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Artificial Intelligence and Labor Markets. a Critical Analysis of Solution Models from a Tax Law and Social Security Law Perspec ISSN 2704-7318 Fascicolo 1-2019 DOI: 10.32091/RIID0004 Artificial Intelligence and Labor Markets. A Critical Analysis of Solution Models from a Tax Law and Social Security Law Perspective Michaela Georgina Lexer • Luisa Scarcella Discussions on how to face problems regarding the changes within labor markets due to technology have so far been led by economists, who have mostly suggested a change within the social security system via the introduction of an unconditional basic income (UBI). Since Finland launched an experiment which examines the introduction of a UBI as a possible solution to these changes at the beginning of 2017, certain legal as well as socio-economic aspects will be pointed out that generally have to be considered by national governments when introducing a UBI. The second part of the essay focuses on possible different designs of the so-called “Robot-tax” which recently has been one of the central point of debate in relation to the overtaking of typically human jobs by AI and their impact on state finances. The two different scenarios, referred to A and B, represent the basis for a possibly necessary adaptation within social security law as well as the tax law sector. The main reason we chose to discuss the possible implementation of a UBI and of a “Robot-tax”, instead of other possible measures, is that current discussions, especially within Europe, mainly focus on exactly these instruments. Artificial intelligence – Automation – Job loss – Unconditional Basic Income – Robot tax Summary: 1. Introduction – 2. First Part: UBI and the Finnish Experiment – 2.1. Legal Prerequisites for the Intro- duction of a UBI – 2.2. UBI and EU Law – 2.3. The Finnish Experiment – 2.4. Could a Similar UBI Be a Solution for Either Scenario? – 3. Second Part: The Relevance of Taxation – 3.1. The European Parliament Resolution on Civil Law Rules on Robotics – 3.2. The So-called “Robot-tax” – 3.3. Other Taxation Instruments As Alternative Or Complementary Solutions – 3.4. Will Either of the Discussed Tax Measures Be the Solution? – 4. Conclusion 1. Introduction programming and of finding solutions from first prin- ciples2. In this paper we only consider AI which is The focus of this paper1 is artificial intelligence (AI), not completely autonomous, that is to say, that it which consists of intelligent computer programs that still requires human intervention. can perform tasks generally requiring human intel- The current prevailing estimation regarding the ligence. Their main application can now be found effects of AI on our labor markets predicts two poten- in technologies whose applications characterize self- tial outcomes: a lack of jobs and the resulting mass driving cars, drones, and virtual assistants, and goes unemployment (referred to as Scenario A) or a com- from new types of “machine learning” to “intelli- plete change of required skills as a result of newly- gent” robots and computers that are capable of self- created jobs (referred to as Scenario B). Even though M.G. Lexer (author of the first part) is Research and Teaching Assistant, Department of Labour Law and Social Security Law, University of Graz. L. Scarcella (author of the second part) is Research and Teaching Assistant, Department of Tax and Fiscal Law, University of Graz. 54 one can argue that other scenarios might also be pos- The paper contains two main parts as well as sible in future, we decided to focus on these two since an introduction and conclusion. Discussions on how they are the most frequently discussed these days. to face problems regarding the changes within la- According to a British study conducted by Frey bor markets due to technology have so far been led and Osborne3 47% of jobs in the US are at risk be- by economists, who have mostly suggested a change cause of automation, which is an indication that Sce- within the social security system via the introduc- nario A might become reality within the next 10-20 tion of an unconditional basic income (UBI). Since years. Applying their data to Europe, about 53% of Finland launched an experiment which examines the jobs might soon be subject to automation4. Howe- introduction of a UBI as a possible solution to the- ver, the results do not take into consideration that se changes at the beginning of 2017, the first part other jobs may arise from these developments, sin- of this paper analyses positive as well as negative ce only the probability of the computerization of aspects of the Finnish trial. Furthermore, certain le- current existing jobs was examined5. The reason gal aspects will be pointed out that generally have to this time shall be different to other industrial revo- be considered by national governments when intro- lutions, as argued by Brynjolfsson and McAfee6, is ducing a UBI. The second part