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If AI replaces workers, should it also pay taxes?

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Re: If AI replaces workers, should it also pay taxes?

#971

Post by fragmede »

AnthonyMouse wrote: post #952
fragmede wrote: post #940

Earlier quoted context omitted.

The problem with that is that it operates from a wrong idea of how to set prices for a product. From first principles, you make a widget, figure out how much it costs to make it, including your time, then add some amount of margin on top, and you have a business. That is incorrect. No, you have product, and then you just make up a number based on circumstances. If you're lucky, the price you manage to sell your widge…

You're describing what happens in uncompetitive markets (or for status goods, which have inherently weird behavior because they're a signaling mechanism that relies on waste and artificial scarcity as a mechanism of operation, but also inherently nobody actually needs them). In an ordinary competitive market, margins are thin because sellers are fungible, so charging slightly less than the competition results in a di…

This assumes income still exists.

Automation drives goods toward zero while destroying the wage base, as Ricardo warned: gains flow to owners (das capital) of scarce resources. Today that’s Ricardian rents on land, housing, zoning, healthcare, education. $2 TVs ain't gonna pay rent.

Antitrust decides who captures surplus, not how people access it once wages stop working. And UBI would just be stapling cash onto a broken distribution system. So what actually replaces labor as the primary claim on surplus?

Re: If AI replaces workers, should it also pay taxes?

#972

Post by xyzzyz »

unethical_ban wrote: post #915
xyzzyz wrote: post #903

Earlier quoted context omitted.

Because if you're taxing income, you're discouraging production, and discouraging consumption is better than discouraging production.

Why need production if you don't have consumption? I jest, only partially. I suppose we do things how we do because taxing income is a lot easier to do progressively than taxing consumption. You can't meter how many times someone has been out to eat or how many gallons of gas they have put into their car, but you can more easily track what their employer puts in their bank account.

You can progressively tax consumption by combining high, non-progressive consumption tax with negative income tax rates. Something like, everyone gets some small UBI, and also extra income for every dollar made.

For example, let's introduce 35% consumption tax, but introduce $1k/year UBI and extra 30% on income between $0 and $30k, then additional 20% on income between $30k and $60k, and then 10% on income between $60k to $100k, and 0% on any income above that.

Then, if you make $30k, your gross take home pay is actually $30k + $1k + 30% * $30k = $40k, and if you make $200k, your gross take home pay is $200k + $1k + 30% * $30k + 20% * ($60k-$30k) + 10% * ($100k-$60k) = $220k.

At the same time, if you make $30k, if you spend all of it on consumption, you pay 35% * $40k = $14k in taxes, so your net take home pay after taxes is $40k-$14k = $27k. On the other hand, if you make $200k and consume all of it, you pay $77k in consumption tax, and your net take home pay is $220k - $77k = $143k. All very progressive.

Now, the person making $200k is highly incentivised to avoid some of this tax, and instead of consuming all of it, he might only want to consume half of it, and invest the other half. This is great, because then the other half will (hopefully) get invested in a productive activity, so that in future there's even more production.

Re: If AI replaces workers, should it also pay taxes?

#973

Post by platevoltage »

tt24 wrote: post #963
platevoltage wrote: post #954

Earlier quoted context omitted.

I guess I don’t like the taste of of boot leather as much as you do.

Or as a top 1% income earner (like most SWEs in the United States) I just don’t enjoy paying taxes very much.

Most SWE's are not top 1% earners. What are you talking about?

Re: If AI replaces workers, should it also pay taxes?

#974

Post by tt24 »

platevoltage wrote: post #973
tt24 wrote: post #963

Earlier quoted context omitted.

Or as a top 1% income earner (like most SWEs in the United States) I just don’t enjoy paying taxes very much.

Most SWE's are not top 1% earners. What are you talking about?

You intentionally neglected to add a very relevant piece of my sentence.

Re: If AI replaces workers, should it also pay taxes?

#975

Post by AnthonyMouse »

fragmede wrote: post #971
AnthonyMouse wrote: post #952

Earlier quoted context omitted.

You're describing what happens in uncompetitive markets (or for status goods, which have inherently weird behavior because they're a signaling mechanism that relies on waste and artificial scarcity as a mechanism of operation, but also inherently nobody actually needs them). In an ordinary competitive market, margins are thin because sellers are fungible, so charging slightly less than the competition results in a di…

This assumes income still exists. Automation drives goods toward zero while destroying the wage base, as Ricardo warned: gains flow to owners (das capital) of scarce resources. Today that’s Ricardian rents on land, housing, zoning, healthcare, education. $2 TVs ain't gonna pay rent. Antitrust decides who captures surplus, not how people access it once wages stop working. And UBI would just be stapling cash onto a bro…

The only truly scarce things are time and energy/matter. Everything else can be made from those.

Labor is essentially the sale of time. If labor becomes cheaper then energy/matter becomes the bottleneck. Except that there is actually quite a bit of energy and matter in the universe and the main bottleneck on collecting more of it is labor, so if labor gets cheaper then so does energy and matter.

The things you're pointing to are the things that are artificially scarce. How expensive is a housing unit if you can build a 100 story building on any lot and the labor to do that is cheap? Now how expensive is it if building tall buildings is banned and there is an intentional regulatory bottleneck on more people getting trade licenses?

If you still need human labor to build housing then people can get jobs building housing until housing gets cheap. If you don't need human labor to build housing then housing would already be cheap. Unless you have the government artificially constraining the housing supply, in which case you need to fix that. And the same thing for medicine and education.

