Remote workers should be taxed for privilege

[Frank Cox]

https://financialpost.com/executive/...-says-deutsche

Choosing to earn a living from home once the pandemic ends is a privilege that you should pay for, according to strategists from Deutsche Bank AG’s research arm.
“Working from home will be part of the ‘new normal’ well after the pandemic has passed,” the strategists led by Luke Templeman wrote in a note. “We argue that remote workers should pay a tax for the privilege.”
The team propose a 5 per cent levy for those who work from home on a regular basis and not because of a government lockdown mandate. Such a measure could raise US$48 billion a year in the U.S. and about 16 billion euros (US$18.8 billion) in Germany, they say, to fund subsidies for low-income earners and essential workers who are unable to work remotely.
Deutsche Bank Research undertook a survey to examine the major global shift toward remote work that occurred as a result of the COVID-19 pandemic, which may endure as many professionals discover financial, personal and professional benefits of the change. According to the results, more than half of those working remotely want to continue doing so for between two and three days a week even after the health crisis ends. The survey of 800 people was conducted in September.
Working in the comfort of one’s own home saves money on travel, lunch and socializing, according to Deutsche Bank Research, and offers greater job security and flexibility, the strategists said. Yet people who are working remotely are also contributing less to the infrastructure of the economy, potentially extending the slump in national growth, they said.
“That is a big problem for the economy as it has taken decades and centuries to build up the wider business and economic infrastructure that supports face-to-face working,” Templeman said.
The proposed levy would be paid by the employer if they don’t provide their employee with a desk, whereas if the worker decides to stay home based on their own needs, they would be taxed for each day they work remotely, according to Deutsche Bank Research. In the U.S., the strategists calculate, such a tax could pay for a US$1,500 grant to the 29 million workers making under US$30,000 a year and unable to work from home.
“It does make sense to support the mass of people who have been suddenly displaced by forces outside their control,” Templeman said. “Those who are lucky enough to be in a position to ‘disconnect’ themselves from the face-to-face economy owe it to them.”

[Mike Blakesley]

The proposed levy would be paid by the employer if they don’t provide their employee with a desk

.... and the cost would be passed on to consumers in the form of higher prices. (They left that part out.)

It's a ridiculous idea. For one thing, it's not exactly a money saver to work from home. You may even have costs you wouldn't have when you work onsite -- like equipping and maintaining a home office, for example. That ain't cheap.

[Steve Guttag]

This could devolve into a political discussion pretty fast...

As for working from home, it all depends on what sort of job you have and what you are doing. I can say, from my experience this summer, I did quite a bit of work-from-home. I was doing a fair amount of computery stuff (CAD, QSYS and even configurations of theatres via our remote-in service). I can get much more work done in a given amount of time from home, if for no other reason, nobody is going to bother me with "just a question" or incessant phone calls. So, depending on what I was doing that day, I didn't come in at all. Other days, I made a point of coming in, if for no other reason that to BE available (to others in the company as well as any calls that may have come in...though it was VERY quiet this summer).

Even monotonous things like configuring switches for QSYS (I had over 20 to do for one plex)...I just brought them home because it is far more efficient to just bang those out rather than getting interrupted in the middle and starting back up.

I don't consider working from home a privilege. Depending on the task, it is an efficiency. From an environmental standpoint, it is better since you are not driving to/from (or even riding mass transit). You aren't buy gas (or whatever powers your vehicle) either so there are savings to be had by all. I do think that an employer should be able to compel an employee to furnish their own office equipment though most will deduct such expenses.

And if the only distinction of having an office is a desk...employers will certainly find a way to provide the least amount they legally have to, if that was the stumbling block to a work-from-home plan.

[Leo Enticknap]

This proposal is going to come up against the green agenda, because they want to encourage home working in order to lessen the burning of fossil fuels for commuting. Depending on the level(s) at which the tax was levied (federal, state, and/or local), counties and cities that stand to lose a lot in commercial property tax as companies scale back their physical footprint to home working would either welcome or oppose the idea.

Like Steve, I can work at home on some things, but not others. I broadly agree with the sentiment of the article - that the ability to work at home full time is a significant perk, and that people in occupations that simply can't be done from home must feel somewhat aggrieved at all this hyping of home working as the "new normal." But I'm not sure that using the tax system in a negative way sends the right message. If the result of C19 is that the economy changes significantly and permanently, then the tax system will have to change to reflect that. I would hope that this would involve tax breaks from the baseline for workers who cannot do their job from home (hospital doctors, truck drivers, etc.), rather than punitive tax hikes above the baseline for those that can.

[Frank Cox]

You also get into the definition of what, exactly, working at home really is.

