Some days ago, the research desk of Deutsche Bank published a report titled — “What we must do to Rebuild” that talks about the possible and feasible steps the governments across the world can undertake. The report considers all the spectrums put forward by the novel coronavirus pandemic and the measures ought to be considered while rebuilding the global economy. It also prescribed the needed solutions that could offset the devastating effects of the pandemic out of which one interesting proposal caught everybody’s attention.
The report states: “For years we have needed a tax on remote workers and the novel coronavirus has just made it obvious. Our economic system is not set up to cope with people who can disconnect themselves from face-to-face society and Those who can work from home receive direct and indirect financial benefits. Thus, they should be taxed in order to facilitate the transition process for those who have been suddenly displaced”.
Work from home tax? What is the rationale behind it? How practical it is as a solution?
The report considers the fact that this new policy of “remote working” or “work from home” is not going away anytime soon and is here to stay. According to its content, it is imperative to tax the “privileged folk” and redirect their high amounts of income to the contrary section of the society, those who do not have the means and methods of working from home.
Thus, a “Privilege Tax” is what the report takes us towards.
Moreover, the report says that such a tax drive can have the following benefits:
- It has the capacity to fetch the government of the United States as much as $48 billion.
- It can help provide 29 million low wage workers with a $1,500 annual paychecks.
However, there are hundreds of problems in actually implementing the proposed scheme.
On what basis can we tax people working from home?
The whole proposed argument is based on a tacit assumption which is that working from home is a privilege and such a privilege needs to be taxed by the government.
Is work from home really a privilege or an added stress?
A lot of researches have been performed in this domain. Since, work from home is a new concept all together all we can do is anticipate and forecast the possible long-term consequences. The researches tell us the following fact about the policy of “work from home”:
So, the argument here is that the privileged folks enjoy certain added benefits and advantages while working from home when all the other people need to stand at the front line, face added risks and expose themselves to the COVID-19. The latter does all this only to keep his personal balance sheet and the economy up and running. And, if this is not a privilege enjoyed by the remote workers, then what is?
White-collar jobs hiring employees who are college graduates perhaps have more to offer via the means of work from home because their job role does not mandate a high amount of interpersonal or face-face interaction. For example, in the case of an IT worker, the major requirement is just a laptop and an internet connection and he is good to go. But, on the contrary, if we consider a blue-collar employee such as a waiter, factory employee, or a store clerk he cannot just afford to work from home.
The above states factor responsibly gives the white-collar workers an advantage over the blue-collar workers. This is proven by the data that an average working professional in India has the potential to save nearly Rs. 5000 per month along with an approximate 90 minutes of commute time when he is working from home.
But, not to forget, there is another side of the story as well that we must consider.
A counterargument to this explains the downsides of working from home which is mentioned below:
- Work from home puts an added mental stress on the minds of the employees of having to work alongside caring for children
- They need to make multiple investments to develop work infrastructure
- The employees shall also encounter difficulties in drawing boundaries between work and personal life
So, then, where are we headed towards?
Before coming to any conclusion, one has to consider all kinds of costs. The positive externalities of working from home such as less congestion, less pollution, fewer accidents, and perhaps even productivity gains.
The author of the report believes that the benefits derived from remote working clearly outweigh the costs involves. However, when one would converse with the people actually working from home, they might have a different opinion.
Do we have another factor that goes in favor of the work from home tax?
The report also says that with this sudden shift towards work from home ideology, a big chunk of people has disconnected themselves from the inter-personal world for the first time ever in human history. All this happens while they are still leading a full economic life.
This also means that the remote workers are contributing less to the economy’s infrastructure whilst still utilizing it to the maximum potential possible.
This poses another challenge in front of the governments across the world as they have spent decades and centuries to set up the wider face-to-face working compatible business and economic infrastructure that now lies futile in the modern tech-friendly era. The economic malaise would perhaps be increased if this enormous proportion of assets and resources lie redundant.
So, the possible solution to this is collecting the extra savings in the form of tax and mobilize additional resources.
But we still do not have a well-defined way to go. The proposal still needs to analyzed carefully with both its pros and cons listed down and compared. One cannot be just taxed because he or she is in an ambiance which makes his remote working possible. Needless to say, the report leaves us on an open note, to think, discuss, deliberate, and analyze.