Neg evidence is comparative.

In order to address that issue, another alternative would be to modify the taxation of capital income. It appears that most tax systems around the world tend either to discriminate labor income in comparison to capital income, or at least entail favorable rules for capital income. For instance, in many countries, labor income is subject to progressive tax rates, while income from capital, notably capital gains, are either subject to a lower tax or, like in Switzerland, exempted from tax, to the extent they belong to private wealth.53 Labor income is also subject to social security contributions, or to payroll takes, like in the United States. By contrast, capital income, such as dividends, interests or capital gains usually do not contribute to the social security. The same is true for the corporate profit tax, which is in most cases exempted from any social security levies.

As a consequence, some commentators suggest – instead of taxing robots – to reform the tax system in order to bring back parity between income from labor and capital.54 Various solutions may be contemplated. First, the income tax on labor could be reduced. In particular, while in most systems, the social security contributions on labor is shared half between employers and workers, a repeal of such tax would arguably make sense because this administrative additional cost may create an incentive to use robots instead of human workers.55 This solution would at the same time increase the states’ revenues accruing from labor income and the financing issues would thus remain unsolved. Second, income from capital could be subject to a comparable burden of tax than the one on labor, and also to social security contributions. Third, the preferential treatment of capital gains toward ordinary income could also be modified. Finally, the introduction of a wealth tax could also be contemplated.56

In our view, the idea of finding a more appropriate balance between the taxation of labor and capital income is fully justified. Some suggestions, however, are not necessarily adequate. For instance, and following the German or the Swiss experience, levying a wealth tax on individuals creates many issues from a constitutional standpoint (confiscatory effects) and is highly delicate on a political side. Furthermore, this tax tends to exacerbate competition between states and may trigger avoidance strategies from high net worth individuals, such as a change of residence. The revenues arising from wealth tax should also not be overestimated. In our view, if changes of the tax system have to be implemented, they should focus on the revenue and the consumption side. However, these solutions do not specifically address the disruption caused by AI and robotics in the labor market and tend to offer a more global approach. Should the scenario of a massive disruption in labor occur, the new economy requires a new tax system. Partial changes and/or modifications to the existing system would indisputably not be sufficient. In view of the above, the solution consisting in taxing robots would represent a more adequate approach, given that such approach focuses on the core issue: the development of AI and its implementation into robotics.