NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Should Robots be Taxed?

Joao Guerreiro, Sergio Rebelo, Pedro Teles

NBER Working Paper No. 23806
Issued in September 2017, Revised in January 2019
NBER Program(s):Economic Fluctuations and Growth, Public Economics

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 making the current income-tax system more progressive and by taxing robots. But this solution involves a substantial efficiency loss. A Mirrleesian optimal income tax can reduce inequality at a smaller efficiency cost. An alternative approach is to amend the current tax system to include a lump-sum rebate. With the rebate in place, it is optimal to tax robots as long as there is partial automation.

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Document Object Identifier (DOI): 10.3386/w23806

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