Bill Gates Proposes FICA Taxes on Robots that Replace Human Workers

Microsoft co-founder Bill Gates has renewed his proposal for taxing automation, suggesting that companies replacing human workers with robots or artificial intelligence could be required to pay an equivalent of FICA payroll taxes.

Bill Gates proposes FICA taxes on robots that replace human workers.

In an interview with Ezra Klein of The New York Times, Gates said society could define a unit of labor and apply the same tax regardless of whether the work was performed by a person or a machine.

“You define a unit of labor and say, independent of whether that's delivered by a human or robot, you are paying the same FICA tax that a human worker would pay,” Gates said.

FICA, or the Federal Insurance Contributions Act, provides the payroll-tax mechanism that finances Social Security and Medicare. Under the current system, employers and employees pay FICA taxes on covered wages. Robots themselves do not currently pay FICA taxes.

Gates said taxing automated labor could help maintain government revenue and provide resources for workers displaced by automation.

“Just because the economic signals say that it'd be lower cost to use an AI doesn't mean society has to do that,” Gates said. Gates first raised the idea of a “robot tax” publicly in 2017.

He has continued to argue that governments may need to adjust tax systems as AI and robotics replace or transform human labor.

In a recent essay, Gates said AI was already affecting white-collar work and argued that blue-collar occupations could increasingly be affected as physical robotics improves.

He has also proposed taxing AI “tokens” — units used to process AI queries — as a way of slowing the transition away from human labor while raising money for retraining and social programs.

Gates' proposal remains a policy idea rather than an existing US tax requirement.

No federal law currently requires companies to pay FICA taxes on robots simply because the machines perform work previously done by employees.