Even though remote employment has brought a series of benefits to the lives of workers across different sectors, many employers in California have started to see a loss in economic growth. These losses have come from policies such as the local tax incentives that come with locating a business within the state.
Initially created with the double purpose of a) spurring economic growth and activity in the area; and b) increasing the base tax in the area via the creation of well-paid jobs, which in turn generate higher income taxes. However, the tax flexibility policies ran into an unforeseen dilemma when the majority of the workforce moved to remote work models as a consequence of the COVID-19 pandemic.
Now that the pandemic has mostly receded, state governments, including the one in California, are facing a new challenge regarding how to keep these benefits under a steady flow. Moreover, maintaining these benefits raises the concern about how this could influence the future of remote and hybrid work.
According to recent research, some cities have already started actively addressing this issue. Such is the case of Plano and Allen, two growing Dallas counties that recently ruled out a clause that lets employers partially count remote and hybrid workers to qualify for their local business incentives.
Although the immediate future remains unclear, remote workers residing in California will likely have to watch out for changes in the near future. With discussions of recession becoming a trending topic, businesses located in the state will likely seek to somehow maintain the lucrative benefits that come with tax breaks and incentives. This means keeping a closer eye on what percentage of the workforce remains in the office and what they do with their time there.
In an attempt to keep these benefits, California employers may put more pressure on employees to return to the office simply to ensure that they qualify for tax benefits.