Robots and Taxes: Arne and Jeroen’s Week in Startup Country

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Robots and Taxes: Arne and Jeroen’s Week in Startup Country

Once a week Arne Lasance and Jeroen van den Oever, serial entrepreneurs and investigative geeks, review the week’s news, offering analyses about the most important developments in the world of startups, financial management and whatsoever tickles their fancy.

Arne: Hey Jeroen, how’re things in tha Alps?

Jeroen: the Swiss slopes are excellent, after nearly a metre of snow fell  over the past week, thank you. Me and my misses will crawl out of our winter hideway soon now.

Arne: Did you get the latest wisdom from Bill Gates? “The robot that takes your job should pay taxes”, would you believe that? According to the guy who gave us Microsoft, that’s “one way to temporarily slow the spread of automation,” thank you!

Jeroen: Well, forget about the Swiss Alps. This is massive! We are nearing a new Luddite revolt! Robots are taking human jobs, not only in manufacturing, but also ever more white collar jobs. If robots make money and pay taxes like we do, we may haul in enough money to pay the Universal Basic Income, we mentioned in an earlier post.

Arne: You mean the robots will pay enough taxes so we can all earn a universal basic income (UBI) without working? You must have been sitting in the sun too much my friend.

Jeroen: Exactly! I mean, no I have not been getting much sun lately. I understand if you need to sit down for a moment now.

Arne: Well, be that as it may be, It’s a striking position from the world’s richest man and a self-described techno-optimist, as one commentator put it.  Microsoft is  one of the leading players in artificial-intelligence technology, after all – the object of the Neo-Luddites.

Jeroen: I quite like the idea of a UBI. Did you know that of all people Richard Nixon was one of the early adopters of this idea of free money for all? Imagine for a moment that  on the first day of every month, around $1,000 is deposited into your bank account – because you are a citizen.  And this $1,000 is taxfree, independent of every other source of income. A UBI would guarantee all the non-working citizens a monthly basic salary above the poverty line.

Arne: Hmmm… it would mean that we can get rid of the zillion bureaucratic social security benefits, rules & regulations. It really would ‘empower’ the people. It would not in fact end rising inequality, decades of stagnant wages, the transformation of lifelong careers into gigs and sub-hourly tasks. But it sure would soften the blow for the Precariat we talked about before.

Jeroen: Yes, and a UBI would  create equal opportunity for all, not equal outcome. Another interesting fact: a partial UBI has already existed in Alaska since 1982. A version of basic income, ‘mincome’ was experimentally tested in Canada, where the town of Dauphin managed to eliminate poverty for five years. These days we’re seeing UBI experiments in many countries, from Namibia, India, Brazil, Finland and even the Netherlands!

Arne: Dont forget Switzerland!

Jeroen: Ahum, yes. Almost 77% voted against it in last year’s popular vote.

Arne: Giving money to everyone for doing nothing, that sounds incredibly expensive.

Jeroen: Well, it may sound counter-intuitive, but the exact opposite is true, at least according to some believers at the WEF in Davos recently. What’s really incredibly expensive, they say, if you really take everything into account, is not having basic income.  Let me quote from their reasoning:

You must realize that UBI in fact represents a net transfer. In the same way it does not cost $20 to give someone $20 in exchange for $10, it does not cost $3 trillion to give every adult citizen $12,000 and every child $4,000, when every household will be paying varying amounts of taxes in exchange for their UBI. Instead it will cost around 30% of that, or about $900 billion, and that’s before the full or partial consolidation of other programmes and tax credits, that are immediately made redundant by the new transfer.

Arne: I think I get it. Most seniors already have a basic income through their state pension and/or social security benefits where there is no state pension scheme. Unemployment benefits cost a lot of money too, plus  a lot of expensive bureaucracy. And like with flat taks, a UBI could also mean the end, partly or completely, of horrors like foodstamps, wage subsidies, child tax credits, temporary assistance for needy families and last but not least the home mortgage interest deduction plans, which mostly benefit mainly the wealthy anyway. All those billions could more effectively be spent on UBI. And let’s not forget the impact financial security will have on healthcare and education costs.

Jeroen: The true net cost of UBI  you could easily cover in most countries by  an additional few percentage points tax here and there. Why not through Bill Gates robot tax?

Arne: Why not, indeed?

Jeroen: So let’s open our borders to all immigrant robots and bid them a hearty welcome!. Do you remember Herbert Simon, in the early 1960s?

Arne: Vaguely, yes… What do you mean?

Jeroen: Well, at the time the Nobel laureate in Economics, Herbert Simon predicted that although many “programmable” decisions in business would be automated in a few decades, worries about the “bogeyman of automation” were misplaced. So far, Simon’s projections have turned out to be prescient on both counts, as automation continues to create new jobs and has improved living standards all over the world.

Arne: Well, he did deserve his Nobel award. You know, we now have self learning machines, robots, like Turbotax and H&R Block in the US, that can file your taxes faultlessly. So I guess Gates’s robots should be able to file their own taxes as well…

Jeroen: That sounds almost like Paradise! Robots will do all the work, they will pay taxes, that they will file themselves. We humans don’t have to do anything to receive our UBI’s!

Arne: Thanks Jeroen. This thought will keep me going for a while. See you next week!

Jeroen:  Why not indeed?

 

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