It’s funny to think that a government that de-officed tens of thousands of workers and confined them to their homes would then think to tax that same population for working from home. It’s even funnier to think that a foreign corporate conglomerate would sway the U.S.’s (or other sovereign nations) government to pass such legislation. Not that that’s ever happened before…Under the veil of “rebuilding,” Deutsche Bank (DB)released this document putting forth what it thinks should be done to bring the world back from a pandemic-induced recession. Starting on page 32, DB argues that working from home (WFH) has and will cause further economic harm and that WFH employees should be taxed as much as 5% as they are enjoying ‘unfair economic liberties’. DB does a great job interjecting slick, data-y graphs to make their claim seem science-based and well-founded. What they fail to deliver, however, is common economic sense on what such a tax would actually do to the worker and the economy.
Let me be clear: I am hugely opposed to this concept and am not ashamed to challenge it fervently. Much like most well-intentioned tax legislation, this idea is shortsighted and offers more negative consequences than positive. Let’s dig in.
Those who can WFH receive direct and indirect financial benefits and they should be taxed in order to smooth the transition process for those who have been suddenly displaced.
Stated in the first paragraph is the first piece of glaring shortsightedness DB puts forth. Do WFH employees receive direct and/or indirect financial benefits their commuting counterparts do not? Yes and no. Sure, I’m using way less gas than I ever have. I don’t stop by the store nearly as often. I don’t eat out nearly as much. However, the aforementioned are simply the natural side effects of WFH. The fact that I do not drive more and thus buy less gas means I have more capital to spend later. By having more capital, even if it’s just a hundred extra bucks a month, doesn’t mean that money won’t enter into the economy. It simply means I will have just as much impact on the economy when I’m ready to spend it. Additionally, the globe benefits since I put out fewer emissions into the air. DB is also horribly failing to see the new economies sprouting up and around remote work. Though I may not need to go into an office, I still need a comfortable chair to work from, a strong internet connection, Slack or HipChat, a standing desk, etc. Those things are not limited to physical corporate real estate. If anything, the average worker clamored to purchase the above when lockdowns swept the country. Those items had to be made. The resources to make those items had to be harvested. Humans had to be involved with both processes. What did this sudden rush do to the economy? Well, it transferred capital that was being spent in a traditional commuting-based economy to one that requires more WFH support. One can argue it’s better for the economy and the world at large as fewer cars were on the road. Global warming and climate change is supposed to be very costly, isn’t it? Then why would we want to punish people for not contributing to either? Lastly, DB suggests there’d be a “smooth transition” to those displaced by the pandemic. Let’s take that at its word. Let’s say we decide to enter this transition. How long is the transition for? Would it be six months, a year, five years? The ambiguity and the inability for DB to come up with an informed timeline shows they have no idea how long it would take to supposedly steal resources from one group and give them to another. There is no metric for when the apparent strife would be over. As the great economist Milton Friedman once said: “Nothing is so permanent as a temporary government program.” Ain’t that the truth.
The sudden shift to WFH means that, 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. That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits.
Let us remember that the American workforce was forced under governmental coercion to halt face-to-face (FTF) interaction. Yes, let’s punish workers for that, too. What DB falls short on here is defining leading a full economic life. Conveniently, there is no definition. Does leading a full economic life mean being confined to your 300sqft Brooklyn apartment paying $3,000/mo without enjoying any of the amenities the city has to offer for months on end? Does it mean you cling to a job you loathe only because the economy is so poor and hiring has ground to a halt? Does it mean trying to maintain composure as your two-year-old is screaming in the background during a critical sales presentation? What is a full economic life, DB? It’s near insulting for them to claim WFH employees are contributing less to the economy while receiving benefits from it. On that note, let’s move into an uncomfortable area. If the logic is: “hey, you’re not contributing enough to the economy and still receiving its benefits,” then why don’t we get rid of welfare? Does anyone on welfare create jobs or opportunities in the economy? Do they have the saved capital to make a large impact within their community? No. They are contributing less to the economy while still receiving benefits. Following DB’s logic, it’s not unreasonable to nix the welfare program while we’re at it. I am not knocking those on welfare, but this is a glaring contradiction that can’t be ignored.
WFH offers direct financial savings on expenses such as travel, lunch, clothes, and cleaning…The newly-discovered gains of home working, both tangible and intangible, all have value. And they generally outweigh the costs.
Let’s take this in order. In regards to travel, the only foreseeable expense an employee would have would be for his or her car, bus, or train ticket. Employees (very rarely if at all) are paying out of their own pockets to fly across the country for a business meeting. For lunch, yes I am eating at home more, but that’s because restaurants have been forced to raise their prices to up their margins because the government made it illegal for them to operate normally which resulted in a huge blow to their bottom lines. DB also conveniently leaves out that this means WFH employees are most likely spending more money at their local grocery store. Thus, that capital is still entering the market in the exchange of money for a week’s groceries. On clothes: for most tech companies, the dress code is pretty lax. Unless you work in finance, law, or something similar, you’re fine with a pair of jeans and a button-down shirt. You’re not getting your suit dry cleaned every week. DB is assuming that the average WFH employee has a habit of buying new clothes frequently. They also ignore healthy spending habits where one doesn’t needlessly buy clothes upon clothes. A healthy economy must have an overflowing closet in the eyes of DB. On cleaning–UH, WHAT? How do homes get messy? People live in them. They move things around. Tiny parts of their skin fall to the ground and form dust. That dust meets the shed fur of their pets. They have kids who can’t keep their food on their plates. DB may be insinuating that because people are working from home more often, that they now have new time to clean. This is an unfounded assumption. Inherently, by spending almost all waking hours at home, and that being at home creates more uncleanliness, cleaning is only more necessary when WFH.
