This is a fascinating discussion.
To the tax point a solution would be to move from an income tax to some kind of productivity tax. The other benefit from such a move would be to move to decouple the economy from population growth, maybe. I’m not sure of that, requires considering.
The more interesting problem is giving people something to do. And I think we have nearly 100 years experience of dealing with this, mostly not well. I have repeatedly linked to Bertrand Russell’s essay
http://www.zpub.com/notes/idle.html because it shows that as early as WWII we had sufficient population for our needs and considers what to do with the new found spare time. He imagines all kinds of lovely pursuits like writing, composing, etc. and I think here he was dead wrong.
My readings and observations lead me to believe that we have an inherent desire to participate in the tribe, to be a necessary cog. If we are not participating then we feel really poorly, depressed, even suicidal. Those of us who do not desire to participate are looked down upon as laggards, anti-social, psychopaths, etc.
On the one hand we have told young folks to “follow their muse” which got them to go deeply into educational debt and acquire degrees that won’t feed them. Other groups have fallen into social decay and resorted to addictive drugs to fill the time.
The government agencies I have been involved with too frequently have a surplus of surplus people. This extends into the big engineering consulting firms I’ve worked with. It’s not universal which shows far more can be done with far less. Efficiency is infrequently valued highly even in for profit companies. I know that’s not a universal experience and some will say they have not seen that. Yes, but it is true in the industries where I worked. Drove me nuts. And then there are all the make work jobs like TSA. Society gets very little direct benefit from their direct efforts.
But society does derive benefit from those folks being employed. It gets them off the street, gives them a sense of place in the society, dignity if you will, it circulates cash which lubricates the economy. And these are far from trivial accomplishments within our culture.
Further automation will only stress the system to come up with additional ways to keep more people occupied and engaged. I don’t know how far we are down that path, or even if there is an end. Or if we are already hanging over.