My plumber works out of his truck and his wife answers the phone at his house and sends out the bills. Is he working from home?

I live in my theatre, in an apartment behind the screen. Am I working from home?

[Leo Enticknap]

My impression from the article is that the Deutsche Bank policy wonks had in mind salaried employees who work out of their residence that is otherwise unconnected to their employer. Self-employed sole traders or the owners of small businesses who live and work on the same property (that they also own or rent) are already treated slightly differently by the tax system. In my city, for example, the property has to have a business license, even if it's a regular house with one of the bedrooms used as a home office. If you're using the home office to do salaried work for an employer you don't need one, but if you're running your own business out of it (however small), you do.

[Harold Hallikainen]

I worked from home for more than 3 years, and I think it worked well. For most people, there's a big savings in time spent commuting. An idea I heard somewhere was for a city to require a business license (for the home location) for someone working from home. I really cannot see this if someone is still an employee. MAYBE if someone is a contractor a business license could be required. Thinking employee versus contractor brings the California AB5 issue to mind (the recent election determined that Uber and Lyft drivers are contractors, not employees). It looks like as contractors, they ARE required to have a business license ( see, for example, https://therideshareguy.com/do-rides...ness-licenses/ ). Generally, I think that if you're an employee, you should be able to work from anywhere (though state income tax people want taxes if you work in that state even if the employer is in another). If you're a contractor, you still should be able to work anywhere, but may need a business license.

[Marcel Birgelen]

In the last 20 years, the Internet infrastructure has become sufficiently good in most part of the western world that most traditional office workers can do about 80 to 100% of their work from home. Being largely self-employed, working from home was nothing new for me for the last 15 or so years and also our employees were allowed to do a lot of their work from home, even pre-pandemic.

Working from home has both its pros and cons. I guess it's important to still meet in-person on a regular interval (as long as that's possible), because some things actually work more efficiently in teams than others. If you need to concentrate on stuff, being in an isolated environment, where your colleagues can't bother you every other minute with "just another question", working from home often makes perfect sense. But not everybody does have that quiet space at home, so for them, the office is the quiet space. Also, we've found that some creative thinking processes really benefit from teamwork and while lot of it can be replicated via video conference (Zoom, Teams, you name it), an in-person meeting still often is more efficient.

The idea to tax working from home, in my opinion, is just ridiculous. I get that those investors in office space are worrying for their future, but since there has been a shortage for adequate living space in large parts of the world: Convert those offices to homes. Maybe governments are worried that their tax income may go down, because corporations lease less office space to be taxed and people drive less and a lot of money is made on taxes on combustibles, even more so in Europe than in the U.S., but this otherwise contradicts the target to reduce emissions from commutes. Also, governments all over the place can save a lot of money if they don't need to spend all those billions on additional road improvements.

Still, I see taxing home workers as a counter-productive measure, as it's clear there will be a whole lot more of it in the nearby future. It's also not necessarily cheaper to furnish home workers. We've spend quite a lot of money on people's home office equipment and pay for their connectivity, for example.

[Steve Guttag]

I do think that an employer should be able to compel an employee to furnish their own office equipment

Oops...I meant to say that an employers should not be able to compel an employee to purchase home office equipment. Quite the opposite...right down to the cost of internet access should have an expense account to cover such costs (or, at least, the business portion).

I do agree, if fewer people are commuting, it reduces not only the consumption of fuel but the wear and tear on roadway infrastructure so governments would need less taxes to keep those up.

Very few industries, including ours, have not felt the changes brought about by technological advances and regardless if you are in the cinema business or real estate, you need to adapt to the changes and not just pine for how things used to be.

[Leo Enticknap]

Thinking employee versus contractor brings the California AB5 issue to mind (the recent election determined that Uber and Lyft drivers are contractors, not employees). It looks like as contractors, they ARE required to have a business license ( see, for example, https://therideshareguy.com/do-rides...ness-licenses/ ).

Interesting that the No on Prop 22 campaign did not point this out in their propaganda and advertising (that I saw, at any rate). That would have been a persuasive argument, IMHO.

Business licenses in California at the moment are not that pricey - they range from around $100 to $300 a year, depending on which city (or, if the business property is on unincorporated land, county) the property is on. The question will be if we can expect to see those costs rise to something a lot more significant if home working causes a major and permanent loss of government revenue from the property tax on business premises. An added worry is the fear that cities and counties pass details of business license holders to the state and federal tax authorities, thereby sucking someone who does very little of their own business (say, a side hustle turning over in the high three or low four figures a year) into a world of bureaucracy above and beyond their personal tax return. I don't know whether this happens or not, but I do know that the fear of it happening is out there. That scenario must be an even bigger fear in many European countries, in which citizens do not have to complete and file a personal tax return at all if most of their income is taxed through withholding (called PAYE in the UK): the fear would be of having to do that for the first time.