Let’s shift to the intangible costs of working from home that are seemingly outweighed. Outside of not interacting with other humans FTF (which DB jabbed us for earlier) for the vast majority of the workweek, we are also cooped up in our homes far longer than we ever have been. Perhaps we get out once and a while to walk the dog, check the mail, or take out the trash, but we spend most of our days working from where we live. In a normal economy, this wouldn’t be such a big deal. We could go to a coworking space, work from a coffee shop, or blow off steam by grabbing beers with friends after work. However, with the lockdown hangover, many of our previous outlets have been diminished greatly. Because of this, so has our overall mental state. No one will tell you that working from home 40+ hours a week and going outside for a couple of hours is great for the mind. We need in-person interaction. We need to feel relaxed as we grab drinks with friends. We need to feel at rest being outside and around others. That doesn’t matter to DB. They think you should be taxed anyway. How’s that going to fare for our mental state?
First, the tax will only apply outside the times when the government advises people to work from home.
Ah, some rationality. But again, short-sightedness and contradiction on the part of DB. The government forced us to work from home in the first place. What did that do? Well, for the company I work for, they decided that a fully-distributed workforce made more economic sense than maintaining an office that few if any employees were going into. I supported this measure. Why would any company pay for a space that so few are inhabiting? That capital can be better spent on hiring new employees (which is great for the economy) or rewarding further those who have exceptional performance (also great for the economy). By taxing WFH employees, we would be punishing this behavior. Yes, corporate real estate has taken a huge hit during this hysteria. No one can say that the industry wasn’t critically impacted. However, by instating a WFH tax, remote workers may choose to go into an office in an effort to skirt the government’s new shakedown. DB thinks this will magically set the economy back to where it was. What they fail to see is that companies like mine, who have already gone fully remote, will most certainly pass that tax burden down to the worker. Thus, the worker may say: “but I want to come into an office to avoid this tax.” Perhaps even enough employees say this to where the company now has to look for an office space again. The search and purchase of such office space eats up enormous time and financial capital that the company could by using more productively in their business. Instead of perhaps hiring one or two employees each quarter, the business now has to pay tens of thousands of dollars per month to operate an office space. DB, how does that trend for the unemployment rate?
Best of all, a WFH tax does not merely subsidise businesses that have no long-term future. If, for example, a city-centre sandwich shop is no longer needed, it does not make sense for the government to support the business in the medium term.
Towards the end of the section, DB explains where the money from the tax would go and tries (poorly) to dispute the points against a WFH tax. As exemplified above, DB thinks the government should decide when a company should no longer receive a subsidy. Essentially, they’re positing when a company no longer needs the thieved money from WFH employees to operate, they will cease such forced transfer of wealth. How and where to begin with that process is beyond me, but it’s certainly worrying to give the government–which is no stranger to crony-capitalism and poor financial spending–to decide when and when not to give money to corporations. By doing such, the government is creating yet another bubble where the natural processes of the market aren’t being allowed to operate and thus increase the risk and severity of failure. Additionally, if the government can simply print trillions of dollars out of thin air to bail out corporations, why not just print a few billion and hand it to FTF workers? DB thinks that would be silly. Instead, we should steal funds from other citizens. Perfect!
Those who are lucky enough to be in a position to ‘disconnect’ themselves from the face-to-face economy owe it to them.
As the last line of DB’s WFH tax section, this truly summarizes the feigned cooperation effort they try to push. Let me cede a little bit of ground here. I am fortunate to have the job I have, but I’ve also earned my place. I’ve worked hard to get where I am. I’m productive and generate revenue for the company I work for which allows the company to scale and earn more profit. Luck doesn’t decide that. Will and effort do. Additionally, DB is assuming the WFH economy is superior to the FTF economy. Both have their pros and cons just like anything else in life. To assume that WFH is superior to FTF is completely subjective and thus insufficient for legislation. Remember–the businesses that were allowed to operate fully during lockdown were all FTF businesses.
In conclusion, I’d like to point out that this is a German company putting forth lofty ideas on how to rebuild the economy. I mount a hefty offense in this post but understand that at the end of the day, DB simply released its ideation for a solution. Still, I can only hope its ideas don’t travel across the Atlantic and into the minds of lawmakers here. I’m not sure when leaning on a global bank for legislation is ever wise or in the interests of the populace, but I am sure that taxing those who WFH is a huge mistake.