Optimal Taxation of Robots

69 Pages Posted: 21 Feb 2019

See all articles by Uwe Thuemmel

Uwe Thuemmel

University of Zurich - Department of Economics

Date Written: 2018

Abstract

I study the optimal taxation of robots and labor income. In the model, robots substitute for routine labor and complement non-routine labor. I show that while it is optimal to distort robot adoption, robots may be either taxed or subsidized. The robot tax exploits general-equilibrium effects to compress the wage distribution. Wage compression reduces income-tax distortions of labor supply, thereby raising welfare. In the calibrated model, the optimal robot tax for the US is positive and generates small welfare gains. As the price of robots falls, inequality rises but the robot tax and its welfare impact become negligible.

Keywords: optimal taxation, input taxation, production efficiency, technological change, robots, inequality, general equilibrium, multidimensional heterogeneity

JEL Classification: D310, D330, D500, H210, H230, H240, H250, J240, J3

Suggested Citation

Thuemmel, Uwe, Optimal Taxation of Robots (2018). CESifo Working Paper No. 7317, Available at SSRN: https://ssrn.com/abstract=3338646

Uwe Thuemmel (Contact Author)

University of Zurich - Department of Economics ( email )

Z├╝rich
Switzerland

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