Tax deductions

It’s time to end tax deductions for union busting

As workers attempt to form unions at companies such as Amazon and Starbucks, reporters have highlighted a number of practices that appear to be designed to prevent workers from organizing, including: anti-union texts that Starbucks would have sent to its employees; a captive-audience anti-union meeting with six members of Starbucks management that a barista should have attended; anti-union literature sent by Amazon to workers and posted on the Internet and in warehouse bathrooms; and the $3,200 a day Amazon allegedly paid just one of the anti-union consultants it hired to counter union efforts in Bessemer, Alabama.

Government investigators also found Amazon improperly pressured workers to vote against union membership in Bessemer and alleged the corporate giant engaged in surveillance of discussions. workers in a New York warehouse. The company denies these allegations.

These allegations underscore the need for Congress to pass reforms that allow workers to join unions freely and fairly. Pro-union lawmakers have rightly focused on the Protection of the Right to Organize Act (PRO Act), which would increase penalties for companies that violate workers’ rights, among other reforms. Yet, as is often the case, the tax code also needs to be scrutinized. A small but important correction to the tax code deserves greater attention in the effort to strengthen workers’ rights.

Companies are currently allowed to deduct the costs of their union busting activities as ordinary and necessary business expenses from their corporation tax. In other words, taxpayers are effectively subsidizing union busting.

These types of union busting are unfortunately very common. Estimates suggest that three-quarters of employers hired anti-union consultants in union elections with more than 50 workers. Union avoidance consultancies seek to ensure that workers vote against the union – and, more cynically, their goal is often to prevent union elections from taking place. Indeed, a union avoidance consultancy advertises that it can help employers “not only win your election, but also teach your staff advanced union avoidance techniques to ensure that your company does not will never again have union elections”.

Complicating the challenges for workers, companies may even break the law in their anti-union campaigns: one study estimates that employers are accused of breaking the law in nearly 42% of all union elections.

While proposals such as the PRO Act are key to strengthening workers’ rights, even if the PRO Act were to pass, Americans would still indirectly support employer anti-union actions because of the way the tax law is currently structured.

But the tax legislation can also be changed. Congress has, in several circumstances, limited deductions for certain business expenses. For example, companies cannot deduct expenses related to lobbying and other political expenses, excessive executive compensation, and illegal activities such as bribes.

Congress should add union busting to that list — as the Center for American Progress Action Fund has long advocated — which is exactly what the No Tax Breaks for Union Busting (NTBUB) bill introduced today by Sen. Casey (D-Pa.) would.

This reform would not only help give workers fairer treatment, but it would also save taxpayers’ money. Rough approximations from a more limited proposal suggested savings of about $71 million per year, indicating that the NTBUB Act would produce even greater savings.

It is important to note that Congress can enact this type of tax law change during the budget reconciliation process – a process that allows certain tax expenditures and bills to be approved by Congress by simple majority and avoid the possibility of a buccaneer in the Senate. For example, former President Donald Trump’s 2017 law that cut taxes for the wealthy included provisions prohibiting business deductions for certain fines and penalties and passed through the budget reconciliation process with 51 votes in the Senate. .

Union-friendly policy reforms should be a top priority for policymakers because, as President Biden has emphasized in numerous speeches, stronger unions are key to addressing the most pressing challenges facing our country. Unions help ensure that workers’ wages rise faster than the cost of living; reducing extreme economic inequality; reducing gender pay gaps; closing racial wealth gaps; stimulate economic mobility; and help ensure that politicians listen to the will of the people.

When Congress passed the National Labor Relations Act in 1935, it recognized the importance of unions to American society. Indeed, the stated purpose of the law is “to encourage the practice and procedure of collective bargaining”.

Unfortunately, the current legislation is far from achieving this objective. Many policy changes are needed to promote unions and collective bargaining, as well as to rebalance power between workers and employers. Fixing the tax code so that it no longer encourages actions by employers that run counter to this objective would be a step in the right direction.

David Madland is the author of “Reunion: How Bold Labor Reforms Can Fix, Revitalize, and Unify America » and is a senior fellow at the Center for American Progress.