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Democrats Push Tax Breaks for Union Political Activity

Reconciliation bill has tax breaks for unions that fund Democratic campaigns

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September 22, 2021

House Democrats are fighting to give a tax break to workers, but only if they agree to subsidize union political spending, which pours billions into Democratic campaign coffers.

The proposal, which is part of the $3.5 trillion reconciliation package, allows union members to write off up to $250 worth of union dues annually. The tax deduction excludes dissenting workers who pay partial fees that do not cover political spending. Republican leaders and labor watchdogs said a tax write-off should include all labor union fees, not simply political ones, and should be debated as an individual piece of legislation rather than tucked into a massive funding bill. 

Rep. Virginia Foxx (R., N.C.), ranking member on the Committee on Education and Labor, said Democrats want to reward labor unions for their consistent political support.

"Democrats’ incestuous relationship with union bosses is harming hardworking taxpayers," Foxx told the Washington Free Beacon. "This proposal blatantly discriminates against workers who choose not to join a union or don’t subscribe to the left’s socialist ideologies. Union bosses aren’t getting a tax break, they’re getting repaid for their loyalty to Congressional Democrats and the Biden administration."

Labor unions spent nearly $2 billion on elections and lobbying in the 2020 election cycle, with millions in additional spending that watchdogs say is illegally classified as charitable on federal labor filings. Top labor union PACs overwhelmingly support Democratic candidates. Union members have the option to opt out of dues that fund this political activity, but in some states still have to pay fees to cover union representation in negotiations and grievances. The House proposal would only allow tax write-offs on dues that go toward political spending.

Frank Ricci, a former local union president and labor fellow at the Connecticut-based Yankee Institute, said Democrats tried to sneak this provision into the massive reconciliation bill because they know it is too controversial to pass on its own. 

"This is another power grab at the expense of the taxpayers," Ricci told the Free Beacon. "If legislators believed in this provision, it would be properly legislated, not hidden away in reconciliation." 

The proposal passed along party lines in the Ways and Means Committee in September.

A separate proposal in the reconciliation package would benefit unions by establishing a $4,500 tax incentive for the purchase of electric vehicles manufactured in a union plant. F. Vincent Vernuccio, president of the Institute for the American Worker, said the plan amounts to a handout for unionized manufacturers such as General Motors and Ford, while excluding Tesla and other non-union autoworkers. Vernuccio said these proposals are meant to empower unions that are desperate to stop the decades-long decline in membership. 

"The discrimination against workers who choose not to be part of a union or pay for its politics in the Democrat reconciliation package is stunning in its brazenness," Vernuccio told the Free Beacon.

The budget proposals come as Democrats push what they are calling the most pro-union legislation in history: the PRO Act. The bill would put an end to the 27 "right to work" states that ban mandatory union membership as a term of employment. Greg Mourad, vice president of the National Right to Work Committee, said this cozy relationship between Democratic lawmakers and union bosses comes at the expense of rank-and-file workers. 

"This is a blatant payback that effectively conditions a tax deduction on contributions to Democrat candidates and their political priorities," Mourad told the Free Beacon. "By intentionally excluding nonmember workers who are forced to pay union fees but choose not to support unions’ political and lobbying activities, this scheme drops all pretense about helping rank-and-file workers and demonstrates that the real beneficiaries are union boss politicos."