Bill Gates Controversy on Taxing Manufacturing Robots

On February 21, US$85.5 billion entrepreneur, investor and Microsoft founder Bill Gates received criticism for his controversial interview with Quartz wherein he stated that robots will need to be taxed like people to ensure that the level of social services and education increases consistently.

Since early 2016, various industry leaders and manufacturing giants including the $50 billion company Hon Hai Precision Industry, parent company of Foxconn Technology Group, began to replace human employees with robots. In May 2016, Foxconn replaced 60,000 factory workers with robots and 5 months later, Foxconn deployed additional 40,000 robots in China to carry out complex manufacturing operations more efficiently.

At the time. the spokesperson of Foxconn Technology Group stated:

“We are applying robotics engineering and other innovative manufacturing technologies to replace repetitive tasks previously done by employees, and through training, also enable our employees to focus on higher value-added elements in the manufacturing process, such as research and development, process control and quality control. We will continue to harness automation and manpower in our manufacturing operations, and we expect to maintain our significant workforce in China.”

The introduction of robots allowed Foxconn to massively improve production efficiency and job costs. In one single factory, Foxconn was able to eliminate 60,000 human workers and throughout its factories, the company was able to cut 40,000 more workers. Foxconn still houses over 1.3 million employees as there exists many operations within manufacturing that require the oversight of human workers.

However, in an interview with Quartz, Gates expressed his concern with the increasing replacement of human workers with robots in regards to taxation. He stated that normally, human workers are required to pay taxes for whichever income they drive by contributing to a company. If robots replace humans and carry out similar operations, Gates stated that robots should be taxed for the same amount as human employees.

In an interview, Gates said:

“Right now, if a human worker does $50,000 worth of work in a factory, that income is taxed. If a robot comes in to do the same thing, you’d think we’d tax the robot at a similar level. You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, being thoughtful about that extra supply is a net benefit. It’s important to have the policies to go with that,”

Criticisms on Gates emerged specifically on the criteria of separating robots from software. Can the action of implementing robots or software to maximize production efficiency be described merely as a “replacement” of human employees with robots? Or is it a smart business decision of the company to simply implement better technologies that can reduce job costs?

As an example, assuming that Foxconn cut 60,000 employees in a factory by implementing various high tech machinery and technologies, can the government then jump in and start taxing those machinery? And what separates these machines from other types of machines used in other factories?

As technology matures and multi-trillion dollar industries like manufacturing grow at an exponential rate, there will be major changes in the way businesses and operations are handled. Imposition of regulations and policies to limit the development of smart software and sophisticated robots could restrict industries from reaching their maximum potential.

Image Via: AIB

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