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Save Social Security by taxing machines?

Published: 8/28/2020 3:28:40 PM

Whenever the prospect of Social Security insolvency is discussed, the only reforms suggested involve either additional taxes on workers or reductions in benefits. Neither of these is palatable, so I suggest, herewith, an alternative.

Suppose the Brown Corporation decides to replace one worker with a machine. If the worker to be replaced earns $30,000 per year, the Social Security system will lose $3,750 a year — half from the worker, half from the company. Why not replace that lost income with a tax on the machine?

The company would still save money, even after paying the tax. Otherwise, it would not have bought the machine in the first place. Machines can save all kinds of money, not just wages and employment taxes. They do not need a cafeteria or break room, uniforms, restrooms, employee incentive plans, paid time off or health insurance. The benefit of automation to a company is significant, even if there is no gain in productivity.

Would computing the tax be arbitrary and burdensome? Probably not. Every business owner knows, or should know, what the company’s costs are. Companies are pretty good at figuring costs and savings.

I admit this is a half-baked idea. It deserves discussion and refinement. There are plenty of smart people around to do that.

Peter Jones


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