In the scheme of catchy phrases, Deutsche Bank has come up with a good one. After all, who (but me) argues that privilege is good, something we should all aspire to and something we should wish on everyone?
As brightening vaccine prospects tease a return to pre-pandemic normalcy and employers map out when and how remote workers return to the office, analysts at Deutsche Bank are proposing a “privilege tax” on post-pandemic work from home to subsidize lost wages for low-income workers.
Deutsche argues that remote workers contribute less to the economy’s infrastructure while still receiving its benefits, and says that a 5% tax on individuals levied against their wages on days they decide to work remotely would “leave them no worse off than if they had chosen to go into the office.”
It’s not as outrageous as it might as first seem. For one thing, it’s true that some of us whose physical presence isn’t required are “privileged” to be able to shelter in place, for now, and just be able to enjoy the luxury of working from home later. Others, the nice folks who stock shelves and serve coffee, who heal patients and put out fires, don’t get that option. Part of that is a product of choices we made, to do a job that requires physical presence. Part of that is the options available to us to make that choice. Not everybody can get the right undergraduate degree that saves them from asking if their customer wants extra whip with their latte.
And if you don’t go out, then you save yourself some expenses, and deny those expenses to the economy.
As a basis for the argument, the bank says working from home is financially rewarding thanks to “direct financial savings” on expenses such as commuting, clothes and lunches, as well as indirect savings from things like reduced work-related socializing and laundry.
These gains “generally outweigh” the costs of working from home (such as the stress of juggling work and children at home or an imperfect home-office setup), Deutsche states, pointing to a majority of people who say they’d continue working from home at least part-time after the pandemic as evidence.
Essentially, the net-net savings of working from home, and the net-net cost to the economy of employers no longer needing expensive commercial space to put your desk, transportation for which you won’t pay, the shorter take-out line at the deli and your largely pantsless existence, should work out to be about even.
And what would happen with this privilege tax?
Deutsche estimates the tax could raise $48 billion annually in the United States–money the bank suggests could fund a $1,500 grant for the 29 million workers in the nation who can’t work from home and earn under $30,000.
Well, they didn’t name it a privilege tax for nothing, you know. But then, what it really comes down to is another transfer payment, but this time based not on wealth but privilege. Plenty of people can work from home while being paid a pittance, many of whom work at Vox or Slate after the glory of getting their gender studies degree. While they may be able to save some money remaining at home, it’s not as if they were rolling in dough beforehand.
But then, privilege is still privilege.
“A work-from-home tax [makes] sense to support the mass of people who have been suddenly displaced by forces outside their control,” Deutsche’s Luke Templeman concludes in the report. “From a personal and economic point of view, it makes sense that these people should be given a helping hand… Those who are lucky enough to be in a position to ‘disconnect’ themselves from the face-to-face economy owe it to them.”
That there is an economic justification for this argument is one thing, but do the people who, for whatever reason, enjoy the “luck” of being able to “disconnect” themselves “owe it to them”? That’s a different issue.
There are many reasons why people end up in jobs that don’t lend themselves to being able to work from home. It can be societal discrimination. It can be personal choices. It can be good decisions or bad. It can be pure kismet or quite deliberate. Part of the decision-making includes the incentives that influence our choices. Want to be a physician? Study hard in school. If you choose to party instead of study, chances of your becoming a brain surgeon are significantly reduced. Choices.
And then there are people who made all the right choices and yet, for reasons wholly beyond their control, ended up sucking wind.
The notion of entitlement is one that has gained a lot of traction, even if the notion of a privilege tax has yet to catch fire. People are understandably in favor of their burdens, the ones they deem unfair even if they knowingly assumed them like student debt, being lifted off their shoulders. And from the perspective of an enlightened, wealthy, liberal society, the idea that anyone should be homeless, denied healthcare, suffer mental illness or addiction without available aid, seems unacceptable. The idea that people, even if they made their own choices, should be denied a safety net and allowed to die in the streets is intolerable.
But the alternative notion that they are “owed” anything by those privileged is the wrong approach to the problem. The American dream is one where we aspire to as much privilege as we can, which is the point of all that hard work, education, and eschewing bad choices. If not, then why aren’t we all getting drunk and high every night, which is a lot more fun than studying organic chemistry?
And even if we tax people for the privilege of being in a position that allows us to stay home, will that change the incentive system?
Templeman notes that governments “have always backsolved taxes to suit the social environment,” pointing to the United Kingdom’s “window tax,” which as the name suggests taxed residents based on the number of windows in their house between 1696 and 1851. The tax was intended to place a heavier burden on the wealthy (who presumably had houses with more windows) and preceded the United Kingdom’s first income tax, which “As society changed, the window tax was abolished and… in the same way, as our current society moves towards a state of ‘human disconnection’, our tax system must move with it.”
If you didn’t want to pay more in taxes, you built a house with fewer windows. If you don’t want to pay the privilege tax, you go to work in an office. And if your employer doesn’t want to pay for your desk, phone, square footage, granola bars and computer, because those are costs to him, then he has to pay you to stay home. Choices.
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For a bank, Deutsche has a poor grasp of supply and demand. An employee is likely to accept a lower salary if saved the expenses of commutation and a presentable wardrobe. The savings will accrue to the employer.
But this is an additional income tax, so it doesn’t go to the employer but to the government, theoretically to be paid over to those who can’t stay home. Of course, once the govt gets its hands on that sweet revenue, where it ends up is another matter.
Then again, if the employee doesn’t want to work for a 5% drop in salary and the employer has to pay an extra 5% to get the quality of employee required, will the govt feel the employer’s pain?
