TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, September 7, 2016

Hackney Presents Labor Unions And Tax Exemption Today At Northwestern

HackneyPhilip Hackney (LSU) presents Subsidizing the Heavenly Chorus: Labor Unions and Tax Exemption at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

Labor interests are historically politically weak in our US democracy. They face classic collective action problems. Laborers are great in number, do not have strong political skills, and are unlikely to recoup the cost of participating in labor union activity. Without assistance, we should expect labor interests to engage in limited and sporadic organized political efforts. This presents big problems for a modern democratic state that depends upon organized interests to represent the interests of its citizens. This Article examines the impact of our federal income tax system on labor interests in the context of the provision of tax exemption to labor unions and the deduction of labor union dues.

I find that because we widely provide tax exemption to all nonprofit organizations including business interests, tax exemption as currently structured likely does more harm to the interests of labor, and consequently our democracy, than good. I contend that we should subsidize labor through tax exemption, while simultaneously ending exemption for business interests. Additionally, I argue we should provide an above the line deduction for union dues to equalize the treatment of laborers and businessmen who pay dues to their relevant labor union or business association.

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