On the Money

What would Skynet do? One San Francisco official is pushing for a 'robot tax'

Key Points
  • Entrepreneurs and politicians are trying to smooth the transition to an automated workforce
  • Microsoft co-founder and billionaire Bill Gates said earlier this year that he believes governments should tax companies' use of robots.
  • "We're exploring continuing the payroll tax and extending it to robots that perform jobs humans currently do," a San Francisco politician explained to CNBC.
Tax the robot

If a worker loses a job to a robot, who pays the city and state tax revenue that the formerly employed worker paid in? Right now, nobody does.

That's where the idea of a "robot tax" comes in.

In an interview with Quartz earlier this year, Microsoft co-founder and billionaire Bill Gates said he believes governments should tax companies' use of robots. It's an idea one San Francisco politician is now trying to advance to the next level.

"I think automation is a good thing," San Francisco Board of Supervisors member Jane Kim told CNBC's "On the Money" in an interview, "but there will be a downside to this technological progress and workers will be left behind."

To try to combat that, Kim has created a committee called the "Jobs of the Future Fund."

"We're exploring continuing the payroll tax and extending it to robots that perform jobs humans currently do," Kim explains. Companies would pay into a fund, the same payroll tax and social security the replaced worker was due.

Kim told CNBC that the goal "is to help smooth this transition, help workers that are displaced by their jobs re-educate and retrain."

'A really big mistake'

This robot named Bandit can help motivate the elderly to complete exercises and daily tasks.
Source: USC

She added that the money could be used to train workers for future jobs, provide free community college, and "invest in creating meaningful and high wage jobs in industries that are currently hard to automate like child care workers, which is currently a poverty profession."

Kim's idea comes at a time when the debate over automation, and its effects on employment, is picking up speed. A recent study by two MIT academics found that the addition of one robot per thousand workers had a negative effect on both employment and wages.

Meanwhile, proponents argue that more automation is helpful in filling certain low-skilled jobs that are going unfilled.

"We don't have a problem with robots causing unemployment," Jeff Burnstein, president of the Association for Advancing Automation told CNBC. Burnstein leads an industry group that represents more than 1100 robotics and technology companies.

In an interview, he called the robot tax proposal "a really big mistake, not only for California, but for the country. Robots are actually helping save and create jobs right now."

Burnstein said their data "over twenty years shows whenever [industrial] robot sales rise, unemployment falls. The real problem we have is we have so many unfilled jobs that people don't have the skills for. The real threat to jobs in America is when we can't compete."

Burnstein believed additional taxes would harm innovation. "Why would we want to put disincentives on companies using the best technology available?" he asked.

Yet San Francisco's Kim warned of "an increased uptick in automation of jobs." She said beyond manufacturing, "we're talking about retail, trucking, accounting, even stock broker jobs."

Those concerned that a robot could take your job are not alone. Some 72 percent of Americans say they are worried machines might do many of the jobs currently done by humans. And 25 percent of those consider themselves "very worried," according to a Pew Research Center poll out this week.

Burnstein, however, was unmoved. "All the hysteria about job losses, this is nothing new. We've been hearing these threats forever. But we're really good at creating new jobs. We can't always define them."

He pointed to a "search engine optimization specialist" or "app developer" for an iPhone as current high-paying jobs that didn't exist twenty years ago.

"Automation has been changing the nature of jobs forever, " Burnstein added.

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