People Working from Home Should Pay More Tax, Says Investment Bank

Since the start of the COVID-19 pandemic, more people have been working from home than ever before – a trend that looks set to continue as companies reassess their need for all that expensive office space.

This week, the German multinational investment bank Deutsche Bank suggested that people working from home should pay more tax, with the proceeds going to help the underprivileged.

Under the proposals put forward by the bank, people who continue to work from home when the pandemic is over should pay 5 percent of their earnings in tax every single day they don’t go into the office.

The rationale is that workers are saving money on commuting and Pret sandwiches, so the difference would balance out. But this fails to take into account the fact that home workers are also paying for their own electricity, internet, heating and maybe even a chair that doesn’t absolutely destroy their back. However, the report does suggest that employers, rather than employees, could pay the tax, which would make the idea less objectionable.

The report suggests that such a tax could net $49 billion a year in the United States, €20 billion in Germany and £7 billion in the UK. “Working from home will be part of the ‘new normal’ well after the pandemic has passed,” said Jim Reid, global head of thematic research at Deutsche Bank. “Our calculations suggest the amounts raised could fund material income subsidies for low-income earners who are unable to work remotely, and thus assume more ‘old economy’ and health risks.”

Deutsche Bank strategist David Templeman, meanwhile, wrote that, "For years we have needed a tax on remote workers. Covid has just made it obvious.” He added, “The virus has benefitted those who can do their jobs virtually, such as bank analysts, and threatened the livelihoods or health of those who can't.”

Obviously, progressive taxation aimed at helping low-income or unemployed workers is a good thing, but tying this to working from home seems punitive. Flexible working arrangements make people healthier and happier, and should be encouraged. There shouldn’t be a financial penalty attached to home working, if that’s what people prefer and it’s possible for them to do it.

Also, far be it from me to suggest than a multinational investment bank might not be entirely motivated by a concern for the underprivileged, but it seems relevant to note that Deutsche Bank is a major player in the commercial real estate sector (which includes office space). With that in mind, one could argue that the company has a vested interest in getting us back to the office as soon as possible, and that we should perhaps take their tax proposals with a pinch of salt.