Re: If AI replaces workers, should it also pay taxes?

#976

Post by AnthonyMouse »

llsf wrote: post #959
AnthonyMouse wrote: post #936

Earlier quoted context omitted.

In a competitive market, efficiency gains are generally going to end up as lower prices to the customer, which is the main way that ordinary people benefit from them. That doesn't happen when the market is consolidated and the oligopoly keeps the gains themselves. So, ensure competitive markets by thwarting regulatory capture and enforcing antitrust laws.

Yes, that has been the rule for now. But I am wondering that if the prices drop so much, but the price to pay for that abundance would be the loss of significant part of job market, then how can we keep the economy humming ? We would need to find a way to give money to people so they can keep participating in the economy even though everything is cheap. If not UBI, we would need to find ways for the majority to do so…

> But I am wondering that if the prices drop so much, but the price to pay for that abundance would be the loss of significant part of job market, then how can we keep the economy humming ?

Money is an abstraction, so prices are always relative to wages. If prices go down, that's equivalent to wages going up. If your costs are $1000 and your wages are $1000, that's the same to you as if your costs are $100 and your wages are $100.

So the problem solves itself. You previously needed a job that would pay you $1000 to cover your costs, now you only need one that pays $100. And there is still $100 of work that needs to be done, because that's why things cost $100 instead of $0.

Re: If AI replaces workers, should it also pay taxes?

#977

Post by AnthonyMouse »

vel0city wrote: post #965
AnthonyMouse wrote: post #936

Earlier quoted context omitted.

In a competitive market, efficiency gains are generally going to end up as lower prices to the customer, which is the main way that ordinary people benefit from them. That doesn't happen when the market is consolidated and the oligopoly keeps the gains themselves. So, ensure competitive markets by thwarting regulatory capture and enforcing antitrust laws.

But if we fully automate how to make and sell and deliver TVs and blenders and now I can get a 200" TV for $2 and a blender for $0.05 but now I don't have a job so I can't afford even a basic apartment what do we do with our society? Like sure all the goods are stupid cheap but things that are actually naturally rivalrous and exclusive like real estate continue to hold value most random people are pretty fucked it se…

> but now I don't have a job so I can't afford even a basic apartment what do we do with our society?

Apartments aren't land, they're buildings. Buildings can be made arbitrarily tall; if we built tall buildings we'd have more housing units than people long before we ran out of land.

So if there is a machine that can build buildings for free, apartments should be cheap. If there isn't a machine that can build buildings for free, get a job building buildings for money.

Re: If AI replaces workers, should it also pay taxes?

#978

Post by BrenBarn »

refurb wrote: post #970
BrenBarn wrote: post #787

Earlier quoted context omitted.

We currently live under the misapprehension that a company growing from a value of $100 million to a value of $1 billion is a "productive use of capital". My contention is that in general that is not true, and that kind of growth from big to bigger is harmful. We want to disincentivize the concentration of growth and capital in already-large companies, and incentivize the diffusion of wealth in many small enterprises…

The very fact that a company grows in value from $X to $X * 1000 is proof that it’s productive use of capital.

You can say that, but then I can say why do we care about whether something is a productive use of capital? What I care about is life being good for human beings, not "productive use of capital".

Re: If AI replaces workers, should it also pay taxes?

#979

Post by AnthonyMouse »

llsf wrote: post #958
AnthonyMouse wrote: post #828

Earlier quoted context omitted.

> The dark factory does not make much capital gains, even as it produces 1,000 gizmo per second. But that's good, right? It means that the difference between what workers get paid when they do work and what they pay when they buy things is small. > Sure the 4,995 unemployed might be able to afford the gizmo, but the state does not receive the same taxes. So what happens to those 4,995 unemployed people ? who is payin…

> The first is that we automate everything. This is implausible, but let's consider what would happen. Well then necessities would be free, because there is no labor cost to produce arbitrarily many solar panels or skyscrapers or mine asteroids to get unlimited raw materials etc. So then you don't need taxes because nothing costs anything. Well, you still have to pay for the energy (to extract raw material and transf…

> Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands).

But then you're back to having something that isn't automated. If machines do this then it's free. If you need people to do it then people have jobs.

> And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement).

But things would also cost less, in the same proportion.

Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide.

Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses. This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again.

Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers.

But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.

Re: If AI replaces workers, should it also pay taxes?

#980

Post by nasmorn »

nradov wrote: post #847
AnthonyMouse wrote: post #829

Earlier quoted context omitted.

Nah, you could reasonably regard a tax system where everybody pays <2% of their income in tax as fair and likewise one where everybody pays 50%, but there is no way to call a system fair where ordinary working people pay higher effective rates than multinational corporations.

The tax rate for corporations should be zero. The need to do tax accounting and associated financial engineering is a deadweight economic loss. Eliminate corporate income tax and raise taxes on the highest income employees and investors to make the change revenue neutral. Ultimately the profits flow to those individuals one way or another so better to collect all the tax revenue from them anyway. This change would in…

I think each company should pay a low rate on all money passing through. Let’s say 0.1 to 1%. Building huge pyramids of shell companies has probably no economic benefit and is mostly done to evade some regulation or taxes or liability. The ideas how to abuse this are too numerous to count so the government should not try to but simply disincentivize the use of corporations just a little bit. The cost would be borne by the individuals who have the most elaborate company architectures which is probably synonymous with the biggest tax evaders.
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