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As brightening vaccine prospects tease a return to pre-pandemic normalcy and employers map out when and how remote workers return to the office, analysts at Deutsche Bank are proposing a “privilege tax” on post-pandemic work from home to subsidize lost wages for low-income workers.
Deutsche argues that remote workers contribute less to the economy’s infrastructure while still receiving its benefits, and says that a 5% tax on individuals levied against their wages on days they decide to work remotely would “leave them no worse off than if they had chosen to go into the office.”
As a basis for the argument, the bank says working from home is financially rewarding thanks to “direct financial savings” on expenses such as commuting, clothes and lunches, as well as indirect savings from things like reduced work-related socializing and laundry.
These gains “generally outweigh” the costs of working from home (such as the stress of juggling work and children at home or an imperfect home-office setup), Deutsche states, pointing to a majority of people who say they’d continue working from home at least part-time after the pandemic as evidence.
Similarly, the bank proposes levying the 5% tax on employers for each employee who decides to work from home permanently, saying that companies could even be better off despite the tax given potential savings on office downsizing and general maintenance.
Deutsche estimates the tax could raise $48 billion annually in the United States–money the bank suggests could fund a $1,500 grant for the 29 million workers in the nation who can’t work from home and earn under $30,000.
The estimated tax proceeds are based on the roughly 50 million Americans who worked from home during the pandemic, an estimated 75% of those workers Deutsche believes would elect to work from home in some capacity post-Covid and an average salary among them of $55,000.
“A work-from-home tax [makes] sense to support the mass of people who have been suddenly displaced by forces outside their control,” Deutsche’s Luke Templeman concludes in the report. “From a personal and economic point of view, it makes sense that these people should be given a helping hand… Those who are lucky enough to be in a position to ‘disconnect’ themselves from the face-to-face economy owe it to them.”
A work-from-home tax hasn’t gained traction among lawmakers in Washington. The Internal Revenue Service, meanwhile, does have guidance on how taxpayers, including newly remote workers during the pandemic, can take advantage of a home-office deduction.
The coronavirus pandemic forced hundreds of millions of people around the world into an unprecedented wave of remote work that’s transformed the way corporations assess the workplace, especially with regards to office space. Dozens of large U.S. corporations have already indicated they’re looking to downsize their real estate footprint after the pandemic, Reuters reports, noting that leasing and rent costs make up employers’ second-largest expense, after labor. Some companies based out of more expensive regions across the country, and particularly Silicon Valley tech firms, are even eyeing salary cuts for employees opting to work remotely out of cheaper cities. Software giant VMware, for example, has offered employees tiered salary reductions if they wish to forgo working in the firm’s Palo Alto, Calif. office (moving to Denver comes with an 18% cut).
Templeman notes that governments “have always backsolved taxes to suit the social environment,” pointing to the United Kingdom’s “window tax,” which as the name suggests taxed residents based on the number of windows in their house between 1696 and 1851. The tax was intended to place a heavier burden on the wealthy (who presumably had houses with more windows) and preceded the United Kingdom’s first income tax, which “As society changed, the window tax was abolished and… in the same way, as our current society moves towards a state of ‘human disconnection’, our tax system must move with it.”
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