Should Robots be Taxed?

Joao Guerreiro, Sergio Rebelo, Pedro Teles

NBER Working Paper No. 23806
Issued in September 2017, Revised in December 2020
NBER Program(s):Economic Fluctuations and Growth, Public Economics

Using a quantitative model that features technical progress in automation and endogenous skill choice, we show that, given the current U.S. tax system, a sustained fall in automation costs can lead to a massive rise in income inequality. We characterize the optimal tax system in this model. We find that it is optimal to tax robots while the current generations of routine workers, who can no longer move to non-routine occupations, are active in the labor force. Once these workers retire, optimal robot taxes are zero.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w23806

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