Deutsche Bank calls for a 5% 'privilege' tax on people choosing to work from home, with the money given to low-income staff

Deutsche Bank calls for a 5% 'privilege' tax on people choosing to work from home, with the money given to low-income staff

November 13, 2020
  • Working from home should be taxed to help support people on low incomes who cannot do their jobs remotely, Deutsche Bank said Tuesday.
  • People choosing to work from home despite their company providing a permanent desk should pay the tax, at 5% of their salary. If companies do not offer permanent desks, they should pay instead, the report argued.
  • Deutsche said the tax could raise $49 billion per year in the US, 20 billion euros ($23.6 billion) in Germany, and £7 billion ($9.3 billion) in the UK.
  • The bank said an average worker would not be worse off if they paid the tax, because they are saving money on travel, food, and clothes by working remotely.
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Deutsche Bank said Tuesday that people choosing to work from home rather than in an office should be taxed 5% of their salary, with the money used to support people on low incomes who cannot do their jobs remotely.

A new report from the German bank said that the average person would be no worse off if they paid this tax, because by working remotely they save money on travel, food, and clothes.

Employers should pay the tax if they don't provide staff with a permanent desk, it said. Otherwise, staff should pay it out of their salary for every day they work from home.

According to Deutsche's calculations, this tax could raise $49 billion per year in the US, 20 billion euros ($23.6 billion) in Germany, and £7 billion ($9.3 billion) in the UK, funding subsidies for low-income earners who cannot work remotely.

The self-employed and low-paid staff should be excluded from the charges, it said. The tax should only apply in countries where the government hasn't advised people to work from home, it said. If the government has told people to work from home, the tax would be unfair.

"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," Jim Reid, research strategist at Deutsche Bank, said in the report.

The report argued that the taxes are fair because those working from home have gained many benefits during the pandemic, such as convenience and flexibility, as well as saving money.

"That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits," the bank said.

Read more: Deutsche Bank has poached a senior trader from HSBC to bolster its distressed-credit business, a powerhouse group that's been hit with defections in 2020

Luke Templeman, Deutsche Bank's macro strategist said: "For years we have needed a tax on remote workers – COVID has just made it obvious.

"For the first time in history, a big chunk of people have disconnected themselves from the face-to-face world yet are still leading a full economic life."

If the average salary of a work-from-home employee in the US is $55,000, a tax of 5% works out to just over $10 per day, Templeman said.

"The $48 billion raised could pay for a $1,500 grant to the 29 million workers who cannot work from home and earn under $30,000 a year," he said.

In the UK, an assumed average salary of £35,000 ($46,400) works out to just under £7 ($9.28) per day, he added.

Many major businesses are continuing to work remotely amid the uncertainty of the COVID-19 pandemic.

In July, Google extended its work-from-home policies to summer 2021, while staff at Twitter have been told they can work from home forever. American Express, Airbnb, and Uber have also extended their work-from-home policies. 

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