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For tax purposes, how do you define a robot?

More and more people are talking about the new economy, and in particular, the role played by robots. As jobs are being eliminated and replaced by robots, governments are losing tax money. There are discussions as to whether robots should be taxed

Coachmen and horses have been replaced by robots

Most people think of robots as machines with arms and legs: this is the most visible part of artificial intelligence. However, this is only the tip of the iceberg. Data science is also automating a lot of processes, typically via software that does the job human beings used to do: accountants, physicians, teachers, lawyers, editors can have some of their tasks performed by a piece of code that parses tons of data to make decisions or do some actual work - maybe a diagnosis, or teaching math classes online to kids. This is also artificial intelligence, albeit the "soft" side of it, as opposed to the "hard" side pictured by physical devices moving on auto-pilot. Yet in both cases  jobs are lost (I prefer to say that repetitive tasks are freed up.) In the case of automated data science (the soft side), it impacts white collar jobs even more.

Governments take notice and realize that it represents a loss of tax revenue. But how do you define a robot? How does a piece of software that automatically finds articles worth curating, selects and schedule blog posts, edits articles and corrects typos, qualify as a robot, even though it replaces the job of an editor? And why should it be taxed, when the company using it does not use any of the infrastructure paid for by government taxes? (For instance, the company is a digital publisher with no office, no physical location, no employees, not producing any physical goods, not consuming energy, and generating no road traffic.)

Where is the borderline between what qualifies as a (taxable) robot and automated data science? Is there even a frontier? And how should governments adapt to the new information economy in which old, costly infrastructure becomes obsolete or at least less used?  Should governments shrink as the services that they provide are less and less needed and replaced by new technologies? Or should they adapt and serve other purposes, maybe cyber-security for instance?

You are welcome to post your comments in the section below.

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Comment by Raj Bhatt on February 23, 2017 at 12:03am

It would be interesting to see how a government would tax robots, if the robots are based in another country. Can the US tax Mexican automotive robots or Chinese footwear-making machines, or Indian software ??

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