As the minimum wage rises in more states, many businesses are turning to replacing workers with robots, and that is impacting the government's income tax revenue.
Fast food chains like McDonald's and Wendy's announced or implemented plans recently to replace workers with self-service kiosks, or robots. CEK Restaurants CEO Andy Puzder, who withdrew his nomination as President Donald Trump's labor secretary, has also expressed interest in deploying robots to combat the rising cost of wages. The decisions came as "Fight for 15" supporters advocate for a $15 federal minimum wage.
The federal minimum wage is currently $7.25, but it has gone up recently in a number of states. Washington State, California and Massachusetts are just a few of the states where the minimum wage is now more than $10 per hour. Washington, D.C., has the highest minimum wage in the country, at $11.50 per hour, according to Bankrate.
But now, Microsoft founder Bill Gates is proposing a tax on robots to make up for the decrease in income tax revenue resulting from lost jobs. During a recent interview with Quartz, Gates was asked what he thought of the idea of a "robot tax." His answer was quite candid:
Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory. That income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.
The billionaire entrepreneur noted that the upside of the increased used of robots would be the "freeing up" of labor. In other words, workers who lose their jobs to robots would then be available to perform other types of work, such as assist the elderly, teach and help special needs children.
Gates proposed subsidizing these new jobs with a "robot tax," which he said could be implemented in various ways.
"Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK," Gates said.
European Union lawmakers rejected last week a proposal to impose a "robot tax" in EU countries, according to Reuters.
The Germany-based International Federation of Robotics applauded the governing body's decision, saying the action would have had a very negative impact on competitiveness and employment."