To Matt's point, a previous employer of mine justified telecommuting based on building rent. They reduced their square footage by 33% and had the displaced workers telecomute. In this case it was justified as a cost savings needed because of poor business prospects, but still there were cost savings even without any tax incentives.

I will add that this solution is much easier to justify in the USA do to the fact that many US homes already have affordable high speed connections in place and the company did not reimburse for this. High speed connections were not as readily available (mainly due to high cost) for some of my European collegues. Affordable high speed may have come to Europe in the last year, but I'll let those currently outside the US comment on this.