The rather staggering sum raises a host of issues plaguing regional economies, city budgets, downtowns, transportation systems, companies and their workforces.
Is your company forcing you to stay in the office to avoid losing tax benefits?
It’s hard to say exactly, but probably not.Various contracts usually have a force majeure Terms relating to events beyond the control of the parties. A well-timed global pandemic in the history of technology has caused irreversible changes in the nature and location of work. First, cracking down on employers seems to be directly counterproductive to the original idea of incentives for economic development.
Some states have abandoned early plans to aggressively enforce old tax incentive rules—It’s worth noting that Texas, after some initial tough talk, is thinking better of its plan and passed a bill to give remote workers certain tax benefits, and New Jersey. Payroll company ADP recently reminded its clients: Michigan, Utah and Arizona Similar changes were enacted.
There is no central repository tracking these changes to eligibility rules, but state and local officials have certainly reconsidered ways of lashing out at employers desperate to get workers back into the office on their own and penalizing them for failing to get them back.
These are great tax breaks.Why shouldn’t Will local and state governments go after companies that don’t comply?
First, it’s worth remembering that economic development is not an exact science. We remain committed to providing incentives that drive good economic outcomes. Are economic development plans effective? Sometimes, but usually not in the way expected and rarely in a way that confirms an obvious cause-and-effect relationship.
Second, the rapid emergence of communication and collaboration technologies, coupled with lockdown-driven work-from-home policies that may seem ill-advised in retrospect, appeared to disrupt the economic fabric of the workplace. And there is no turning back.
Do the incentives for economic development need to change?
They must. The way the workplace operates has been forever changed, with profound consequences for employers, employees, business districts, cities, and the executives who make corporate investment decisions.
There has been extensive media coverage of the “urban apocalypse cycle” and the “death of urban centers.” However, workplaces and cities of all sizes will undergo profound changes in the coming years, creating huge opportunities for cities to embrace the future.
It’s no secret that many companies want employees to return to the workplace if possible. It’s no secret that most employees hate commuting and waste time and money in the process. However, the organizational benefits of face-to-face working are real: collaboration, coaching, mentorship, and friendships. Over time, employees sitting alone at home can erode organizational culture and effectiveness, while full-time remote work can also have negative morale and mental health effects on many employees.
The government would be wise to help employers begin to define a new work reality that helps keep people in the workplace at least for a significant period of time to shore up local business, sales taxes and property values. This will not be a return to the old model of people sitting in cubicles for 50 to 60 hours a week, but a new model that emphasizes the productivity and social benefits of concentrated and regular gatherings.
New economic developments could mean a complete rethinking of the property tax system. Transportation systems may have to fundamentally change. Public infrastructure built for a previous era of skyscrapers may prove to be poorly designed to meet tomorrow’s needs.
Perhaps tomorrow’s economic development incentives may be more public convenience-oriented and less company-centered. Areas that were once paved plazas or parking lots for commuters can be transformed into sheltered outdoor public spaces, providing places to rest and work, covered with the highest speed Wi-Fi, and ready with safe and clean public restrooms.
Perhaps these tax incentives should be targeted at landlords and their tenants, helping them provide amenities that can help entice workers to leave their homes at least some of the time: space to socialize, exercise, eat, and relax. Silicon Valley companies may be doing more right than wrong with silly game areas, beer tap refrigerators and on-demand snacks. Transforming a drab, 40-year-old office building into an open, humane environment would be much easier with tax breaks and regulatory assistance.
The world of work is undergoing painful changes before our eyes, and this process will continue for a decade or more. Local governments looking to boost economic prosperity are advised to emphasize innovation and out-of-the-box approaches rather than punitive reviews of early pre-pandemic contract terms.
Jim Small is Healthy real estate investment.
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