Lucrative tax break for organized labor would cost taxpayers nearly $1.8 billion

President Biden’s push to reward one of his biggest allies, organized labor, with a lucrative tax break will cost taxpayers nearly $1.8 billion over the next decade, according to a new analysis.

The Joint Committee on Taxation released an in-depth analysis of the tax proposals included within Mr. Biden’s 10-year, multi-trillion-dollar social welfare bill on Thursday. It found that allowing union members to write off some of their dues payments on their tax filings would wind up depriving the federal coffers of approximately $1.8 billion over the next decade, or $180 million a year.

As currently written, the provision would allow members of a labor organization to deduct $250 in union dues off their annual tax returns.

The Coalition for a Democratic Workplace, a pro-business group that represents more than 600 major private sector organizations, says the tax break amounts to an improper political payoff.

“Requiring taxpayers to subsidize union dues as part of the Democratic budget plan favors unions and their political allies over workers and small businesses,” said Kristen Swearingen, the chair of the coalition. “Congress should focus on policies that support all working Americans, including those that increase individual deductions related to job training, rather than pushing tax breaks for unions that support and fund Democratic politicians and causes.”

Democrats contend that the incentive is meant to reward workers, rather than union bosses.

The deduction comes at a time that union membership is on the decline nationally. According to the Bureau of Labor Statistics, union enrollment dropped by more than half between 1983 and 2019, falling from 20.1% to 10.3%.

Mr. Biden, who allied himself strongly with organized labor while running for the White House last year, has promised to arrest the overall union decline. Since taking office, the president has appointed several former union leaders to high-ranking administration posts. The White House has also championed a staunch union agenda, including pushing for the  “Protecting the Right to Organize (PRO) Act” now in Congress.

The legislation, which faces long odds in Congress, would overhaul labor laws, giving unions greater power to organize and collectively bargain with employers. It would also reclassify many independent contractors as regular employees, bound by conventional workplace protections.

The AFL-CIO calls federal labor laws “woefully outdated,” and recently elected AFL-CIO President Liz Shuler, in remarks late last month, urged passage of the PRO Act and protections for unionized public sector workers as well. She said the labor movement has been energized by a series of recent strikes by workers in multiple industries seeking better wages, benefits and working conditions.

“We’re having a moment in the country right now:  #Striketober,” Ms. Shuler said in an October 26 address demanding passage of the PRO Act and a public workers companion bill. “Workers are not going to put up with poverty wages, little to no benefits and they’re not going to risk their lives when there’s a lack of safety protections on the job.

Unlike the PRO Act, the $250 union tax break is likely to become law since Democrats are pushing Mr. Biden’s social welfare bill through Congress along party lines.