A Work-at-Home Tax? – Pacific Research Institute

A Work-at-Home Tax?

Ronald Reagan once described the government’s view of the economy like this: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” From his last point, even the Gipper couldn’t imagine that government would tax something that just stayed put.

Fast forward to a post-pandemic world. A new study, “What We Must Do to Rebuild” by Deutsche Bank, advocates that governments should tax people who work from home 5 percent of their income. The Frankfurt-based investment bank argues that work from homers (WFHs) are saving money from not commuting, lunching out, or buying clothes.  Moreover, WFHs receive intangible benefits such as flexibility, convenience, safety, and greater job security.

“The sudden shift to WFH means that, for the first time in history, a big chunk of people have disconnected themselves from the face-to-face world yet are still leading a full economic life,” said author Luke Templeman. “That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits.”

We WFHs beg to differ. As executive recruiter Jack Kelly writes in Forbes, the report doesn’t account for everything a person needs to do to work from home: “Unless employees were offered stipends to set up home offices, remote workers have had to take on the financial burden of making sure they are equipped to work from home. With extra time spent at home, employees have incurred increased payments in their utility bills. They have to be their own computer technician, troubleshooting complicated issues on their own. Many people have to juggle their job, along with childcare and helping them with glitchy online classes.”

Before the pandemic, 5.4 percent of U.S. workers worked from home. That number has risen to 50 percent during the pandemic and analysts expect that many businesses will make permanent the work from home model for some employees.

Deutsche Bank calculates that U.S. workers at an average salary of $55,000 taxed at 5 percent ($10 a day) would raise $48 billion in additional tax revenue a year.  The study suggests that the additional revenue could pay for a $1,500 grant to the 29 million workers who can’t work from home and earn under $30,000 a year.

More likely, the money would just go straight into government coffers.

Andrew Hunter, co-founder of job search engine Adzuna, predicts that the tax would be incredibly unpopular. “It punishes progressive companies and those with kids or caring responsibilities, who were responsible during the pandemic, who are already taking on more costs and helping the environment by staying at home,” Hunter told the Associated Press. “Let’s be honest, there are many better ways to raise taxes!”

Unfortunately for Californians, in Sacramento there are never enough better ways to raise taxes.

Rowena Itchon is senior vice president of the Pacific Research Institute.  

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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