'Automation Contribution': Stefano Bacchiocchi's legislative proposal

The debate on taxing automation is not new. In the United States, Bernie Sanders launched his crusade against what he calls "the tech oligarchs' war on workers," proposing a robot tax to stem the employment tsunami that threatens to wipe out one hundred million jobs in the next decade. But while overseas the debate remains trapped between political rhetoric and ideological resistance, in Italy, someone has decided to get concrete with a proposal that doesn't want to count robots but to tax results.

On September 25th, in the halls of the Senate, the "Automation Contribution" proposal was presented, a fiscal mechanism that overturns the traditional approach to the issue. This is not another attempt to curb technological progress with a punitive tax, but a system that looks at balance sheet numbers to rebalance a tax system that today rewards those who replace people with machines. Proposing this paradigm shift is Dr. Stefano Bacchiocchi, an accountant specializing in privacy, anti-money laundering, the third sector, non-profits, payroll, and contributions, as well as a lecturer at the University of Brescia, where he teaches General Accounting and Financial Statements.

Bacchiocchi is not a Luddite dreaming of destroying the mechanical looms of the twenty-first century. His professional career is built on the digitalization of business processes, on transforming regulatory obligations into levers for growth. But it is precisely this experience in the field, in daily contact with companies and the workers who populate them, that has led him to an uncomfortable realization: the Italian tax system, like that of much of the Western world, is still stuck in the last century. It taxes human labor while completely ignoring the wealth produced by machines. And this asymmetry, if not corrected, risks producing social tensions that no Western society is equipped to handle.

The mechanism: taxing the effect, not the cause

When I ask Bacchiocchi to explain in detail how the Automation Contribution's fiscal mechanism works, his answer is sharp and direct. "Let me explain the mechanism with extreme clarity, because the strength of this proposal lies precisely in its operational simplicity that sweeps away any bureaucratic excuse. Forget the impossible idea of counting robots or technically defining an algorithm: we look at the economic result, period. The logic is that you don't tax the tool, but the additional income that the company obtains by replacing people."

It is a radical choice that avoids the trap into which all previous attempts at taxing automation have fallen, from the European Parliament, which in 2017 rejected a similar proposal precisely because of the impossibility of defining what a taxable "robot" was, to the technical difficulties that have halted similar initiatives in other countries. Bacchiocchi continues, going into the details of the calculation: "The calculation is done on the numbers that companies already have and that they are required to declare: we mainly take revenues and personnel costs. The state establishes a sectoral benchmark, that is, how much an average company in that sector spends on labor relative to its revenues. If a company spends drastically (there is a tolerance threshold) less than that benchmark because it has automated, a positive difference emerges, an 'expected cost' that is no longer there. It is on that difference, which represents the net competitive advantage of automation, that the contribution is applied. In practice: no new paperwork, we use balance sheet data and tax only the extra profit derived from not paying human salaries."

The next question concerns who exactly will be required to pay this contribution. Bacchiocchi wanted to insert very clear boundaries, and it is evident that he is well aware of the concerns of the Italian business community. "Here too, let's clear up any misunderstandings: we are not shooting in the dark. The obligated subjects are only those companies where automation has created an evident and measurable disproportion between revenues and personnel costs."

The protection of small and medium-sized enterprises, which form the backbone of the Italian economy, is central to the proposal. "I wanted to insert very clear boundaries to protect the most fragile productive fabric. Start-ups, micro-enterprises, and businesses in their early years are totally exempt, as are professional firms and specific sectors like healthcare. Furthermore, the rates are not fixed but progressive and modulated based on size and sector. The goal is to target the large tax capacity that currently escapes the tax authorities, not the small entrepreneur trying to survive or modernize; those who invest in collaborative technology or training even have access to tax credits and exemptions."

I then ask him how the processes considered "automated" for tax purposes are defined and measured, aware that this has been the Achilles' heel of all previous attempts. Bacchiocchi's answer reveals how much this proposal has been studied precisely to avoid the mistakes of the past. "This is the trap into which other international attempts have fallen, and I have avoided it with a radical choice: we do not technically define the 'robot' or 'automation.' It would be a losing battle from the start, because technology runs faster than legal definitions."

