On To Bernie Sanders: Depreciation Tax Schedule Change When Robots Take Our Jobs

As artificial intelligence and robotics march deeper into the workplace — from Amazon’s warehouses to Tesla’s assembly lines and even newsrooms — governments everywhere face a modern fiscal riddle: if machines are replacing human labour, who pays for the social safety net that used to be financed by human workers’ taxes?

It is no longer a thought experiment. As India accelerates industrial automation — Foxconn’s Tamil Nadu assembly lines, Bengaluru’s AI-driven customer support systems, and precision robotics in Gujarat’s ports — the question of who pays for progress is becoming urgent. When automation displaces workers, the traditional tax base — income and payroll taxes from human labour — shrinks. Yet the profits from automation continue to flow to capital owners, often tax-advantaged and globally mobile.

Enter the robot tax — a proposal once dismissed as populist fantasy, now re-emerging in serious policy debates on both sides of the Atlantic. In early October 2025, U.S. Senator Bernie Sanders released a Senate report ominously titled The Big Tech Oligarchs’ War Against Workers: AI and Automation Could Destroy Nearly 100 Million U.S. Jobs. His solution was direct: tax the robots — or rather, tax the corporations deploying them — and use the proceeds to fund displaced workers, retraining, and perhaps even a universal basic income (UBI).

It sounds radical. In truth, it’s a rational correction to decades of fiscal distortion.

The Hidden Subsidy for Machines

Corporate tax systems across the world are designed to encourage capital investment. Through accelerated depreciation and bonus expensing, companies can deduct the full cost of robotic and AI equipment in the year of purchase — effectively getting an immediate tax break. The faster you automate, the faster you write off the cost, and the lower your tax bill.

This is not a neutral policy. It privileges capital over labour. A robot that replaces ten human workers doesn’t pay payroll tax, doesn’t buy lunch, and doesn’t send children to school — yet it earns the firm a tax deduction faster than any human employee could. The state, in effect, subsidises the very trend that displaces its taxpayers.

Bill Gates warned of this in 2017, proposing a robot tax that would “slow the pace of automation and fund the retraining of displaced workers.” Economists such as Daron Acemoglu and Robert Seamans have since quantified the imbalance: U.S. tax policy lowers the cost of automation by roughly 25–30% relative to labour, accelerating job losses in mid-skill occupations.

A Smarter Robot Tax: Adjust Depreciation, Don’t Invent a New Levy

A robot tax need not be a clunky new excise with inspectors counting every mechanical arm. It can be achieved through something subtler and administratively elegant: depreciation adjustments.

By lengthening the depreciation schedule for robotic and automation equipment — for instance, requiring firms to write off costs over ten years instead of one — governments can reclaim foregone revenue without banning innovation. The effect is to raise taxable income in the early years of automation projects, nudging firms to consider employment impacts alongside efficiency gains.

This approach leverages existing fiscal machinery. No new bureaucracy, no arbitrary definitions of what counts as a “robot.” It simply removes the distortion that made automation artificially cheap. The result is a quiet but powerful “depreciation-based robot tax” — a tax by timing, not ideology.

Global Experiments in Automation Taxation

The idea is gaining quiet traction elsewhere.

• South Korea introduced a partial robot tax in 2018 by reducing existing automation investment credits — effectively capping how much firms could write off for machinery that replaced human jobs.

• The European Parliament debated a “digital levy on capital substituting labour” the same year, though it stalled amid fears of anti-innovation backlash.

• In Japan, policymakers are considering linking depreciation schedules to “employment impact scores” — faster write-offs for job-complementing technologies, slower ones for job-replacing ones.

India’s current tax framework already allows accelerated depreciation (typically 40%) for certain machinery, including automation. Reducing that to 20% for high-automation assets, while offering super-deductions for labour-intensive digital upskilling, would make India a world leader in automation-neutral taxation — balancing growth and equity in a single fiscal stroke.

The Revenue Potential and Redistribution Logic

If even 40% were earmarked for a UBI or “Automation Dividend” Fund, every American adult could receive a quarterly payment — small at first, but symbolically powerful. The remaining funds could go into a Worker Impact Fund for retraining and wage insurance.

By contrast, retaining current depreciation policy effectively pays corporations to replace humans — a hidden subsidy for job loss.

Automation and Fiscal Fairness

Critics of a robot tax argue it would “stifle innovation.” But good tax policy is not anti-progress; it’s pro-balance. A well-designed robot tax doesn’t punish technology — it simply removes perverse incentives.

Today’s system is asymmetrical: labour is taxed immediately (through payroll and income taxes), while capital enjoys deferred or accelerated relief. Adjusting depreciation restores symmetry. It ensures that the social dividend from automation — the productivity surplus — is shared, not hoarded.

India’s Opportunity

India stands at a rare inflection point. As it aspires to be the “factory floor of the world” under Make in India 2.0, it must decide whether to replicate Western-style automation subsidies or pioneer an equitable model.

By reforming depreciation rules to reward job-complementing technologies — AI that augments, not replaces — India could redefine global fiscal ethics. The same logic could apply in the GCC and ASEAN economies, where automation threatens low- and mid-skill employment.

India could even pilot an Automation Neutrality Index, rating capital investments by their employment impact and linking depreciation allowances to that rating. The Reserve Bank or NITI Aayog could oversee the model, signalling to investors that fiscal policy will support “inclusive innovation.”

Automation’s Human Dividend

Ultimately, the robot tax debate is not about punishing technology but about modernising the social contract. For two centuries, states taxed human labour to fund public welfare. Now, as machines replace that labour, we must learn to tax the mechanical proxies of work.

Bernie Sanders deserves credit for reviving the moral question — but technocrats must finish the fiscal engineering. Adjusting depreciation schedules may sound dull, but it conceals a profound idea: that as productivity accelerates, democracy must find new ways to capture its dividend.

Automation has created an economy where machines earn more than men. A UBI funded by robot taxation restores the moral symmetry between those who invent and those who are displaced. If the future of work is robotic, then the future of fairness must be fiscal.

Annexure: Draft “Robot Tax and Automation Equity Act, 2025”

Section 1. Short Title
This Act may be cited as the Robot Tax and Automation Equity Act, 2025.

Section 2. Purpose
To ensure equitable taxation of automation capital assets that replace human labour and to allocate resulting revenues to social and economic support funds for displaced workers.

Section 3. Definitions

• “Automation Capital” means any machinery, software, or device that substitutes for human employment in a production process.

• “High Automation Asset” means capital with a verified reduction in full-time equivalent labour exceeding 10% of baseline employment.

Section 4. Depreciation Rules

1. Automation Capital shall be depreciated on a straight-line basis over ten (10) years.

2. High Automation Assets shall not qualify for bonus depreciation or immediate expensing.

3. The Secretary of Finance may issue regulations to classify assets according to automation impact.

Section 5. Automation Dividend Fund

1. Forty percent (40%) of additional revenues from this Act shall be credited to the Automation Dividend Fund to finance periodic universal income disbursements.

2. The remaining sixty percent (60%) shall fund a Worker Impact and Transition Programme, including retraining grants, wage insurance, and regional development support.

Section 6. Effective Date
This Act shall apply to all qualifying capital placed in service on or after 1 January 2026.