What about a "tech tax"?

[Dani]

Would you support a "tech tax" on companies that automate human jobs?

[Reverend Jim]

I would first support a tech tax on auto-trades - the millions of stock market trades that are done automatically by bots. Even a small amount would bring in a lot of tax $$$. If it was applied to all trades then it would have only a small impact on human based trades.

[Salem]

Where do you draw the line?

Take for example a simple block and tackle that allows one person to lift far more by themselves than they could unaided. Are the extra people "automated" out of a job? Should manufacturers of rope and pulleys be taxed for causing displacement of human muscle?

Whether it was invented last week or thousands of years ago, it's all "technology".

[trcooke]

I would first support a tech tax on auto-trades - the millions of stock market trades that are done automatically by bots. Even a small amount would bring in a lot of tax $$$. If it was applied to all trades then it would have only a small impact on human based trades.

You mean in addition to the tax individuals and companies already pay on their profits? What would be the desired outcome of such a tax?

[Dani]

It would get rid of day traders I suppose?

[trcooke]

It would get rid of day traders I suppose?

Automated trading is the same thing, right? Hitting market close with open positions is a cardinal sin. So your idea is that all trades are final and must result in delivery of the underlying goods? You cannot sell your bought contract?

The trading platforms won't like that, obviously, since less than 5% of all trades result in delivery. It's also likely the traders won't like it either since they're in the markets to give themselves flexibility.

It's hard to imagine a functioning market without speculators.

[Dani]

This is Jim’s thinking, not mine. I asked about taxing companies that replace(d) a significant portion of their workforce with AI. Nothing to do with the stock market.

[trcooke]

Then I'm with Salem. Where do you draw the line?

History presents a long list of human created advancements that displace manual labour (both physical and mental). While many do "automate human jobs" they often also create entire new industries for humans to thrive in.

[Reverend Jim]

What would be the desired outcome of such a tax?

It would be two fold. First of all, it would raise money progressively. Secondly, it would claw back some of the money being sucked out of the system by bots. And a small tax would not really impact manual (by humans) trading. It would only impact bot trading. Contrast the dozens (guessing) of trades made by day traders with the millions of trades made by bots.

[Reverend Jim]

I would not support the tech tax as proposed in Dani's first post. As said by Salem, "where do you draw the line?" Do you penalize any manufacturer of equipment from bulldozers and backhoes, to virtually every piece of equipment used in manufacturing? How about companies like John Deere that manufacture harvesters? One backhoe can put hundreds of ditch diggers out of work.

[Dani]

I was specifically referring to the age of AI/LLM. Perhaps an increase in the amount of unemployment insurance that an employer pays for every worker replaced with AI.

[Reverend Jim]

Again, the problem is where do you draw the line. Would you have taxed Maytag because their washing machines put women out of work? What about dishwashers? Every labour saving device has the potential to put people out of work. How many accountants were put out of work after Visicalc appeared?

At least the proposal to tax stock trades doesn't cost any jobs. If you exempt the first n trades per day then it would affect only bot trades.

[Dani]

At least the proposal to tax stock trades doesn't cost any jobs.

How does increasing unemployment insurance cost jobs?? If anything, I would suspect it would do the exact opposite, no?

As it currently stands, an employer pays unemployment insurance for each of their employees on the payroll. Each time an employee is let go without provable just cause, the employer's unemployment insurance rate increases for each of the employees they still have.

This rate increase happens when the employee that was let go files for unemployment, and there's often a back-and-forth "conversation" (in the form of forms) between the employee and the state, and then the employer and the state, in determining whether the employee qualifies for unemployment.

I am suggesting that if the employee is able to prove that they were let go because they were replaced by AI, the employer's rate would go up a teeny bit more than it otherwise would. This would discourage employers from replacing employees with AI.

[Reverend Jim]

I don't think that's how UI works up here.

I am suggesting that if the employee is able to prove that they were let go because they were replaced by AI, the employer's rate would go up a teeny bit more than it otherwise would. This would discourage employers from replacing employees with AI.

So instead of saying, "We're replacing you with AI", they say, "We're downsizing", or, "Your job is redundant."

Of course none of this would even be necessary if your tax rates were what they were in the 1960s.

[Salem]

New companies based entirely on AI/LLM will form.

You can't draw an unemployment insurance payout if you were never employed to begin with.

