Hideto Koizumi, Adjunct Post-doctoral Fellow, received Encouragement Award 2020 from the Japan Institute of Public Finance.
Japan Institute of Public Finance
“Optimal Uniform Capital Taxation in A Partially Automated Society”
Recent automating technologies have sparked discussions on “robot taxes,” aimed to dissuade the displacement of labor and to generate revenue to redistribute to displaced laborers. Implementing such taxes is challenging, however, in part because of the difficulty in clearly separating which technologies substitute for labor from those which complement it. Modeling automating technologies as intermediate goods, I consider the optimal tax policy in this environment. As in standard models, non-linear labor taxes are assigned without the knowledge of a laborer’s type. Additionally, due to tax avoidance concerns and arbitrage opportunities, intermediate goods are uniformly and linearly taxed without the knowledge of their complementarity or substitutability with labor. Despite the potential for automating technologies to be complementary to workers, I find that the optimal tax regime includes a strictly positive tax on these intermediate goods. I discuss the implications of these findings for the robustness of robot-tax policy proposals.