The concrete choice emerges in all its clarity: "My approach is pragmatic: we measure the effect, not the cause. If your revenues hold or rise while your personnel costs plummet below the sector average, then there is relevant automation, whether it's a mechanical arm or an invisible software matters little. Automation becomes taxable only and exclusively when it replaces human labor in a measurable way."

To ensure the reliability of the data, Bacchiocchi has provided for a professional control system: "To ensure that no one plays games with the numbers, we have provided that the data be certified by qualified professionals who put their name and signature on it with compliance visas under ministerial control."

I then move on to ask him about the integration of the contribution with other existing forms of taxation, a crucial aspect to understand if this is an additional tax burden or a rebalancing of the system. "The Automation Contribution is not a tax that is added to the others, but it is a missing piece of the puzzle that fills a glaring gap," explains Bacchiocchi with an effective metaphor. "Today our tax and social security system is crippled because it is based almost solely on human labor, completely ignoring the wealth produced by machines. This measure is a purpose-driven tribute that targets a new tax capacity: the pure economic advantage generated by the replacement of man."

It is important to emphasize, and this is a point that Bacchiocchi is keen to clarify, that the proposal does not affect existing incentives: "We are not touching the existing incentives: Industry 4.0, 5.0, and the Patent Box remain where they are. We intervene only to re-establish a basic fairness, correcting the absurdity that today those who automate and lay off workers find themselves paying less taxes and contributions than those who keep their employees. It is a necessary integration to modernize a tax system stuck in the last century."

Governance: a living system that adapts

A legislative proposal is worth as much as its ability to adapt to change, and it is clear that Bacchiocchi has reflected on this aspect at length. I ask him what tools he proposes to monitor and update the effectiveness of the contribution over time, considering the speed with which the technological landscape evolves.

"We have not written this proposal in stone, we are well aware that the world changes quickly. That is why we have provided for dynamic and intelligent governance," he replies. The initial phase is designed to be cautious and experimental: "We are starting with a pilot phase limited to high-tech sectors to calibrate the indicators well and see how companies react."

But the heart of the adaptation system lies in the sectoral benchmarks: "But above all, the system is based on sectoral benchmarks that are not fixed: they will be updated periodically to reflect the real technological and demographic evolution. There is a management committee composed of experts, social partners, and companies that will have the task of carrying out periodic impact assessments and, if necessary, remodeling parameters and rates. It is not a static tax, it is a living instrument that adapts to reality."

The issue of the destination of the collected resources is crucial for the credibility of the proposal. Too often in Italy, new taxes are justified with noble purposes only to end up dispersed in the general state budget. I therefore ask Bacchiocchi how to ensure that the resources are actually allocated to retraining and support projects for workers.

"I am well aware that the fear is that the money will end up in the great cauldron of unproductive public spending, but we have locked everything down," he replies decisively. "The revenue does not go into general taxation, but into an Autonomous Fund, separate and traceable to the last cent. It is a purpose-driven tribute: by law, that money can only be used for pensions, training, and welfare."

The governance of the Fund has been structured to resist political pressure: "And to prevent politics from improperly getting its hands on it, the management is entrusted to a multilateral governance with everyone involved: institutions, unions, companies, and independent experts. There is an obligation for public reporting and external audits: it is difficult to imagine more guarantees than that."

The crux of the criticisms: innovation vs. equity

We come to the heart of the controversies. The most frequent criticism of proposals to tax automation concerns the alleged brake on innovation and competitiveness. It is the argument I have heard reiterated countless times in discussions on these topics, and I am curious to understand how Bacchiocchi addresses it. His answer leaves no room for doubt.

"Let's be serious, this is the most ridiculous and unfounded objection I hear repeated. Whoever claims that a tax contribution curbs innovation lives outside of reality or is in bad faith," he attacks without mincing words. His argument is built on the practical experience of those who work daily with companies: "An entrepreneur does not choose automation to save on taxes, they choose it because it is damn more efficient: machines don't get sick, they don't go on vacation, and they produce 24/7. To think of stopping this revolution with a tax is like believing that in the nineteenth century we would have saved carriage manufacturers by taxing cars: superior technology always wins, regardless of the taxman."

