LONDON — White collar staff reaping the financial benefits of working from home should be taxed to help other workers who aren’t getting the same advantages, experts at Deutsche Bank said in a new report.
In its report on how to rebuild the economy after COVID-19, the bank proposed a 5% daily tax on each employee that continues to work from home, which could raise tens of billions of dollars for governments. The money could be used to help lower income workers who have taken on greater risk because their jobs can’t be done remotely, it said.
The bank noted that the global pandemic has turbocharged the shift to remote work, a trend that looks set to last for the long term with many workers expecting to spend at least a few days of their work week at home even after the pandemic ends.
These workers benefit from more convenience and flexibility. They also save money directly because they don’t have to pay for commuting costs, takeout lunches, or buying and dry cleaning work clothes – but it means those businesses that have grown up to support office workers won’t be able to recover and “the economic malaise will be extended,” the report said.
While it doesn’t make sense for the government to support, say, a downtown sandwich shop if it doesn’t have any more customers from nearby office towers, “it does make sense to support the mass of people who have been suddenly displaced by forces outside their control,” the bank said. “From a personal and economic point of view, it makes sense that these people should be given a helping hand.”
The tax would amount to just over $10 a day, assuming the average salary of an American working from home is $55,000. That’s roughly the amount the worker might spend on commuting, lunch and laundry, which would leave them no worse off than going into the office, the report said. It could raise up to $48 billion in the U.S. Deutsche Bank carried out similar calculations for Germany and the U.K.
But the proposals faced heavy skepticism.
Andrew Hunter, co-founder of job search engine Adzuna.co.uk said the idea was misguided and predicted it would be incredibly unpopular.
With big name companies extending work-from-home until the end of the year, next summer, or as an option for a growing number of workers, forever, ad hoc accommodations no longer seem sufficient—on either a personal, or a tax policy level. Increasingly, the lines between employees and independent contractors (or freelancers) are becoming blurred. To be clear, you are not self-employed just because you are working from home.
If you are receiving a paycheck from an employer, and those wages will be reported to you and to the Internal Revenue Service on a W-2, you are an employee. Working from home is not enough, on its own, to make you an independent contractor receiving a 1099. Why does it matter? As a result of the Tax Cuts And Jobs Act (TCJA), a.k.a., the Trump tax cuts, for the tax years 2018 through 2025, you cannot deduct home office expenses if you are an employee. There is no hardship exemption or coronavirus waiver. It’s a very bright-line rule: employees who work from home can no longer claim the home office deduction.
The reason you are working from home does not matter to the IRS. It’s not just the home office deduction that is creating confusion among those working from home. Employees who normally work in an office in one state, but live (and are now working from) another may be facing additional tax-filing complications. Bottom line: there is currently no national standard for the withholding, filing and payment of state income taxes for employees who work in more than one state or work in one state and live in another. That means you may have tax requirements where you typically work as well as where you live. Usually, you can sort that out via withholding, tax agreements, and credits.
So what if working at home in one state when your company is in another state means that you’re subject to tax in both places? If either state has a physical presence rule (most states do), figuring the split between the two can be confusing. Typically, you may have too much tax withheld from your paycheck for your nonresident state and not enough for your resident state. Read the full profile on Forbes: https://www.forbes.com/sites/kellyphi… Subscribe to FORBES: https://www.youtube.com/user/Forbes?s… Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes: http://forbes.com Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.