Tax home workers to help low-income workers, says new report

New research from Deutsche Bank suggests an extra tax for home workers after the pandemic to help support low-income earners and those whose jobs are at risk.

Those who continue to work from home after the Covid-19 pandemic should be taxed more for doing so, according to a new report. Deutsche Bank Research suggests that taxing home workers more could help to support those whose jobs are under threat. 

According to the research, those who choose to work from home should be taxed 5% of their salary, which would be paid to people who are not able to work from home. It states that the tax would be paid for by employers, which could see $48 billion (£36 billion) being raised if introduced in the US to help address the current income imbalance. 

The research argues that the tax is fair as those who are working from home are saving money and are not paying into the system like people who don’t work from home are. However, it does not seem to account for the increase in costs associated with working from home, such as higher energy bills. 

In the UK, the tax could help to create £6.9 billion a year, which could equate to grants of £2,000 to low-income workers and those with unstable jobs. This suggests that current minimum wage is not suitable, however, and that pay rates should be addressed on a larger scale to ensure fair pay is provided for those on low incomes. 

Deutsche Bank strategist Luke Templeman said: “For years we have needed a tax on remote workers – Covid has just made it obvious. 

“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. That is a big problem for the economy.”

The report goes on to predict that US workers will now spend 4.6 billion days a year at home rather than in the office, meaning they will not be paying for transport, meals outside of the home and other items they would generally purchase while commuting. 

A 5% working from home tax on a salary of £35,000 would equate to £7 a day. With many employers already saying they will allow staff to permanently work from home after the pandemic is over, the tax could be used to help those who are unable to work from home – such as nurses and factory workers. 

The research suggests that the tax would not apply to self-employed individuals or those working from home on a low income. It would be used to give grants to workers who are unable to do their jobs from home and who earn less than $30,000 (£22,500) a year. It is not clear how the tax would be applied to home workers who are the sole income for their household.