Business

Gates: Tax consumption to fix unemployment caused by technology [VIDEO]

Neil Munro
White House Correspondent

Billionaire software mogul Bill Gates has joined the growing chorus of tech experts who predict that low-skill Americans will face greater unemployment because more jobs are being done by software and robots.

The Microsoft founder, whose net worth is $76 billion, suggested the problem could be fixed by reducing taxes on employers and raising taxes on employees, via the reduction of payroll taxes and the addition of new federal consumption taxes.

The widening recognition of greater low-skill unemployment is also creating a problem for the many executives — including Gates — and lobbyists and legislators pushing for increased immigration. They back the Senate’s immigration bill, which would dramatically increase the supply of foreign labor, despite Americans’ high unemployment rates.

“Software substitution, you know, whether it’s for drivers or waiters or nurses or even, you know, whatever it is you do … is progressing,” Gates told university-trained Washington professionals gathered at a March 13 talk hosted by the American Enterprise Institute.

The growing role of technology “will reduce demand for jobs particularly at the lower end of the skill set. … These things are coming fast,” he said.

“Twenty years from now, labor demand for lots of skill sets will be substantially lower, and I don’t think people have that in their mental model,” he added, echoing other predictions of low-skill unemployment.

A 2013 “study by Oxford University researchers Carl Benedikt Frey and Michael A. Osborne … [predicted] that nearly half of American jobs are at ‘high risk’ of being taken over by robots in the next decade or two,” National Journal reported in March.

The automation is also impacting higher-skilled professionals. This reporter used the Internet, a cellphone and a laptop to write this and three other diverse stories in one day. More dramatically, a reporter at the Los Angeles Times has developed a software-robot that autonomously reports breaking news about earthquakes.

“Democrats concerned by poverty and inequality — and Republicans who resist the social welfare measures necessitated by poverty and inequality — need to think harder about this [immigration and technology trade-off] question,” said a February article in The Daily Beast.

“I think it’s [a] tough” task to protect the middle class from the impact of automation, billionaire investor and immigration-advocate Steve Case said in December.

“I do think tax structures will have to move away from taxing [companies'] payroll because society has a desire to have employment,” Gates said.

“That’s going to force us to rethink how these tax structures work in order to maximize employment,” he said. One alternative, he said, would be to create consumption taxes — such as a federal sales tax — to hit higher-income people, while also reducing taxes paid by employers for each employee.

“The idea that consumption should be progressively taxed, I think that makes a lot of sense,” he said.

That shift would allow companies to profit by importing low-skill immigrants, even though the immigrants would also have to be supported by taxpayers. For example, the Senate’s June 2013 immigration bill offers conditional amnesty to at least 11.7 million illegal immigrants, who would cost taxpayers roughly $6.3 trillion over the next several decades, according to the Heritage Foundation.

Despite accelerating automation, President Barack Obama and many Democrats are promoting the Senate’s immigration rewrite that would double legal immigration to 46 million over the next 20 years. The bill would also double the inflow of guest workers, to at least 20 million.

The 66 million immigrants and guest workers would compete for jobs against the four million Americans who turn 18 each year, and the 800,000 Americans who graduate with skilled degrees each year.

Currently, the nation accepts one million immigrants and 650,000 non-agriculture immigrants each year, to join the working population of 150 million.

So far, GOP leaders in the House have blocked the Senate’s immigration expansion.