The government takes official notice of the company’s pain on the one day of the month that the Bureau of Labor Statistics reports. Anything more than that would be socialism.
But many employers (including banks) are likely to offer a higher salaries to people who work from home because they don’t have to pay for the physical space that being “at work” imposes. The cost of physical space for an employee far exceeds the amount that the employee will spend on gas. And that net savings would be something that employers would use to attract employees.
I’m trying really hard not to get anecdotal, because it’s anecdotal, and I know from experience that you do not have a single shit to give. Suffice to say that this entry evokes a visceral response in me. I don’t have an office to return to post covid, since working from home has been so beneficial to the business over the last year.
This is typical tax policy in Latin America: large corporations (state-affiliated or not) and the very wealthy are able to legally avoid taxes through tax shelters, access to top-flight accountants and tax lawyers, complex forms of corruption and nepotism that meet the letter of the law but not its spirit, and so on, while the large bulk of the population that is in poverty or close to it needs their programs like state healthcare to be funded. So the uber-wealthy, closely connected to or even one-in-the-same as the political class and people in media and having access to high-priced public relations firms, make efforts cast the middle and upper-middle classes (much smaller as a % of the population than in America or Europe, therefore lacking political power) as privileged, and foist taxes upon them in the name of fairness.
Why is a bank deciding what tax should be paid? People don’t wash their clothes and don’t eat lunch at home? And it’s, actually, doing more house cleaning, cooking and dishes, whether doing it yourself or hiring somebody.
Remote work doesn’t create traffic and saves money for road maintenance. But you need to spend money maintaining your office at home, extra room, furniture. The company only pays for your internet and provides a computer. In my experience, there are no savings, it’s about the same. OK, the “privilege” of getting up later is nice. Do they want to tax sleep?
I would have thought working at home is something the government should want, not tax. There is less use of carbon-based fuels. There is less demand for infrastructure like roads. There are fewer accidents to investigate and deal with. The proposal sounds like the realization that someone somewhere may be benefitting so let’s hav3 the government rush in and tax it.
Not “someone” but the wrong “someones”.
Mentioned this to a German friend who lives in Germany. He was incensed. He made three points. [1] Do banks have a role in suggesting taxes? Right now, there is a near 100% lockdown in Germany lasting for a month. Certainly DB has employees working from home. What is the motivation for DB to suggest a tax it would have to pay? [2] DB would collect the tax from employers and charge the German government a fee for doing so. [3] DB would charge a fee to disburse handouts to the negatively affected workforce.
My friend also pointed out one motivation for the German government to implement the tax, to recover lost tax revenue. If fewer employees drive to work or take the bus, then the government collects much less on fuel taxes which amount to a very high percentage of the cost of fuel.
As soon as the investor class pays a privilege tax, I’m on board.
If DB really wants to help the underprivileged, they should suggest moving all those financial operations to countries that speak their language, S Asia (English), French Africa, and the poorest parts of Eastern Europe.
The internet lets you do do all these jobs from anywhere- even from a boat out in the ocean.
Here in the UK, the banks have been pursuing a policy of closing brick and mortar branches in favour of remote banking via t’internet. Strangely enough, we don’t hear any of them suggesting a privilege tax on remote working when it works in their interests. Fancy that!
This theme was explored in ’70s science fiction, where runaway productivity had people being required to expand their consumption to keep the economy from crashing. Is Deutsche Bank asking folks who work from home to get in their cars and drive uselessly for half an hour, order delivery for lunch daily, and so on (or be taxed)?
Or is it simply, “they have more money than they used to, help me get it away from them … er, redistribute it”?
No, don’t answer that.
What the hell are you talking about?
No, don’t answer that.
A great idea. it just needs much more granularity, such as a means test for all bankers and other high earners so that the pips squeak exactly the same for everybody.
That said, Deutsche Bank has a strong vested interest in getting people back out of their homes to all those commercial properties in the cities.
But I wish I had been around when there was a window tax. So long as they didn’t count sliding glass patio doors as windows I would have been sorted.
Although I am not doubting that “some of us whose physical presence isn’t required” at work might perceive themselves as “’privileged”, the privilege may be evanescent.
At first, work from home is feature: you have your job and you can do it remotely, from your den. In time, it becomes a bug: your boss realizes that your job can be done remotely, from Mumbai. (You are welcome to keep the post, if you move to India and are willing work for the prevailing local wage.)
As a surgeon, I am happy that operations via zoom are unpopular, at least among the sane and sober. So while I don’t like my commute, the need for proximity is the best job insurance. “I gotta go to work” will soon be pronounced “I got to go to work!”
Are we sure the whole proposal isn’t an elaborate joke?
Wrapping up by pointing to the window tax looks like a tell.
“The window tax must rank among the very worst taxes in the history of Western Civilization. … The window tax in Great Britain (1696–1851) provides a remarkable case of tax-induced distortions in resource allocation. … As a consequence, people boarded up windows and built houses with very few windows, to the detriment of both health and aesthetics.”
Really, they estimate that working from home is worth 5% of salary, “pointing to a majority of people who say they’d continue working from home at least part-time after the pandemic as evidence.”? Ha!
I have serious doubts that your comments of late haven’t been elaborate joke, given how dumb they are.
This is getting out of hand again. After reading the overnight comments, you should seriously consider just trashing the lot of them and banning the non-lawyers and nutjobs. The contribute nothing with crap like this.
You’re right. I am disgusted by the stupidity of the comments of late. I try to let people speak their minds, but things are out of control, and the lawyers here are similarly disgusted by the stupidity of the comments. I’ve been far too lenient allowing comments to post of late. Today, I will be brutal.
It’s a 21st Century version of Wickard v Filburn.
Bad idea then, bad idea now.