Will taxes be higher or lower in the future?

I’m no economist, so bear with me here. I’d always assumed that because of the US government’s propensity to incur unfunded liabilities, tax rates in the future would have to go up (making Roth IRAs and Roth 401k’s a better bet) to keep the economy from collapsing. However, a story I saw today about Google’s complex international tax avoidance strategy got me thinking.

Google’s international HQ is in Dublin, and fully 88% of Google’s international revenue goes through Ireland, which has fairly low corporate taxes. This is no accident: the Irish know that probably several percent of their workforce is only employed because international corporations are setup there for tax reasons. So lower taxes can be a great way to invite foreign investment, stimulate the economy, and most importantly: create jobs.

Big deal, right? Anyone who takes macroeconomics knows this. However, what I think is interesting is the long-term outlook for human employment over the next 50 years. In case you didn’t notice, technology is taking over. We have robots doing a wide variety of tasks that humans used to do, technology makes one human as productive as five used to be, and there’s a lot of industries where even fewer humans would be employed if it wasn’t for artificial barriers to progress (unions, for example). But eventually those barriers will fall as well, due to simple economics. I read somewhere that some economists theorize that many of the jobs lost during the recession will never come back. Corporations didn’t really need those people anymore, due to technological efficiency, and used the recession as a good excuse to trim the fat. Regardless, it’s not hard to see that as robots and other technological advances become more widespread, we’ll need fewer employees, particularly in the blue-collar industries.

So in the future, I think international competition for jobs will be fierce. So fierce, in fact, that it will dwarf the concern over social safety nets like free healthcare, retirement, unemployment, etc. No government will be able to pay for those things if half their workforce is unemployed, so they’ll be much more likely to cut taxes to attract foreign companies and create jobs.

Well, that’s what would make sense anyway. Then again, we just spent a trillion dollars (that we don’t have) to stimulate the economy. How’s that going for us? So yeah, maybe we’re all just screwed.