birguslatro: Birgus Latro III icon (Default)
There's been suggestions recently that with robots and AI set to take most everybody's jobs away we should perhaps tax the robots. So I thought I'd look into how that might play out by imagining how it might effect a business and the tax it generates. Thus...

Effect of robots on a business - chart 2.

There we have a business with at first 10 humans and no robots, then 5 humans and 5 robots and finally 1 human and 9 robots. A robot is assumed to cost half what a human costs and does the same amount of work. There's a flat tax of 20% applied to both the humans' payroll and the business's profits. The robots aren't taxed, as this is to show what happens when a business can cut its labour costs, all else being equal.

As you'd expect, the business makes more profit with replacing the humans, but the total tax generated by the business, (meaning the tax from the payroll plus the business profits), decreases. So not only has the number of the unemployed increased, but the state has less revenue to deal with the increase. However, it's not too bad though, as while the business has almost doubled its profit when there's just one human left, the tax take has dropped a bit less than a third.

I've seen reports though that robots on average are much more efficient than this, so here's where they're just 1/5th the cost of a human...

Effect of robots on a business - chart 2.

From that you'll see the more efficient robots have now more than doubled the business's profits and the tax take has only dropped about an eight.

Either way though, people are out of a job and less tax is collected. If it's expected to be short term though, then a progressive tax could make up for the loss in the tax take, going by these examples. (And progressive taxes are common, such as in the US, UK, etc.) Which would mean business as usual with regard to helping people though periods of unemployment.

But if robots are going to create a higher average level of unemployment, more tax to pay for that will have to be collected. A higher progressive tax could be used, but perhaps a better way would be to factor into the business tax the amount of payroll the business pays. Meaning a large payroll relative to the business's profit would reduce the percentage of tax it pays. A simple though probably not very good example...

Effect of robots on a business - chart 3.

In that, if the payroll is greater than the business's profits then the business's tax rate is reduced, um, thus...


So if the payroll was twice the profit, the profit would be taxed at half the tax-rate. (10% instead of 20% in these examples.)

As the payroll is only higher than the profit in these examples when there's no robots, that's the only example this change effects, the total tax dropping and the business profits rising. This does produce a more even spread in the total tax across the three examples though, but a rise in the tax-rate would be required to compensate for the overall drop in the country's tax-take. (And a rise in workers' pay to compensate for the tax-rate rise...)

Anyway, the moral of the story is that if you want to tax the robots, (meaning gains in efficiency that result in less people being needed to run a business), taking into account how much a business pays its employees when deciding its tax-rate would seem a good way to do it.

If you want to have a play with this, the following will possibly load into your spreadsheet after you copy and paste it as a text file...

"Tax Rate",,,20
"Gross Income",,,1000000
"General Expenses",,,400000
"Total Expenses",,,=D3+D4
"Business Profit",,,=D2-D5-D6
"Payroll Tax",,,=D6/100*D1
"Payroll After Tax",,,=D6-D8
"Business Tax",,,=D7/100*D1
"Total Tax",,,=D8+D10
"Bus. After Tax Profit",,,=D7-D10

And this is the alternative Business Tax...


Note that what you're trying to achieve is to both increase the tax rate as the payroll decreases while also increasing the business's profits. Efficiencies are good, so they should increase profits.

(The things I waste my time on... :)
birguslatro: Birgus Latro III icon (Default)
Interesting graphs here...

While the first graph shows that participation in the labour force has been increasing in every country looked at except for the US and Sweden, it's much more interesting in the graphs broken down by age and gender. For those 24 and under, gender participation looks much the same, with a general decline being put down to more participating in education.

For those 25 and over though, male participation has been declining while female participation has been increasing. And except for Japan, females now outnumber males in the work force for those between 25 and 54.

Ignoring the male/female mix (and Sweden), is the US's decline due to the US leading the trend here and the other countries will eventually follow, or is the US an anomaly for some reason or another?

(Note that 'work force' means those working and those seeking work. This is not about the level of unemployment.)
birguslatro: Birgus Latro III icon (Default)
The following article is pointing out that for many households in western economies, their incomes have been flat or falling over the last decade...

An interesting difference though can be seen in this graph. While some countries have a similar number of households experiencing a drop in incomes, when you compare their disposable incomes, the results can be very different. For instance, the incomes of 70% or more of US and UK households have been flat or been going backwards. However, it's near 0% for disposable incomes among US households while it's 60% in the case of UK households.

It's tempting to think this just reflects the different health systems in those two countries, except France and the US show similar results, and France has a public health system like the UK.

So maybe the US is more socialist than we think? (Or the UK less so...)
birguslatro: Birgus Latro III icon (Default)
The New Zealand finance minister was interviewed about inequality today...

This is in response to a report showing that 60% of NZ's wealth is owned by 10% of the population while the bottom 40% of the population own 3% of the wealth. In the interview, he compares NZ to Australia, the UK and America. He calls them comparable countries, though doesn't say why they are. My guess would be because they have comparable taxation systems, unlike some of the countries in Europe with much higher taxation and much better standards of living for those at the bottom of the heap. (And who conveniently don't speak English.)

In the 80s the US had Reaganomics, the UK Thatcherism, NZ Rogernomics and Australia something or other similar. These were all major swings to the right in economic policy. The Brexit vote in the UK and the rise of Trump in the US can probably be blamed on the inequality those policies have given us.


birguslatro: Birgus Latro III icon (Default)

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