Praise and Criticism Hits California Union Dues Tax Credit

By Jill McLaughlin
Jill McLaughlin
Jill McLaughlin
July 14, 2022 Updated: July 15, 2022

California’s union members could soon get a special union-dues break on state taxes under a new law.

Senate Bill 189, signed into law on June 30, includes a plan to “[i]mplement a tax credit under the Personal Income Tax Law to offset a portion of costs associated with union membership.”

However, the tax credit still is at least two years away. Legislators will need to determine in 2024 if the state has enough funds to pay for it, and more legislation is needed for the program to begin.

It would only affect the 16 percent of state workers with union memberships, which in 2021 was 2.4 million people.

The United Food and Commercial Workers Union praised the program, saying it levels the playing field for union workers.

“The budget approved today by Governor Newsom and the Legislature establishes a refundable tax credit for union dues, allowing workers to level the playing field that tries to keep them at the bottom,” said Amber Baur, executive director of the union’s Western States Council.

The credit, the first of its kind in the nation, also met criticism from fiscal hawks.

“This is a massive gift to union members,” said John Moorlach, a former Republican state senator from Costa Mesa, to The Epoch Times. “We’re in one of those eras again where an association is wielding too much power.”

Moorlach, the only CPA in the legislature during his 2015-20 tenure, explained how the tax credit would work. A union worker who paid $1,200 in dues and owed $1,000 in taxes would reduce the liability by $400 (one-third), leaving the state only $600, Moorlach said.

“[The law] has a bad aroma. It doesn’t smell right. It’s a massive tax law change,” said Moorlach.

The bill came as a reaction to the 2018 U.S. Supreme Court ruling Janus v. American Federation of State, County and Municipal Employees. It held forcing public employees to pay union dues violated the First Amendment.

“If this tax credit becomes law, that burden would be placed squarely on taxpayers,” Maxford Nelsen, the director of labor policy for the conservative think tank Freedom Foundation, told The Epoch Times. “It’s very troubling.”

Critics say the tax credit is part of an effort by state officials to promote union membership after the Supreme Court ruling.

“I can say this is one of the worst proposals we’ve seen so far,” Nelsen said. “It’s only a step or two removed from the state of California writing checks to the Democratic Party. I think that’s pretty outrageous.”

Labor, restaurant and teachers’ unions have poured millions into Newsom’s campaigns. Most recently, donors spent large sums of money to fight the 2021 statewide effort to recall him.

The governor has collected more than $83 million for his campaign war chest from labor unions, entertainment, the tech industry, and others.

California’s largest union, the Service Employees International Union (SEIU) Local 100, the chapter for state employees, boasts nearly 60,000 members, according to its website.

The national SEIU has spent $13.4 million contributing to candidates, party committees, and outside political groups in this campaign cycle, while its members spent $338,000.

The union has contributed nothing this year to Republican candidates, while 99 percent of their funds went to Democrats or for efforts against electing Republicans, according to Open Secrets.

Other unions that contributed more than $1 million to Newsom’s effort against the recall included the Professional Engineers in California Government, the California Building Industry Association, Advocates for Public Employees, the California State Association of Electrical Workers, the California Teachers Association, the California Correctional Peace Officers Association, and two SEIU local chapters.

Newsom also also included $4.5 billion in the fiscal 2022-23 budget for labor-related items, including workforce development, enforcement of labor laws, and small-business support. Creating more apprenticeships and job training for union workers alone garnered $2.5 billion.