Should Union Dues Be Tax Deductible? (S. 2718)

What is S. 2718?

(Updated October 28, 2019)

This bill would reinstate tax deductions for union dues and expenses and unreimbursed job expenses (such as uniforms) which existed in the previous tax code, but were eliminated by the Tax Cuts and Jobs Act. Under this bill, most unreimbursed job expenses would continue to be deductible as miscellaneous deductions on Schedule A of individuals’ itemized tax returns. However, union dues and expenses would become elevated to an above-the-line deduction, allowing even taxpayers who do not itemize their tax returns to claim deductions for union dues.

Argument in favor

Until the passage of the Tax Cuts and Jobs Act (colloquially referred to as “the GOP tax bill”), union dues and unreimbursed job expenses were tax-deductible for itemized filers. This bill merely restores this part of the tax code to its previous state.

Argument opposed

The Tax Cuts and Jobs Act doubled the standard deduction which made smaller deductions like this less useful because itemizing became unnecessary for many taxpayers. Additionally, adding another deduction to the tax code means forgoing that money in future tax revenues.

Impact

Workers with unreimbursed job expenses; itemized tax filers; union members; and the Internal Revenue Service.

Cost of S. 2718

A CBO cost estimate for this bill is unavailable.

Additional Info

In-Depth: Sen. Bob Casey (D-PA) introduced this bill to bring back tax deductions for union dues, unreimbursed job expenses, and other miscellaneous job-related expenses, which were eliminated in the GOP’s Tax Cuts and Jobs Act:

“The GOP tax bill was a partisan giveaway to the super wealthy and corporations, leaving the American worker behind. Although it is now signed into law, I will continue to fight to reform their scheme into something that is focused on working Americans. Reinstating the deductions for union dues and unreimbursed job expenses is just the start of what we need to do for the millions of Americans who were left out of the GOP tax bill.”

This bill has the support of many prominent labor unions. The United Steelworkers (USW), AFL-CIO, NABTU, Teamsters, International Association of Machinists (IAM), Communications Workers of America (CWA), United Auto Workers (UAW), American Federation of Government Employees (AFGE), National Education Association (NEA), United Food and Commercial Workers (UFCW), United Mine Workers of America (UMWA), and American Federation of State, County and Municipal Employees (AFSCME) all support this bill.

This bill has five cosponsors, all of whom are Democrats.

Of Note: Although lower than in the past, union membership remains sizable in the United States, with 10.7% of American wage and salary workers reporting themselves as members of unions in 2017, adding up to a total of 14.8 million people (up 262,000 from 2016). In total, 16.4 million wage and salary workers were represented by unions in 2017 (14.8 million union members and 1.6 million workers with no union affiliation, but whose jobs are covered by a union contract).

Unions provide workers with meaningful earnings benefits: among full-time wage and salary workers, union members had median usual weekly earnings of $1,041 in 2017, while non-union members had median weekly earnings of $829.

Making union dues an above-the-line deduction, rather than claimable only when itemizing one’s return, may appreciably increase the number of union members who claim their dues on their tax returns. Considering that only 30% of taxpayers filed itemized deductions, it is likely that not all union members who were eligible to deduct their dues from their tax bill did so, owing to the onerous process of itemizing one’s taxes.

Converting union dues to an above-the-line deduction will allow all 14.8 million dues-paying union members in the U.S. to claim somewhere in the neighborhood of $432 - $610 a year in dues on their taxes (based on a Heritage Foundation study of average union dues across the United States from 2005-2013).

Media:

• Sponsoring Sen. Bob Casey (D-PA) Press Statement