The Privilege Tax

In the scheme of catchy phrases, Deutsche Bank has come up with a good one. After all, who (but me) argues that privilege is good, something we should all aspire to and something we should wish on everyone?

As brightening vaccine prospects tease a return to pre-pandemic normalcy and employers map out when and how remote workers return to the office, analysts at Deutsche Bank are proposing a “privilege tax” on post-pandemic work from home to subsidize lost wages for low-income workers.

Deutsche argues that remote workers contribute less to the economy’s infrastructure while still receiving its benefits, and says that a 5% tax on individuals levied against their wages on days they decide to work remotely would “leave them no worse off than if they had chosen to go into the office.”

It’s not as outrageous as it might as first seem. For one thing, it’s true that some of us whose physical presence isn’t required are “privileged” to be able to shelter in place, for now, and just be able to enjoy the luxury of working from home later. Others, the nice folks who stock shelves and serve coffee, who heal patients and put out fires, don’t get that option. Part of that is a product of choices we made, to do a job that requires physical presence. Part of that is the options available to us to make that choice. Not everybody can get the right undergraduate degree that saves them from asking if their customer wants extra whip with their latte.

And if you don’t go out, then you save yourself some expenses, and deny those expenses to the economy.

As a basis for the argument, the bank says working from home is financially rewarding thanks to “direct financial savings” on expenses such as commuting, clothes and lunches, as well as indirect savings from things like reduced work-related socializing and laundry.

These gains “generally outweigh” the costs of working from home (such as the stress of juggling work and children at home or an imperfect home-office setup), Deutsche states, pointing to a majority of people who say they’d continue working from home at least part-time after the pandemic as evidence.

Essentially, the net-net savings of working from home, and the net-net cost to the economy of employers no longer needing expensive commercial space to put your desk, transportation for which you won’t pay, the shorter take-out line at the deli and your largely pantsless existence, should work out to be about even.

And what would happen with this privilege tax?

Deutsche estimates the tax could raise $48 billion annually in the United States–money the bank suggests could fund a $1,500 grant for the 29 million workers in the nation who can’t work from home and earn under $30,000.

Well, they didn’t name it a privilege tax for nothing, you know. But then, what it really comes down to is another transfer payment, but this time based not on wealth but privilege. Plenty of people can work from home while being paid a pittance, many of whom work at Vox or Slate after the glory of getting their gender studies degree. While they may be able to save some money remaining at home, it’s not as if they were rolling in dough beforehand.

But then, privilege is still privilege.

“A work-from-home tax [makes] sense to support the mass of people who have been suddenly displaced by forces outside their control,” Deutsche’s Luke Templeman concludes in the report. “From a personal and economic point of view, it makes sense that these people should be given a helping hand… Those who are lucky enough to be in a position to ‘disconnect’ themselves from the face-to-face economy owe it to them.”

That there is an economic justification for this argument is one thing, but do the people who, for whatever reason, enjoy the “luck” of being able to “disconnect” themselves “owe it to them”? That’s a different issue.

There are many reasons why people end up in jobs that don’t lend themselves to being able to work from home. It can be societal discrimination. It can be personal choices. It can be good decisions or bad. It can be pure kismet or quite deliberate. Part of the decision-making includes the incentives that influence our choices. Want to be a physician? Study hard in school. If you choose to party instead of study, chances of your becoming a brain surgeon are significantly reduced. Choices.

And then there are people who made all the right choices and yet, for reasons wholly beyond their control, ended up sucking wind.

The notion of entitlement is one that has gained a lot of traction, even if the notion of a privilege tax has yet to catch fire. People are understandably in favor of their burdens, the ones they deem unfair even if they knowingly assumed them like student debt, being lifted off their shoulders. And from the perspective of an enlightened, wealthy, liberal society, the idea that anyone should be homeless, denied healthcare, suffer mental illness or addiction without available aid, seems unacceptable. The idea that people, even if they made their own choices, should be denied a safety net and allowed to die in the streets is intolerable.

But the alternative notion that they are “owed” anything by those privileged is the wrong approach to the problem. The American dream is one where we aspire to as much privilege as we can, which is the point of all that hard work, education, and eschewing bad choices. If not, then why aren’t we all getting drunk and high every night, which is a lot more fun than studying organic chemistry?

And even if we tax people for the privilege of being in a position that allows us to stay home, will that change the incentive system?

Templeman notes that governments “have always backsolved taxes to suit the social environment,” pointing to the United Kingdom’s “window tax,” which as the name suggests taxed residents based on the number of windows in their house between 1696 and 1851. The tax was intended to place a heavier burden on the wealthy (who presumably had houses with more windows) and preceded the United Kingdom’s first income tax, which “As society changed, the window tax was abolished and… in the same way, as our current society moves towards a state of ‘human disconnection’, our tax system must move with it.”

If you didn’t want to pay more in taxes, you built a house with fewer windows. If you don’t want to pay the privilege tax, you go to work in an office. And if your employer doesn’t want to pay for your desk, phone, square footage, granola bars and computer, because those are costs to him, then he has to pay you to stay home. Choices.