For about 150 years in the 18th and 19th centuries, there was a “window tax,” the precursor of the cursed income tax. Depending on how many views to the outdoors your house had – an indication of how rich you were – you paid a higher tax.
Fast forward and here many of us are, often looking out our windows in the pandemic, working from home. Might another window-like tax be coming? Are those who work from home newly advantaged? Should it be considered a benefit for which they pay more to be away from a traditional workplace?
One of the world’s preeminent financial institutions, Deutsche Bank, muses in a new report on the idea of a 5% “privilege tax” of income on days we choose or are told to work from home, mainly to subsidize those in lower incomes who cannot.
In its look at post-pandemic economic options, with plenty of big ideas beyond this tax, it argues that employees are financially better off working remotely and that they contribute less to the economy in doing so. The report also suggests the tax would confer a more subtle benefit for employers.
As squirrelly and screwy as the world has gone this year in coping with the coronavirus, the proposal has to be taken seriously, because it’s possible officials are taking it seriously, largely because the world has gone screwy and squirrelly.
After all, revenue for all this spending has to be found somewhere. Why not start at home?
The proposal is for employers to pay the tax if they don’t provide an adequate home office. Employees would bear the tax if they’re properly equipped and choose to stay home to work. Auditors would arbitrate in the event of disputes of who wants what.
On a $52,000 income, it works out to $10 a day, likely less than the costs of commuting, parking, presentable clothes, restaurant lunches, designer coffees, laundry, dry-cleaning and the like. The question is: would an employee want to part with that slight newfound advantage? Another question: does the work-from-home cohort “owe” those who can’t?
If employers bear the cost, the cost might be offset by spending less on the office space they occupy and the furniture they house. Even the water cooler doesn’t come free. A question for them is: would it be worth the loss of a present workforce to shrink the worksite? Another question: why would any employer permit government to regulate how workforces are organized?
The German bank’s Luke Templeman argues that our economic system is not set up to deal with those “who can disconnect themselves from the face-to-face society.” A large swathe of the workplace’s infrastructure stands to lie redundant, he argues, and the effects will extend the economic malaise post-pandemic if somehow people aren’t repaying some of the benefits of working from home.
He says the newly discovered benefits – safety, convenience, flexibility, even job security – have value outweighing the mental stressors of juggling work with children and occupying a less-than-ideal home office.
Surveys in the pandemic have found significant support for detaching from the face-to-face work world. At the very least, a large majority would prefer to hang out at home pretty often.
There is nothing to suggest any decision-maker in Ottawa or Victoria has this idea in the hopper, and the U.S. Internal Revenue Agency (IRS) has cast cold water on it. But it has been very interesting to see many of the world’s leading forums discuss the idea as one of the first to emerge in the pandemic to contend with the new normal.
As far as I can calculate, this tax might yield between $4 billion and $5 billion annually in Canada, not insignificant if it is a redistribution of income but hardly the post-pandemic panacea to what economically will challenge us. In the same way we learned more about the digital divide when coronavirus struck, we are concluding some are in a much better position to pursue either a full detachment from the workplace or a hybrid employment. Fine, but why pounce on them? Why even a flat tax instead of a graduated one?
What certainly doesn’t feel right in the report is the assertion that working from home is somehow a denial of the workplace economy. We might discover in time that it enables a shift of it to one’s neighbourhood and its restaurants and retailers. We could all use more vibrant, walkable districts – and yes, a lot less tax. •
Kirk LaPointe is publisher and editor-in-chief of BIV and vice-president, editorial, of Glacier Media.