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Deutsche Bank released a report suggesting a five percent bump to the income tax of individuals who work from home. The tax is meant to offset the "privilege" of those who work from home, and redistribute those funds to workers who find themselves less-favorably situated.
The tax is outlined by chapter six in the bank’s Konzept 19. The proposal’s argument is that remote employees don’t have expenditures that would normally accompany a daily commute. These include the cost of gas, car maintenance, lunches, and appropriate attire, among other costs. The absence of these expenditures gives stay-at-home employees extra capital, which, according to Deutsche Bank, should be additionally taxed.
If implemented, the report estimates a revenue of $49 billion in the United States, €20 billion in Germany, and £9.3 billion in the United Kingdom. Per the design of the proposal, these taxed amounts could then be re-distributed to lower-income workers. For a salary of $55,000 annually, the tax would reportedly cost employees an extra $10 daily.
It’s a quasi-socialist policy that takes the "social" out of an income.
In an ironic twist, one of the stated purposes of Konzept 19 is to redeem capitalism in the eyes of a younger generation of Americans—the proposed tax on stay-at-home employees being a part of that plan.
Page eight of the report spells it out:
"Democratic capitalism is under threat as increasing numbers of young people view the system as rigged against them. The pandemic has only exacerbated their economic disadvantage. However, there is a growing risk that as the young gain an electoral advantage, a populist politician will harness the anger and upend capitalism in ways that hurt inclusive development. To avoid this, we must now redistribute from the old to the young in ways we have not yet considered."
Konzept 19 additionally includes other suggested initiatives such as addressing economic challenges in Europe, the transition to a hydrogen economy, and an adaption of digital currencies.
The argument for the tax, written by Luke Templeman, a thematic strategist for Deutsche Bank, states that growing numbers of employees who work from home disconnect them from day-to-day society—and the market. That’s something that Templeman sees as a dent in society’s economic fabric.
According to the report, stay-at-home employment has been growing for years; between 2005 and 2018, Deutsche Bank finds that there was a 173 percent increase of employees who work from home—a rate that in recent months has been catalyzed by COVID-19.
"For years we have needed a tax on remote workers – COVID has just made it obvious," Templeman said.
Projections from Deutsche Bank suggest that it’s a trend likely to continue even after the pandemic. Google’s CEO Sundar Pichai, for instance, informed a number of employees they would not be required to return to the office until sometime in 2021.
While some employees, like the ones at Google, are expected to eventually return to the workplace, Jim Reid, a research strategist for the bank, believes remote work is a growing norm that’s here to stay.
"Working from home will be part of the 'new normal' well after the pandemic has passed. We argue that remote workers should pay a tax for the privilege," Reid said.
While the proposal doesn’t specify if the plan is designed directly to combat the effects of COVID-19, Deutsche Bank's language suggests their proposal is a long-term strategy.
Templeman says he's already received some feedback on his argument. Not everyone is enthused.
"A lot of people aren't impressed at the idea of another tax," he said. "However, some have seen it as an interesting policy that governments can use to redistribute some of the gains from the pandemic which have been unexpectedly accrued by some people while others have lost out."