A Deutsche Bank (DB) survey found that after the Covid-19 crisis has passed, remote work will still be part of the new normal. They argue that remote workers should pay a tax for the privilege to help recover the economy. How would this tax impact CFO’s 2021 planning?
The proportion of Americans working from home before the pandemic was only at 5.4%.
During the pandemic, the proportion increased to 56%. As many of these people will continue to work remotely, at least for some time, the research express that “remote workers are contributing less to the infrastructure of the economy while still receiving its benefits.”
Remote workers have gained many benefits during the pandemic, so the researchers estimate a 5% tax for each WFH day (that is around $10 per day for an average salary of $55,000 a year) “would leave the average person no worse off than if they worked in the office”.
As per the research, the funds raised with these taxes should be used to subsidize the lowest-paid workers who cannot work from home and are more at risk.
While working remotely has its challenges, such as finding a comfortable and adequate space at home and interacting less frequently with others, employees who work from home have massive cost reductions on expenses such as travel, lunch, clothes, and cleaning. Time is money. Adding convenience, flexibility, the reduced risks, and the possibility to live away from costly big cities, more and more people will want to work remotely. If the percentage of employees working from home continues to be significant, researchers argue it can impact the country’s entire economy, making a recovery more difficult.
Now the question is: who should pay the tax? The Deutsche Bank recommends that the tax only starts when the government advises that it is safe to work in the office again. The employer should pay it if they don’t provide office space to the employee. If an employee decides to work from home, the employee will pay the tax out of their salary each day they work from home.
The tax should exclude self-employed workers or other types of jobs that are typically performed from home.
While many can argue against the WFH tax, given that there are many costs incurred working from home in the long term, it could become a temporary solution to ramp up the recovery rates or those more affected. In the long term, working from home could also become an industry by itself, generating other sources of economic growth and improving people’s re-distribution across smaller cities.