Rethinking Revenue, Treasury and Investment Management

Telework and Local Taxes

Page from GFR

It’s often said that pandemics don’t start trends but rather that they accelerate the trends that were already in motion. Telecommuting is an excellent example. Work from home was slowly on the rise before the pandemic, but since COVID-19, it’s become the default mode for many workers. It’s clear that telework, temporarily borne out of necessity during the pandemic, is now a permanent component of the U.S. labor force.

This could mean many things for state and local finance. It’s easy to speculate that as a result of telework, many well-paid professionals who used to commute to central cities are no longer a reliable source of sales taxes, income taxes, transit farebox revenues, and other revenues that follow traditional downtown economic activity. That’s a major challenge for state and local fiscal policy going forward. But at the same time, telework might keep sales and income tax revenues closer to home as workers stay closer to home