Recently, a Deutsche Bank analyst decided to put a note out there that governments should tax people that are able to work from home.
They suggested a 5% tax is due for the privilege of being able to work from home during the pandemic, and for not participating in the large economy that forms around workplaces – dining, coffee, public and private transportation, parking, gas etc.
For me, this type of analysis is disconnected from the reality in most people’s lives. Not everyone works for VC-funded tech startups or FAANG companies that offer generous stipends for home offices, so working from home has meant that expenses have gone up for most people. Sure, we don’t commute anymore, but we spend 100% of the time at home, which carries other issues.
Our WFH life
Here’s what working from home looks like for me and my wife:
- we had to get a 2 BR apartment instead of a 1 BR to be able to work from home without interrupting each other, so extra money on rent
- our two laptops and multiple monitors run all day long, so we use more electricity and had to update our internet connection to sustain 2x video calls
- we spend 100% of the time at home, so we have to run the heating all day, too, since it’s autumn/winter now. We don’t have AC in California, but we had considered a portable one during the heatwave.
- we spend more money on food, now that we have to buy and cook for the whole week, order out
- we run the dishwasher daily, if not multiple times per day given that we eat 3 meals x2 every day at home
All these things translate into increase cost of living at home, more wear and tear to our homes, on top of the impact the lockdowns and social distancing has had on our lifestyles. We are thankful, though, to be able to work in industries that enable this kind of work.
Tax Brakes, not Taxes
But back to taxes or tax breaks. Instead of taking more money from everyone working from home, I propose governments do the following (we’re based in the US, so I’ll take the IRS as the example here, but these can apply to any democracy):
- Enable W2 workers to take work from home deductions – like 1/3 of the rent, as business expense, since we’re using it as an office. For now, only 1099 workers or LLCs can do that.
- If you’re a homeowner and have fully paid your place, great! You should also be able to deduct an extra depreciation due to working from home all day
- We should be able to do the same for electricity, internet and items we bought for work – desk, chair, new monitor, keyboard, mouse etc.
This would free up capital for people to invest, save and better prepare for time where they might be unemployed or for some other life event.
Another tax would only make middle class people work more for their money, and provide extra funding for unclear government goals that might transfer wealth to ultra high net worth individuals.
So no, Deutsche Bank, we shouldn’t tax WFH more.
Photo by The New York Public Library on Unsplash
2 replies on “Tax Breaks, not Taxes for People who Work From Home #WFH”
Deutsche Bank is involved in every major banking scandal, they should be the last to talk about honest work.
Yep, agreed. Maybe they were trying to market some advice for governments they work with? Otherwise, the attention-grabbing headline doesn’t make too much sense