Do we need a ‘work-from-home’ tax?

Analyst says remote workers enjoy financial benefits but contribute less to economy

Do we need a ‘work-from-home’ tax?
Remote workers are contributing less to the economy yet still receiving its benefits, says a Deutsche Bank analyst.

Is there a need for a work-from-home tax? One analyst seems to think so.

With the lockdowns of the COVID-19 pandemic, a lot of people working from home have “disconnected themselves from the face-to-face world yet are still leading a full economic life,” says analyst Luke Templeman, a researcher at Deutsche Bank.

Remote workers are contributing less to the economy yet still receiving its benefits such as financial savings on clothing, transportation and other such expenses that they would have if they had been working in the office, he says. They also enjoy greater job security, convenience and flexibility.

Globally, almost half (44 per cent) of workers believe that the biggest change during their work-from-home setup amid the pandemic is work-life balance, according to a study released in October.

And all these benefits outweigh the costs, that include the additional mental stress of juggling work and children, and dealing with an imperfect home-office setup, according to Templeman.

“These costs should not be underestimated; however, they usually pale in comparison with the gains. [That’s] why the vast majority of home workers want to continue remote working, on at least a part-time basis, after the pandemic passes,” he says.

Nearly half of men and women say that they are unable to focus on work while their kids are home, according to a survey by LinkedIn released in September.

How would this tax work? Templeman says it would only apply outside the times when the government advises people to work from home. And either the employee or the employer would shoulder the five per cent tax cost for a specific day a worker works remotely, depending on who decides for the work location for that day.

“This can be audited by coordinating with company travel and technology system,” says Templeman, adding the tax contributions will help those who have been displaced or forced to take low-paying jobs while they retrain or figure out their next step in life.


However, Jared Walczak, vice president of state projects at the Center for State Tax Policy at the Tax Foundation, says Templeman’s idea offers a ton of complications.

The idea calls for a specific distinction between whether workers are working remotely out of necessity or convenience. This would mean that salaries would have to be allocated to each day, which would be considerably complex for those with performance-based or project-based considerations in their work contracts.

“The fundamental consideration, however, is less about the logistics than the logic of the tax,” says Walczak. “Templeman is concerned about unused infrastructure – vacant office buildings and underutilized city centres – but he doesn’t propose that the tax be levied by the cities and states losing workers to telework (which has its own problems). Instead, he wants a federal tax designed to strip away the financial benefit of remote work, confiscating employees’ savings by staying at home.”

The benefits that employees get from working from home do not hurt the federal government or the economy.

“The proposed remote work tax doesn’t fix a problem; it doesn’t even identify a problem worth fixing. It simply enacts a penalty on those able to work remotely,” says Walczak. “

One-quarter of workers say it is not likely that they will return when offices re-open, according to a survey by organizational consultancy Korn Ferry released in October.

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