Bacchiocchi does not stop there and also dismantles the argument of delocalization, a classic bogeyman waved every time new taxes are discussed: "And please, let's also stop with the fairy tale of delocalization: companies don't flee because of taxes, they flee because of bureaucracy, slow justice, lack of supply chains, lack of infrastructure, or because the cost of human labor is too high, problems that we do not aggravate at all. Those who use these arguments are just trying (why?) to protect those companies that, today, do not assume their social responsibility."

The final jab is particularly poignant: "It is even more absurd when these laughable criticisms come from small entrepreneurs or, even, employees! Who are precisely those not only exempt from the tax but those who would directly benefit from the resources!"

It therefore becomes essential to ask him what are the main social benefits that this contribution can guarantee. The numbers he cites are not negligible. "We are talking about numbers and real life: we estimate a full-regime revenue of about 8 billion euros a year. This is not small change, it is the oxygen needed to keep our social system, which is collapsing under the weight of aging, afloat."

The primary destination of the resources is clear: "The main benefit is the sustainability of pensions, which are at risk today because there are fewer and fewer human workers to pay for them. But not only that: these resources are used to finance continuous training and retraining for those who lose their jobs, because we cannot afford to leave anyone behind. It is a mechanism of pure equity: we take a part of the wealth produced by the machines to guarantee a dignified life for people."

I then ask him how the contribution can mitigate the negative effects of automation on the labor market. It is a topic on which many economists have different positions, some argue that technology always creates more jobs than it destroys, citing previous industrial revolutions. Bacchiocchi does not agree, and he says so in no uncertain terms.

"We have to stop telling ourselves the fairy tale that 'technology creates more jobs than it destroys.' It is not a scientific law, it is a hope that is being disproven by the facts today. This time the revolution is different: it affects white-collar workers, accountants, bankers, lawyers, with a speed that leaves no escape."

The function of the contribution emerges clearly: "The contribution serves precisely to mitigate this devastating impact. It finances real social safety nets and outplacement paths to prevent technological unemployment from turning into a social time bomb. If we do not intervene now by redistributing the benefits of automation, we will find ourselves with unmanageable social tensions and an impoverished middle class that will not even be able to buy the products made by those very efficient robots."

The last question concerns the role of the state. In an era in which the debate oscillates between those who call for a return of the regulatory state and those who preach the purest liberalism, I ask Bacchiocchi what the role of institutions should be in regulating automation.

"The state can no longer stand by as a passive spectator while the world changes. It must take back the reins and govern the process," he replies with a conviction that admits no hesitation. "The role of the state is to reconnect the productive reality, made of algorithms and robots, with the social pact that holds the country together. It is not about stopping progress, but about transforming a budget problem into a lever for industrial policy."

Fairness in competition is central to his reasoning: "The state must ensure that competition is fair, because today those who automate enjoy an unjust tax advantage over small businesses that employ people. We must promote a model in which innovation is at the service of the community and not a source of exclusion. If the state abdicates this role, the social cost will be unsustainable."

A balance to be built

The Automation Contribution proposal presented by Dr. Stefano Bacchiocchi in the Senate represents a pragmatic attempt to address one of the most critical nodes of the ongoing technological transformation. Through a fiscal mechanism that taxes the economic effects of automation rather than the technology itself, the proposal seeks to reconcile innovation and social cohesion, avoiding both the Luddite utopia of stopping progress and the dystopia of an economy where the benefits of productivity are concentrated in a few hands while the social costs are distributed among the community. With an estimated annual revenue of eight billion euros allocated to an Autonomous Fund for pensions, training, and welfare, and with a dynamic governance designed to adapt to technological change, the Automation Contribution stands as a rebalancing tool in a tax system still anchored to an economy of human labor that is rapidly disappearing. It remains to be seen whether the proposal will find the legislative path to become a reality, but the debate it has sparked is in itself a sign that the issue can no longer be postponed.