Humans need not apply

[Dani]

New companies based entirely on AI/LLM will form.

That's true. However, a short term increase to unemployment insurance tax might slow down the current mass-layoffs that are starting to happen now and likely to continue for the next couple of years, at least until we see what happens when the AI dust settles.

[Salem]

Welcome to the world of the 0.001% who have 50.01% of the politicians in their pocket.

For multinationals and billionaires, the tax system is a dog-and-pony show to distract the masses, while some chunk of the money raised flows right back to them.

Just look at musky getting a huge spacex contract off the back of schmoozing the orange ****.

[Reverend Jim]

I don't think anyone would argue with how high level languages and frameworks have made programmers much more productive. Fortunately the demand for programmers, at least until now, required the training of more and more of them. But increased productivity often comes with decreased demand for bodies. Do we tax the people who make the code tools that make us more productive?

[Dani]

My opinion is strictly formed based on living in Silicon Valley and having some very frightening conversations with people that AI is going to cause mass-layoffs in the region over the next couple of years. A very large portion of the entire workforce in two counties will all be out of work in an area known for the highest cost of living and highest home prices in the country. I feel it will cause a huge economic collapse in the region. This is a thought experiment to somehow temper this outcome.

[Dani]

I also want to clarify that the state is already taxing employers for each employee laid off, and the tax rate is based on how many employees have been laid off in the past and how many still are remaining at the company. I am simply suggesting a temporary increase to the tax rate in an effort to soften the blow of projected mass-layoffs.

[Reverend Jim]

Is there any such thing as a temporary increase? The income tax was supposed to be temporary.

[Dani]

So were road tolls.

But yeah, just a thought experiment since the tax is already based on a rolling points-like system.

[Reverend Jim]

Apparently New York has been collecting a stock tax since 1981 at the following rates

Selling price per share    Rate (cents per share)
-----------------------    ----------------------
Less than $5               1.25 
$5 to less than $10        2.50 
$10 to less than $20       3.75
$20 or more                5.00

Unfortunately, New York also refunds that tax. This amounts to billions of dollars annually.

[Gulshan_7]

Well, for this question, every person have some different perspective. Like in my opinion, I think a "tech tax" could be a good idea if the money goes to training workers for new jobs and helping people who lose their jobs because of automation. As we all know, that technology can make work very fast and easier, but we need to make sure that no one is left behind. Apart from this I also think that, company should show some responsibility when they replace human jobs with technology. If they will follow this strategy then everyone will get benefits.
Thanks

[IS-92]

I have direct observations regarding China. The truth is that in industrial production, the degree of automation is many times greater in the US and the EU, but this has had no impact on overall employment and tax policy.
At the same time, it is good to take into account that there are entire industries in which automation is severely limited, due to the specifics of technological processes.
In recent months, some kind of insane marketing campaign has begun, explaining how replacing highly skilled labor with artificial intelligence can lead to a reduction in costs.
Many employers were fooled and invested in artificial intelligence systems. In just a few weeks (as a result of the losses generated), the first signs of sobering up appeared.
Whatever we say, what is presented to us today as "artificial intelligence" is no more than the "expert systems" well known to us from the 1970s.
Such solutions cannot replace work that requires logical analysis and abstract thinking, because they are based solely on existing experience. Such an approach applies to cascading processes, but it is absolutely inapplicable when the processes are recursive in nature.
The Chinese learned this lesson a long time ago, and a number of measures have been taken there to avoid such erroneous decisions.
The truth is that the introduction of a technology tax is a serious strategic mistake, although at the moment it seems like the right decision.
What we must always remember is that strategic mistakes are irreparable. In this case, the problem is purely political, not technological.
Call it karma, dialectics, cause-and-effect relationships, or whatever you want, but everything that is happening today has already happened and more than once, and always at the root of the problems are (and remain) financial interests and the lack of strategic thinking.
Let's just mention the names of Andy Rubin (Hiptop), Rick Miner (Wildfire), Nick Sears (WebTV), Chris White, and many others. They withdrew from this madness, as did my colleagues and I years ago.

[jkon]

There isn't a global government so is this question just for USA where Dani who is the author of it is ?

[Dani]

@jkon I suppose I was thinking about California where the local economy here in Silicon Valley is likely to be completely crushed.