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Automation and taxation

Author

Listed:
  • Kerstin Hötte
  • Angelos Theodorakopoulos
  • Pantelis Koutroumpis

Abstract

Do automation-induced changes in labour and capital income undermine public revenues? Decomposing taxes by source (labour, capital, sales), we analyse the impact of automation on tax revenues and the structure of taxation in nineteen EU countries during 1995–2016. Before 2008 robot diffusion was associated with a decline in total tax revenues and taxes from capital, along with decreasing labour and capital income and output. After 2007, the negative effects diminish. Information and Communication Technologies show a weak negative but persistent effect on total tax revenues and taxes on goods for the full period, and an increase in capital income. Overall, the impact of automation on production and taxation varies over time. Whether automation erodes taxation depends on the technology and stage of diffusion. Concerns about public budgets appear myopic when focusing on the short run and ignoring relevant technological trends.

Suggested Citation

  • Kerstin Hötte & Angelos Theodorakopoulos & Pantelis Koutroumpis, 2024. "Automation and taxation," Oxford Economic Papers, Oxford University Press, vol. 76(4), pages 945-969.
    • Handle: RePEc:oup:oxecpp:v:76:y:2024:i:4:p:945-969.
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    File URL: http://hdl.handle.net/10.1093/oep/gpae006
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    Cited by:

    1. Wu, Yan & Niu, Peiyuan & Wu, Yunqiao, 2025. "Does the digital sector affiliation matter for the productivity of multinational firms?," Economic Modelling, Elsevier, vol. 144(C).
    2. Huang, Meiying & Li, Quan & Li, Bowen, 2025. "From algorithms to green growth: Can artificial intelligence drive enterprise energy transformation?," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1846-1866.
    3. Yang, Yong & Wang, Yonggui & Wang, Linlin & Wu, Yan, 2024. "Host country household spending and foreign subsidiary performance: The role of local knowledge, entry mode strategies, and the digital economy," Journal of Economic Behavior & Organization, Elsevier, vol. 227(C).
    4. Spreen, Thomas Luke & Wang, Ziyuan & Yang, Lang (Kate), 2025. "Industrial automation and local public goods," Journal of Public Economics, Elsevier, vol. 247(C).

    More about this item

    Keywords

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    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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