The Privilege Tax is Another Nail in the Coffin of Economic Freedoms

In this Thursday, Oct. 19, 2017, photo, freelancer Jaimyn Chang works in his home office in Raleigh, N.C. Chang does search engine optimization work for small businesses and now requires a credit card number up front to do work because of the many times people didn't pay. (AP Photo/Gerry Broome)

With Democrats looking at a razor-thin House majority, and a Senate that well may remain Republican, they continue to find not-so-creative ways to attack Americans’ established and newfound liberties. As I discussed on a panel in October, the PRO Act and S.4378, the so-called Worker Flexibility and Small Business Protection Act were created to have a chilling effect on entrepreneurism, the independent contractor model, and small business.

“There is a War on Work happening in our country. Local, state, and national lawmakers are crafting legislation to restrict your freedom on the type of professional, vocational, or gig work in which you choose to engage. All this, in the middle of a global pandemic.

“In fact, the legislative maneuvers over future COVID stimulus funds have much to do with House Speaker Nancy Pelosi inserting poison pills aimed at independent professionals and small business under the guise of worker “helps”. It is a concerted effort to destroy your economic and vocational freedom and opportunity, and to kill the entrepreneurial and independent spirit on which America was founded.

Same itsh, different day. Here is yet another attack on the horizon, couched in the deceptive cloak of help.

A report from Deutsche Bank supports a “tax” of 5 percent on people who work from home.

I. Kid. You. Not.

“Deutsche Bank unveiled a new report Tuesday that said people who choose to work from home should be taxed 5% of their salary, with the revenue generated going to help people who cannot work from home.

“The report states a 5% ‘privilege’ tax could benefit workers who don’t have the opportunity to stay home.”

“Privilege” tax? Really? For many of us, working from home has little to do with “privilege”, and much to do with survival of the fittest. It takes ingenuity to survive and thrive in the midst of economic uncertainty; independent contractors, gig and app workers, and the self-employed are the embodiment of this.

Independent contracting and work-from-home opportunities have increased during this global pandemic. Close to 30 percent of professionals have found freelancing and work-from-home a lifeline, as they watched their brick-and-mortar jobs reduce their hours or disappear altogether. Now these Deutsche Bank economists are attempting to hijack these gains under the guise of helping others.

C.S. Lewis said it well,

“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

It is the lack of choice and individual responsibility in this equation that is truly egregious. Most people work from home because they want to. People who cannot or do not work from home are generally those who prefer not to. For whatever reason: flexibility, health, caring for a sick relative or a special-needs child, no one should be penalized for making the choice that suits their life, skill set, and earning potential.

This tax is another form of tyranny; a way for the government to dictate how your income can be spent, and to diminish the incentives for making the choice to work on your own. It’s a naked incursion on your economic freedom.

In the battles over COVID relief, a suspension of the payroll tax was championed by President Trump, but Cruella de Ville Nancy Pelosi shot it down. One thing that would have been beneficial in a temporary suspension of the payroll tax is that people could see how much the government already takes, and how much it is wasted on things that do not matter. Those who work for themselves look at tax policy differently, and also pay more attention to how elected officials use their tax dollars. That is how it should be. But too often, fixed wages, set hours, and supposed protections create complacency rather than urgency.

The report hypothesizes this ridiculous scenario:

“Deutsche Bank estimates that the average U.S. worker who chooses to work from home makes $55,000 a year and would pay roughly $10 per day in tax. They argue the $10 is a rough equivalent of what an office worker might spend on commuting, lunch and laundry. However, if the employer doesn’t provide their staff with a permanent desk, then the employer should be responsible for the tax, the report said.

“Deutsche estimates the tax could raise $49 billion each year to help those in industries that do not permit them to work remote.

This hypothetical does not even bother to factor in the above-average “U.S. worker”, many who are high-end professionals who garner over $100,000 in revenue a year. A 5 percent tax would affect them differently than an average middle manager. And what if I don’t want to give you $10.00 a day? Our founding fathers threw tea in the Boston Harbor to protest excessive taxation. In these modern times, it should be the legislators that go in the drink for coming up with this nonsense until they reject it. How, exactly, will this tax be implemented? Will it be federalized, or up to the states? Some states do not have a business tax or local taxes, which is what makes them attractive to people who want to keep more of their earnings. This Privilege Tax smacks of an end-run around those states in order to bilk more money from hard-working Americans.

Before the industrial revolution and mass production, communities acted as units, and each person in the community had their place: the grocer, the tailor, the farmer, the banker, the handyman, the nanny, the accountant, the writer, and on, and on. Everyone worked in concert with each other and negotiated with each other toward the common goals of food, shelter, education, connection and community building.

If anything, the increased ability to work from home and the gig economy has brought that back into balance. Allowing professionals to craft their own schedule gives them the time and flexibility to contribute to their community. The accountant can step away from his client’s balance sheet to coach his child’s soccer team. The graphic designer can supplement their income through app driving, giving greater mobility and freedom to the elderly, disabled, and helping single moms get their children to extracurricular appointments. The handyman can help build low-income housing, or help a widow with repairs to her home.

This becomes less and less prevalent when legislators use academics and economists to craft policies that benefit government control and theft, rather than economic freedom and strengthening the community.

It also punishes ingenuity and the ability to hustle. Independent work separates the worker bee from the drone. People who have (or want to have) the ability to further themselves, are the ones that think outside the box, and find creative ways to get and keep work on their terms; those that need the structure of time, place, and job description are cut from a different cloth. Both serve and contribute to the economy, and to the community. One should not be penalized for the benefit of the other.

This Privilege Tax, the PRO Act, and S.4378 only serve to reward and codify one model, and eliminate the other.

Mark my words: A Biden-Harris administration will work to restrict any form of business that does not involve Labor Union control, and these bills and proposals are the tools in their arsenal. The cautionary tale of California’s AB5 should give our lawmakers pause; instead, they are doubling down to further destroy American commerce, and the hardworking Americans who fuel the economic engine. It needs to be stopped.