California Governor Gavin Newsom Signs New Budget Creating Nation’s First Tax Credit For Union Dues

In the most populous state in the U.S., California, leading politicians often talk about equity, equality, and their efforts to achieve both. Yet a tax break included in the new California state budget signed by Governor Gavin Newsom (D) on June 27 will exacerbate existing inequality in state taxation, critics contend.

California is one of only a handful of states where union dues are tax deductible for state income tax purposes. As part of the new state budget recently signed by Newsom, California lawmakers have made that targeted tax break even more valuable.

The new budget passed by lawmakers in mid-June and signed by Governor Newsom two weeks later will take California’s existing tax deduction for union dues payments and turn it into a tax credit capped at 33% of dues paid. Changing the deduction to a credit makes the union tax break more generous and benefits those who don’t itemize or have a tax liability.

“While union dues are currently tax deductible, union workers are more likely to not itemize their deductions and therefore do not get the same tax benefit for their dues that higher paid professions are more likely to get for their professional association dues,” notes the budget floor report. The creation of this new tax credit was praised by union leaders. In a statement released shortly after Governor Newsom signed the new budget, Amber Baur, executive director for The United Food and Commercial Workers (UFCW) Western States Council, thanked Newsom and state legislators for “allowing workers to level the playing field that tries to keep them at the bottom.”

This enhanced tax break for union members in the new California budget was dubbed the “Workers Tax Fairness Credit.” But critics claim fairness is an ironic word to use since the credit is not available to the vast majority of workers.

“In California, it’s ‘government of the unions, by the unions, for the unions,’” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. The union dues tax credit in the new budget boosts a tax break most workers can’t utilize because only 15.9% of the state’s workforce is unionized, according to the Bureau of Labor Statistics.

The enactment of the nation’s first state tax credit for union dues payments comes a few months after Democrats in Congress attempted to enact an above-the-line federal tax deduction for union dues payments that would be available even to taxpayers who do not itemize. Critics of that proposal, which was included in the Build Back Better spending package passed by the House of Representatives in 2021, point out it was targeted to benefit a small minority of workers who disproportionately donate to Democratic campaigns, as is the case for California’s new union dues tax credit.

“In effect, they’ve forced the 90% of workers in America who aren’t in a union to subsidize the dues of those who are,” said Representative Kevin Brady (R-Texas), House Ways and Means Committee ranking member, of the union dues deduction that congressional Democrats proposed but have thus far been unable to enact.

“By making union dues tax deductible, Democrats are essentially making it more financially viable for people to contribute to organizations that help elect Democrats,” wrote Dominic Pino, a National Review Institute fellow, about the federal union dues deduction. The same argument could apply to the union dues tax credit in the new California budget. Pino and others who make this assertion can point to political spending data from Open Secrets, which shows 90% of union donations to federal campaigns during the 2020 election cycle were directed to Democrats.

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  1. Robert Dorn says

    These lowlife democrats are always finding ways to payoff their union buddies. Unions are no longer needed by the USA. However they are useful to democrats who collude with them to perpetrate graft and corruption

  2. Really??? says

    It is more troubling then paying off union thugs.

    It is the Socialist funding of unions on the backs of the taxpayer.

    Now all of a sudden the entire tax paying public in California is paying for some union troll getting his union card.

    Now let’s talk about equity.

  3. And never mind that Pretty Boy Newscum is also having us pay for abortions!! Kill those babies taxpayers!

  4. The democrats will throw unions a vote buying bone, and will continue to crash California’s economy. It’s all political theater. The reality is, democrats despise the working middle class.

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