Poten�al Solu�ons to Mass Unemployment

1) Universal Basic Income

a. UBI is a “no strings atached” approach
b. Programs in Manitoba, Namibia, and India were found to have increased educa�on,
reduced medical problems, and increased economic ac�vity, as well as reducing poverty.
c. Strongly supported by big “Silicon Valley” names like Elon Musk, Mark Zuckerberg and
Richard Branson
d. Nevertheless, how will UBI address people psychological needs?

2) Enhancing the earned income tax credit

a. Earned income tax credit: a federal tax credit designed to provide financial assistance to
low-to-moderate-income working individuals and families.
b. It reduces the amount of taxes owed and can result in a refund for eligible taxpayers.
c. The credit amount depends on income, filing status, and the number of qualifying
children.
d. Complexi�es of the EITC o�en leads to errors

3) Incen�vizing hiring human workers

a. New Jobs Tax Credit
b. Corporate subsidies for having a majority human workforce

4) Government provided jobs

a. Government itself could directly create jobs, thus avoiding some of the inefficiency of
using tax credits for private employers
b. Civilian Conserva�on Corp. (“CCC”) employed about 2 million men between 1933 and
1942
c. The CCC workers built roads, trails, and structures
d. A new CCC could address both the long-term unskilled unemployment problem and the
backlog of deferred maintenance in the Na�onal Parks, Forest Service, and Bureau of
Land Management.
e. The CCC was “wildly popular” during its existence, and many of the roads, trails, and
structures built by the CCC are s�ll in use today
Poten�al Funding Solu�ons

1) Robot replacement penalty: Firms pay a tax when they replace a human worker with a robot
a. Pros
i. Incen�vize business to keep human labour
ii. Keep low-wage/unskilled workers employed
b. Cons
i. Slow technological progress
ii. Complexi�es around how we define “robot”
iii. Complexi�es in understanding how to differen�ate “job-transforming” and “job-
displacing” robots
iv. Impairing the compe��veness of domes�c workforces

2) Robot tax: Classify robot labour as “labour” rather than “capital”. “Robot labour” would need to
be defined and earnings from such robot labour tracked through the business owner and taxed
as ordinary income
a. Pros
i. Equalizing the cost of labour and robo�cs
b. Cons
i. Slow technological progress
ii. Complexi�es around how we define “robot”
iii. Impairing the compe��veness of domes�c workforces

3) Equalizing the taxa�on of capital and labour: Tax ordinary income and capital (dividends, capital
gains, etc…) at the same rate
a. Pros
i. The Tax Reform Act of 1986 taxes capital and ordinary income at the similar rate
ii. Provide an element of simplifica�on to the tax system
iii. Incen�vize con�nuous investment rather than “gains hoarding”
b. Cons
i. Capital is much more mobile than labour
ii. May encourage evasive behaviour

4) Increasing the tax on the wealthy: Increasing the marginal tax rate on wealthiest people
a. Pros
i. Simple
b. Cons
i. Encourages evasive behaviour
ii. Capital is s�ll taxed at a lower rate than labour is
iii. High net worth individuals could find ways to mi�gate their tax liabili�es