Working from home has both its pros and cons. I guess it's important to still meet in-person on a regular interval (as long as that's possible), because some things actually work more efficiently in teams than others. If you need to concentrate on stuff, being in an isolated environment, where your colleagues can't bother you every other minute with "just another question", working from home often makes perfect sense.

Couldn't agree more, and this is one of the reasons that I'm very thankful for being able to work at home on some days, and in the shop and/or in the field on others. On the rare occasions when I'm on the road for an entire week, or at the computer at home, I feel stressed out at the end of it, but in different ways.

[Mark Gulbrandsen]

This article must have been written by the head of Nestle, also a German. He doesn't think water should be a free thing. Many companies around this area already assume this is going to be the norm and are downsizing or looking into downsizing their office space as a result. My GF works from home... got some getting used to having her around ALL THE TIME and the cats WENT NUTS! But overall it's worked out really well. And she is just as productive working here as she was in the office.

[Leo Enticknap]

...and the cats WENT NUTS!

Mine had kittens - literally! They like "working from home," too:

kits.PNG

[Bobby Henderson]

I sure as hell do not think anyone working from home should be taxed for that "privilege." While there are certain good things about being able to work from home there are drawbacks too. It's a complicated situation. It is more environmentally green to not have to drive to work. If you don't have to be seen on camera via Zoom or something similar you don't even have to get dressed! That seems great. Of course, after a certain amount of time stuck at home I start getting cabin fever.

At first glance, being able to work from home will allow someone to be able to avoid all the distractions of co-workers and being hounded by phone calls. But one's own home is not free of distractions either. I have a membership at the Lawton Family YMCA so I can go work out there because I hate working out alone at home, being tempted by the TV set, computer or refrigerator. I can work on sign projects easily enough at home, but I prefer being at the office because there are coworkers I can talk to in person about specific project details and I have access to a lot of equipment and reference material I can't fit in my house.

Here's what I think is the biggest downside to working at home: you can end up never being off work. It's already a slippery slope bringing work home from the office. It may not be such a bad thing for people who are single and live alone. But anyone maintaining a marriage or serious relationship has to put up boundaries between the office and home.

This article must have been written by the head of Nestle, also a German. He doesn't think water should be a free thing.

What kind of water are we talking about? If it's the treated kind that comes out of the faucet then, no, that shouldn't be free. Water treatment and delivery infrastructure is pretty costly.

[Frank Cox]

Water bills are pretty much out of control around here, at least. When I opened my theatre (25 years ago) I was paying about $40 per month for water including both the base service charge and the consumption charge.

I just paid last month's water bill a couple of days ago. $198.90, of which $125 is the service charge and remainder is the per-gallon usage charge. $125 per month before you use any water at all? I understand that the water treatment plant and line maintenance is costly, but is it really that costly? (Apparently it is.)

It's the same all over, I guess. When I was paying the water bill for my mother's house in a town on the other side of the province, it was around $175 per month as well. She told me several years ago that she had cut back on watering her garden because the water was so expensive at that time.

[Marcel Birgelen]

Oops...I meant to say that an employers should not be able to compel an employee to purchase home office equipment. Quite the opposite...right down to the cost of internet access should have an expense account to cover such costs (or, at least, the business portion).

I guess employers should pay for all reasonable expenses to be able to work at home. Obviously there's a thin line between what's still reasonable or not. A few years back we paid a large part of the installation costs for an air-conditioning unit in the attic space of one of our employees. What we didn't agree on, are the running and maintenance costs of this unit, it was a one-time payment. The problem with many of those things is that it's still unclear if you can put them up as investment and/or to which extend you can deduct those costs from your corporate taxes. A lot of those things are considered income for the employee, which gets heavily taxed in many tax regimes.

This article must have been written by the head of Nestle, also a German.

Nestlé isn't German but Swiss. But yes, they are very deep in selling bottled water all over the planet and there's a lot of controversy about it. But it's not like companies like Coca Cola aren't doing the same. I guess the rising price of water all over the planet reflects the potential scarcity of that resource in the future.

In the Netherlands, water availability never really has been a big problem, quite to the contrary. With much of the habitable land below sea level, getting fresh water out of the ground essentially only required digging a hole of a few feet deep in many places. But even over here, we're currently experiencing drought seasons we've not seen before. Not enough to really scare anybody in the short run, but certainly a bit scary for the long run, as the whole agriculture industry is heavily dependent on loads and loads of fresh water being readily available and cheap...