Deutsche researchers propose 5% tax on remote workers, post-pandemic

By Dan Ennis
Nov. 16, 2020 - HR Dive

Dive Brief:

• Americans who work from home voluntarily after the coronavirus pandemic should pay a 5% tax that will, in turn, be given to those who cannot work remotely and earn less than $30,000, Deutsche Bank researchers proposed this week in an in-house magazine.
• Assuming remote workers earn $55,000 a year on average, the tax would represent about $10 a workday, Deutsche researcher Luke Templeman wrote. Meanwhile, remote workers are saving on the costs of commuting, lunches out, clothes and laundry.
• People would not be taxed if they are self-employed, are low earners, or working from home under government recommendation. Further, if their employer does not offer them a permanent desk, the employer would pay the tax under the Deutsche scenario. This can be audited by coordinating with company travel and technology systems,ゝempleman wrote.

Dive Insight:

Roughly half of the 104 million Americans working full time are doing so remotely, a nearly tenfold jump from before the pandemic, Deutsche researchers found.

"Remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits," Templeman wrote.

The sudden nature of that shift has spurred a swell in unemployment, and the tax on voluntary remote workers could help "smooth the transition process for those who have been suddenly displaced," he wrote.

But beyond that, the infrastructure supporting face-to-face working took decades to build, and economic recovery would be delayed "if a great swathe of assets lie redundant," Templeman wrote.

In a survey of newly remote employees (non-country specific), Deutsche researchers found the proportion of those who will remain remote, post-pandemic:

The researchers used those numbers to calculate 4.2 billion new workdays would be remote each year after COVID-19. They then added 394 million workdays for full- and part-time workers who were remote before the pandemic. Assuming 4.6 billion workdays, a $55,000 average salary and a 5% tax rate, Deutsche calculated the tax would raise $48 billion per year. The bank made similar calculations for employees in Germany and the U.K.

That $48 billion could fund grants of $1,500 for the 29 million U.S. workers who must work on-site and earn less than $30,000 per year, excluding those who earn tips, the researchers found.

"Some will argue against the tax. They will say that engagement with the economy is a personal choice and they should not be penalized for making that decision," Templeman wrote, arguing that a 5% rate would leave employees no worse off than if they had used that money to commute and eat. Further, companies paying the tax may more than make up for it in the savings they incur from downsizing their offices, he said.

"Yet, these people should remember that governments have always backsolved taxes to suit the social environment," Templeman wrote, citing the institution of the "window tax" in the U.K. In the late 17th century, when public sentiment was loath to accept an income tax, King William III introduced a property tax based on the number of windows in a home. The tax was repealed in 1851.

"As society changed, the window tax was abolished and, eventually, an income tax was introduced," Templeman wrote. "In the same way, as our current society moves toward a state of ‘human disconnection,’ our tax system must move with it."