Washington, D.C. — A new issue brief from the Center for American Progress Action Fund looks at the anti-union bias baked into the U.S. tax code and suggests three steps to fix it to build power for workers.
Unions and collective bargaining agreements can help address many of the country’s most pressing economic issues, such as income inequality and racial and gender pay gaps. Yet current policy, from labor law to the U.S. Internal Revenue Code, is rife with rules that hinder workers’ ability to organize.
The brief outlines three reforms that policymakers can make to remove anti-union bias from the U.S. tax code:
- Impose limits on corporate deductions of business expenses that are anti-labor: Businesses should not be allowed to deduct money spent on anti-union activities, such as hiring union avoidance consultants, from their tax obligations.
- Create a new above-the-line deduction for union dues: By classifying union dues as an above-the-line deduction, workers would be able to deduct them regardless of whether they chose the standardized deduction or an itemized deduction.
- Change tax law to reduce misclassification of employees as independent contractors: Misclassification robs workers of their right to collectively bargain and denies them access to overtime pay, unemployment insurance, and workers’ compensation. Misclassification also costs local, state, and federal governments billions in unpaid tax revenue.
“We need an economy that is centered around the dignity of work. One way to do that is by building a tax code that prioritizes workers,” said Sen. Sherrod Brown (D-OH). “Our current tax code works hardest for billionaires and corporations; it’s time we put workers first. I’m glad to see the Center for American Progress Action Fund focusing its efforts on this.”
“The congressional Republican tax bill in 2017 was an insult to working Americans,” added Sen. Bob Casey (D-PA). “It was an obscene tax giveaway to the ultrawealthy and multinational corporations. Making matters worse, it took away tax deductions that benefit workers, like the deductions to cover the cost of travel, uniforms, tools, and union dues. We must reverse these harmful measures, and also expand their access to more workers. I’m glad to see the inclusion of my legislation, the Tax Fairness for Workers Act, in this report. This assault on workers and our unions has to stop. Making sure all union members are eligible to take the deduction for dues is a necessary step in that direction.”
“Our nation is at its strongest when workers are empowered to fully exercise their constitutional right to organize,” said Sen. Chris Van Hollen (D-MD). “Unions promote better workplaces, higher wages and benefits, and a more equitable economy for all Americans. Our tax code should encourage, not penalize, the rights of workers, and as a member of the Senate Budget Committee, I will push to fast-track the changes recommended in this report to make our tax code fairer for all workers.”
“Current tax law favors big corporations and creates unnecessary roadblocks for workers who are trying to organize,” said David Madland, co-author of the brief and senior adviser to the American Worker Project at the Center for American Progress Action Fund. “But policymakers have the ability to remove those roadblocks by reforming the tax code to enact policies that are both pro-worker and, ultimately, more equitable.”
Read the issue brief: “3 Pro-Union Reforms To Improve Tax Fairness for American Workers” by David Madland and Malkie Wall
For more information or to speak to an expert, contact Julia Cusick at [email protected].