House tax bill subsidizes union political campaigns
Published in Washington Examiner
October 7, 2021
By James Sherk, America First Policy Institute and Institute for the American Worker and
F. Vincent Vernuccio, Mackinac Center for Public Policy and Institute for the American Worker
The tax bill going through the House discriminates against workers who do not want to support union politics. The draft House reconciliation tax bill contains a $250 deduction for union dues. But only workers who fund union political activities can claim it. This indirectly subsidizes union political campaigns.
In 23 states that are not “right to work” states, unions can get private-sector workers fired for not paying union fees. However, they cannot force those workers to join the union. At most, they can force them to pay for core operational expenses. Such “agency fees” typically cover the vast majority of dues but still provide some savings. Those savings largely come from not paying for union political activities or lobbying.
About 1 in 10 unionized workers in these states pays agency fees instead of becoming a full union member. Some nonmembers object to their union’s political agenda. Others simply have better uses for their money.
The House bill’s new $250 tax deduction for union dues is above the line and will cost taxpayers $4.2 billion over the next decade. The kicker is that only union members can claim it. Agency fee payers cannot. To get the tax break, workers must fund union political activities.
This structure eliminates most of the financial benefits of becoming an agency fee payer. Opting out of union membership still reduces dues obligations. But it also costs workers the $250 deduction. On net, many agency fee payers would barely break even.
This will push unionized workers to fund political activities they do not actually support. Polls show union members think unions focus too much on politics instead of workers. One poll found that two-thirds of union members would prefer their union spend dues on creating jobs and focus on representation instead of politics. Another found that 81% of union households want unions to get their members’ permission before spending dues on politics. Many unionized workers dislike union political spending.
The current system puts some pressure on union leaders to heed workers’ preferences. If they spend too much on politics, their members can opt out and pocket the difference. The House bill largely eliminates those savings. This reduced pressure will reduce union accountability to the rank and file.
This measure also circumvents the federal prohibitions on tax deductions for politics and lobbying. People who donate to political campaigns do not get a tax break. But the House bill makes paying union dues that expressly fund political activities tax deductible.
This deduction creates a one-sided tax subsidy for political activists. Union leaders overwhelmingly support Democrats even as 40% of their members vote Republican. In the 2020 election, unions spent more than $250 million on political campaigns. Almost 90% of their donations to candidates went to Democrats . This provision subsidizes almost exclusively left-leaning politicians through the tax code.
The tax code should not be used in this way. Taxes generate the revenue that funds all government operations. They should operate without partisan preference. Turning the tax code into a tool to encourage membership in one-sided activist organizations sets a terrible precedent.
Many would quickly see the problem if Congress created a tax break for gun owners — but only if they joined the National Rifle Association. Or if small-business owners had to join their local chamber of commerce to write off certain business expenses. The same principle should apply here. Workers should not be required to donate to union political campaigns to get tax deductions.
James Sherk is the director of the Center for American Freedom at the America First Policy Institute and a senior fellow at the Institute for the American Worker. F. Vincent Vernuccio is a strategic adviser at the Mackinac Center for Public Policy and president of the Institute for the American Worker.