Should Robots Be Taxed?

Rebelo, Sérgio, Pedro Teles and Joao Guerreiro

No 12238, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We use a model of automation to show that with the current U.S. tax system, a fall in automation costs could lead to a massive rise in income inequality. This inequality can be reduced by raising marginal income tax rates and taxing robots. But this solution involves a substantial efficiency loss for the reduced level of inequality. A Mirrleesian optimal income tax can reduce inequality at a smaller efficiency cost, but is difficult to implement. An alternative approach is to amend the current tax system to include a lump-sum rebate. In our model, with the rebate in place, it is optimal to tax robots only when there is partial automation.

Keywords: Inequality; Optimal taxation; Automation; robots (search for similar items in EconPapers)
JEL-codes: H21 O33 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-pbe and nep-pub
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Citations: View citations in EconPapers (53)

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Related works:
Journal Article: Should Robots Be Taxed? (2022)
Working Paper: Should Robots be Taxed? (2018)
Working Paper: Should Robots be Taxed? (2017)
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