November 13, 2020
People working from home should be taxed at a higher rate to compensate for the money they aren’t spending on commuting and other expenses, according to a new report from economists at Deutsche Bank. The report argues that the move could generate billions in additional revenue which could then be redistributed to lower paid workers and those who cannot work remotely. The report argues that this should have happened anyway given that the number of Americans who regularly worked from home had already increased by 173 percent between 2005 and 2018.
However the events of this year have accelerated the shift and the report notes that more than half of people who have been working from home (WFH) since the Spring for the first time want to retain the choice. The report suggests a tax of 5 percent for every day of remote work. The tax would be paid by the employer, if the company doesn’t provide an office-based desk; and exemptions would be offered to the self-employed and those on lower incomes. Employees who choose to work from home when given the option of coming into the office would have to pay the tax out of their own salary.
“WFH offers direct financial savings on expenses such as travel, lunch, clothes, and cleaning,” the report states. “Add to these the indirect savings via forgone socializing and other expenses that would have been incurred had a worker been in the office.”
The report claims that a working from home tax in the UK could boost the annual pay of the country’s three million low-income workers by £2,307, while the US’s 29.2 million low-income employees could see their yearly earnings rise by $1,666.
Responding to some of the feedback on the idea, the report’s author Luke Templeman said: “a lot of people aren’t impressed at the idea of another tax, however, some have seen it as an interesting policy that governments can use to redistribute some of the gains from the pandemic which have been unexpectedly accrued by some people while others have lost out.”