Taxation on robots

Originally published 4 April 2017. AI polished for a better reading experience: 11 August 2026.

As advanced economies face slower population growth and an ageing median citizen, doubt about public pension systems is rising. By 2050 in Europe, dependent residents could amount to roughly 60% of those of working age. That ratio implies a heavy tax burden on people still in work if pensions are to be paid as today.

There is a second pressure. Highly capable AI and robotisation may lift unemployment—especially among workers aged 40 and above. Younger graduates will adapt more easily to the new landscape; experienced workers will find it harder to retrain into the new economy, not because they lack will, but because the robot era will demand imaginative, highly specialised skills. Young people will spend years acquiring the hard and soft skills required. A simple mid-career swap will not be realistic for many professionals over 40. The problem is that this group is also a central source of the tax base that funds pensions.

If we combine an ageing population with high unemployment among main taxpayers, how will pensions and unemployment support be financed? That question should be answered now, while the trajectory is still relatively predictable.

Some voices propose taxing robots. Because a robot can replace identifiable human labour, and because one can estimate how many workers a system displaces, it is feasible in principle to design tax schemes that mimic labour taxation on those systems.

Any such plan must weigh the real impact of robotisation on employment, the global competitive position of firms, and the wider economic cycle. Robots are means of production; humanity has lived through earlier waves when machines replaced workers. What may be new is that something long treated as uniquely human—intelligence itself—risks being substituted by AI. We may approach a world in which almost no task is permanently beyond machines.

I remain an optimist. I believe the prosperity robots can deliver will eventually let us loosen classical labour relations. Basic needs could be covered; people would create and produce more from curiosity than from fear of hunger or homelessness. Time freed by automation would go into creative living and sharing. Money, as we know it, would matter less; reputation grounded in contribution to humanity’s well-being would become a real form of value.

Should my generation of millennials fear that future? I think not. There are bright ideas for how society can change with technology. Our task now is to shape politics and the economy so that growth is sustainable and participative—not left to chance while the tax base quietly erodes.