What if the U.S. placed a tax on robots? The concept has been publicly discussed by policy analysts, scholars, and Bill Gates (who favors the notion). Because robots can replace jobs, the idea goes, a stiff tax on them would give firms incentive to help retain workers, while also compensating for a dropoff in payroll taxes when robots are used. Thus far, South Korea has reduced incentives for firms to deploy robots; European Union policymakers, on the other hand, considered a robot tax but did not enact it.  

Now a study by MIT economists scrutinizes the existing evidence and suggests the optimal policy in this situation would indeed include a tax on robots, but only a modest one. The same applies to taxes on foreign trade that would also reduce U.S. jobs, the research finds.   

“Our finding suggests that taxes on either robots or imported goods should be pretty small,” says Arnaud Costinot, an MIT economist, and co-author of a published paper detailing the findings. “Although robots have an effect on income inequality … they still lead to optimal taxes that are modest.”

Specifically, the study finds that a tax on robots should range from 1 percent to 3.7 percent of their value, while trade taxes would be from 0.03 percent to 0.11 percent, given current U.S. income taxes.

“We came in to this not knowing what would happen,” says Iván Werning, an MIT economist and the other co-author of the study. “We had all the potential ingredients for this to be a big tax, so that by stopping technology or trade you would have less inequality, but … for now, we find a tax in the one-digit range, and for trade, even smaller taxes.