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Professor Kim suggests introduction of new tax regime
By Park Jae-hyuk
The rapid growth in artificial intelligence (AI) technology has been threatening jobs of human workers, just as machines did in the First Industrial Revolution.
While self-checkout machines at the nation's unmanned convenience stores have already begun replacing many part-timers, experts say this is just the beginning. They expect licensed professionals will also lose their jobs in the era of the Fourth Industrial Revolution. Daumsoft Vice President Song Kil-young, an expert in big data analysis, warned that high-income earners will lose their jobs faster than low-income earners, because people will want to save as much return as possible on their investments.
Amid the growing concerns, several new tax systems against AI and robots have drawn public attention. One of the systems is the intelligence-added tax (IAT).
In his recently published book, "Human vs. Machine," Prof. Kim Dae-shik at the Korea Advanced Institute of Science and technology (KAIST) wrote, "As the value-added tax (VAT) adopted during the First Industrial Revolution, we can consider adopting a new concept, such as the IAT."
VAT was introduced as a tax imposed on manufacturing procedures in the early 20th century. Kim said imposing taxes on AIs' productive activities can redistribute wealth, relieve the shock of unemployment and sustain the capitalistic economy.
According to the professor, IAT enables the government to maintain its systems in the era of the Fourth Industrial Revolution and guarantee basic incomes for its citizens.
"Because slaves were in charge of production in ancient Rome, citizens had nothing to do, so the government guaranteed their basic incomes," Kim wrote in his book. "Given that Romans had no productive jobs, the state offered cruel entertainments to them."
The professor said robots will serve as Roman slaves down the road. However, he stressed humans in the future should do productive works for their self-realization, instead of enjoying the cruel entertainments of Romans.
The system he proposed can be regarded as one of "robot taxes." Experts have come up with various concepts of robot taxes from one in which robots pay their income taxes as taxpayers to another that regards robots as tools subject to property taxes.
Kim's suggestion is closer to the latter. It is similar to imposing VAT on vending machines.
However, the manufacturers' duties to pay VAT have been shifted to the end consumers. Businesses will likely shift their responsibilities to pay IAT on consumers, even if the government adopts the new tax system. This is the classic economic issue of the incidence of tax burden.
As the demand for AI services and machines is not likely to be very elastic, end users are expected to take the biggest burden instead of sellers.
Therefore, further debate is needed to conclude whether IAT can properly redistribute wealth in the future when most consumers will live on basic incomes.
Some experts have urged Korea to take a closer look into the introduction of a robot tax and use the national income to retrain human resources for new jobs.
