Deutsche Bank: Remote Workers Should Be Taxed 5% For Working From Home After The Pandemic
A Deutsche Bank research team has proposed remote workers pay a 5% tax for the privilege of working from home after the pandemic to subsidize income lost by low-wage workers.
Deutsche Bank strategist Luke Templeman said in the bank’s research report that a tax on remote workers has been needed for some time, but “COVID has just made it obvious.”
“Working from home will be part of the ‘new normal’ well after the pandemic has passed,” the strategists, led by Templeman, wrote in a note according to the Financial Post. “We argue that remote workers should pay a tax for the privilege.”
Working from home has been embraced during the coronavirus pandemic as remote workers have spent less money on transportation, clothes, food, and socializing after work. Companies including Google, Microsoft, Morgan Stanley, JPMorgan, Capital One, Zillow, Slack, and Amazon are also embracing remote workers as they also save money on office space rent, utilities, and amenities to attract workers such as a gym or free lunch.
However, the report from Deutsche added remote workers are also “contributing less to the infrastructure of the economy whilst still receiving its benefits.”
Templeman told CNBC he believes remote workers should pay the tax after the pandemic ends “in order to smooth the transition process for those who have suddenly been displaced” by the coronavirus pandemic. At the height of the pandemic, the unemployment rate was above 14% and low-wage workers were affected the most.
Low-wage workers not only make less money than remote workers, but have to travel more using public transportation, are forced to interact with strangers more often, and can be fired easily or replaced quickly. All these factors not only put low-wage workers at a much higher risk of getting infected, but also affect their pockets.
According to Templeman, the 5% tax rate wouldn’t have a significant impact on companies or employees. Templeman used an example based on an assumed average salary of $55,000 a year to show the 5% tax would come out to just over $10 a day, or less than a worker would spend daily on transportation to work and lunch.
Templeman also told CNBC the global economy was not set up to cope with people disconnecting from face-to-face society. Currently 56% of workers in the U.S. are working remotely and 47% are working from home in the U.K. No one expected the mass movement to remote working seemingly overnight and it has led to some unintended consequences including higher levels of burnout.
Despite the idea for the tax, the coronavirus pandemic is showing no signs of ending. The U.S. is now over 100,000 new cases per day across the country and states are again beginning to implement virus-based restrictions.