More Lock Downs and a Privilege Tax?

Even the WHO knows better than to indulge another lock down, yet that plus the idea of a privilege tax are surfacing.

November 16, 2020

By: Bobby Casey, Managing Director GWP

lock down When it comes to the government, I’m a cynic at best and a pessimist on most days.

When it comes to the market, however, I’m forever an optimist.

The government survives mainly on force and compulsion. It doesn’t have to try, or excel at anything to exist. It doesn’t worry about whether it’s going to be around tomorrow. It will. And it will be bigger with each day that passes, with nothing qualitative to show for it.

The market, however, is spry. It responds to forces such as government, and has a way of reinventing itself through adversity.

This is why I believe that the silver lining to all the “COVID Mania” is an expedited move toward remote and gig work.

If you thought that Trump lacked decisive action over the pandemic, Biden hasn’t even officially taken office and his team of experts are all over the map.

Dr. Michael Osterholm is one of Biden’s advisers on the corona virus task force. He suggests another four to six weeks of lock downs to bring the “virus under control”:

  • The government could borrow enough money to make up for lost incomes of individuals and governments during a shutdown. (Funny, no mention of businesses and their incomes.)

  • “We could really watch ourselves cruising into the vaccine availability in the first and second quarter of next year while bringing back the economy long before that,” he said.

A day after floating this idea, he dials it back saying he never discussed the idea with anyone and believes it’s unlikely congress will back such a thing. Biden would have to decide which way to go on the lock downs, and how far he’d be willing to go to get the cooperation from every state and local government.

He has, to date, avoided making any definitive decisions. Since one of the biggest criticisms of the Trump administration was his “lack of leadership” on this pandemic, Joe Biden is oddly starting off indecisive in the days leading up to “day one”.

Lock downs only protract the remote work of many individuals from call centers to firms and agencies. How long are these businesses expected to keep paying rent to NOT occupy the space before they realize that business can continue without it and make these remote work arrangements permanent?

Even without Biden at the helm, plenty of states are still ordering that office workers who can work from home continue to do so based on their defined phases to reopen.

While government takes its time pretending to do something of use or import, some are taking notice of the move toward a more permanent arrangement of remote work. People like me who notice stuff like that are just happy about it.

However, a new report from Deutche Bank suggests that a 5% privilege tax be levied on people who work from home. The rationale behind it is as preposterous as the premise: that there is privilege to saving money while working remotely.

If you consider the costs of driving, parking, and eating out the assumption is that the tax wouldn’t amount to more than that, on average. But paying to go to work when it’s become unnecessary is senseless. Paying someone their salary and letting workers keep more of that salary is the last hope for any economic stimulus.

Yet, the argument for this tax is two-fold:

First, those who can work from home should help pay for those whose jobs do not allow for this model. Luke Templeman at Deutsche Bank says, “The $48 billion raised could pay for a $1,500 grant to the 29 million workers who cannot work from home and earn under $30,000 a year.”

Second, as the authors of this report point out, “That means remote workers are contributing less to the infrastructure of the economy whilst still receiving its benefits.”

This tax could generate as much as $48 billion in the US, 20 billion euros in Germany, and 7 billion pounds in the UK. This 5% tax would amount to about $10 per day on someone making $55,000 per year

It exempts self-employed and lower-paid staff and applies to countries where there is no government work-from-home mandate.

“Working from home will be part of the ‘new normal’ well after the pandemic has passed. We argue that remote workers should pay a tax for the privilege,” Jim Reid, research strategist at Deutsche Bank, said in the report.

This is a long-winded way of saying: It’s not fair that some people have jobs that adjusted well under these draconian mandates, so let’s redistribute the wealth of the middle class!

I guess the consideration that people who are working from home who have children never factored into this. If parents can’t send their kids to school due to lock downs, they have to pay for at least a few hours of childcare support. They aren’t actually “saving money”, it’s just being spent somewhere else.

It never mattered before that some people worked remotely while others didn’t. Governments insisted on carpooling and building HOV lanes to keep traffic low and “reduce emissions”. When the market responded with electric cars, the government saw how much money they were losing in fuel tax, and jacked up the registration costs for those with electric cars.

This happened especially in states like California. And we are seeing this same panic again where government revenues are down, and desperation takes hold: they need another tax fix!

It really is easy to be glib when you are immune to consequences. People like Dr. Osterholm and those who composed the report at Deutsche Bank are those glib mouthpieces who irreverently brandish ideas of lock downs and privilege taxes about, without a care in the world.

If I did that with a gun, I couldn’t kill as many people as those policies have and will. That’s how irresponsible these opinion leaders are being.

I’m still a big fan of the movement toward normalizing remote work. It’s unfortunate that it had to come about this way, as I thought the environmentalism would have been the driver. Remember, if this wasn’t a great thing, no one would be talking about taxing it.

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