of the paper focuses that, routine tasks are not the only ones at risk, so on possible different designs of the so-called “Robot- are non-routine cognitive tasks. tax” which recently has been one of the central point of debate in relation to the overtaking of typically On the contrary, Scenario B refers to the fact human jobs by AI and their impact on state finan- that there has always been some kind of change in ces. The two different scenarios, as described above, qualifications throughout history – one need only represent the basis for a possibly necessary adapta- think of the Industrial Revolution – and thus this is tion within social security law as well as the tax law just a new era, which requires adaptations in training sector. The main reason we chose to discuss the pos- and developments. Autor argues that «[j]ournalists sible implementation of a UBI and of a “Robot-tax”, and even expert commentators tend to overstate the instead of other possible measures, is that current di- extent of machine substitution for human labor and scussions, especially within Europe, mainly focus on ignore the strong complementarities between auto- exactly these instruments. The conclusion will sum- mation and labor that increase productivity, raise marize the key aspects and findings resulting from earnings, and augment demand for labor.»7 either scenario. As a result, it may be more beneficial to fo- cus on how employees can adapt to the new skills which will be required for tomorrow’s jobs. Accor- 2. First Part: UBI and the Finnish ding to the Organization for Economic Co-operation Experiment and Development (OECD), such skills shall inclu- de Information & Communication Technology (ICT) A UBI is a sum of money to which every citizen is skills as well as solid literacy, numeracy and problem- entitled. Since a basic income replaces all, or at lea- solving skills to use ICT effectively8. Additionally, st the majority of, social benefits the introduction of one should not forget the changes to the labor mar- such a regime seeks to reform welfare systems that ket such as a shift to self-employment (e.g. from the are currently based on insurance/assistance models rise of start-ups) or precarious work due to new types and strictly linked to employment. Recipients do of work (e.g. crowdwork) that most probably will be not have to meet any requirements (e.g. a means inevitable. test, contribution periods), or fulfill certain tasks to Assuming Scenario A will be tomorrow’s reality, “earn” their entitlement (e.g. demonstrating a wil- countries will have to redefine current tax systems lingness to re-integrate into the labor market). In since there might be a huge loss in terms of revenue fact, payments are completely unconditional9. derived from wage-based taxes. For some States, this Thus, the introduction of a UBI seems very temp- constitutes the main source of income (e.g. Austria). ting, especially if driven by the idea of inequality On the other hand, as a result of Scenario B, our cur- reduction10. At the same time, it will be very dif- rent systems may also be affected by these changes ficult to implement if one takes into consideration and, therefore, our current social welfare systems as that the introduction of such an instrument shall re- well as tax systems may have to be subject to reform. place current social welfare programs and therefore In order to contribute to these uncertainties, the goal require restructuring of the allocation of public finan- of this paper is to analyze possible solutions from a ces. Discussions regarding a UBI have already been tax law, as well as social security law, perspective. held by famous politicians, philosophers and econo- Michaela Georgina Lexer • Luisa Scarcella 55 mists, from Erich Fromm to Martin Luther King Jr., Due to the fact that a UBI aims to replace most and are therefore certainly not a new phenomenon. social benefits, one can argue that such a scheme However, the idea seems to gain a new perspective may infringe upon the principle of equality if it re- through recent developments in the area of AI and re- sults in a complete reduction in benefits. However, sulting changes within labor markets, since employ- since decisions regarding social security systems are ment for everybody cannot be guaranteed with cer- made by Member States according to Article 153(4) tainty as discussed above. In both Finland and the of the Treaty on the Functioning of the European Netherlands, a pilot project introducing a UBI was Union (TFEU)13, within a Member State a UBI can- recently launched at the beginning of 2017. While not be declared contrary to European Union (EU) UBI trials have been conducted around the world legislation14. 11 for several decades , the Finnish experiment has Therefore, a UBI has to be interpreted in light of unique characteristics and therefore deserves to be the equality principle of each national constitution.
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