TaxProf Blog

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

Monday, January 30, 2017

Hackney Presents Labor Unions And Tax Exemption Today At UC-Irvine

HackneyPhilip Hackney (LSU) presents Subsidizing the Heavenly Chorus: Labor Unions and Tax Exemption at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

Labor interests are historically politically weak in our U.S. democracy. Laborers who desire to form an organization to advance their political interests face classic collective action problems. This presents a significant challenge for a modern democratic state that depends upon organized interests to represent the political voice of its citizens. This Article examines the impact of our federal income tax system on labor interests. It focuses upon the provision of tax exemption to labor unions and the deduction of labor union dues. I adopt a model that presumes in a democracy we should aim for one person one political voice. By political voice I mean more than the concept of one person one vote; it refers to the ability of citizens to participate in setting the political agenda and to vote on any final decision.

In a modern democratic state, we largely depend on our organized interests to fulfill this fundamental democratic role of political voice. To the extent our institutions hinder or even harm political voice equality, we should seek to make change. I find that because we widely provide tax exemption to all nonprofit organizations such as business interests, which face much less severe collective action problems than do labor interests, our tax system likely does more harm than good to the political voice of labor. In an attempt to right that political voice inequality, I contend that we should subsidize labor interests 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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