It’s time to end tax deductions for anti-union activity

As workers attempt to form unions at companies such as Amazon and Starbucks, journalists have highlighted a number of practices that appear to be designed to prevent workers from organizing, including: anti-union texts Starbucks allegedly sent to its employees; a captive audience anti-union meeting with six members of Starbucks management that one barista was reportedly required to attend; anti-union literature Amazon reportedly sent to workers and posted on the internet and in warehouse bathrooms; and the $3,200 per day that Amazon reportedly paid to just one of the anti-union consultants it hired to counter union efforts in Bessemer, Alabama.

Government investigators have also found that Amazon improperly pressured workers to vote against joining a union in Bessemer and alleged that the corporate giant engaged in surveillance of workers’ discussions at a New York warehouse. The company denies these claims.

These allegations highlight the need for Congress to pass reforms that make it possible for workers to freely and fairly join unions. Pro-union legislators have rightly focused on the Protecting the Right to Organize Act (PRO Act), which would increase penalties for companies that violate workers’ rights, among other reforms. Yet, as is often the case, the tax code must be scrutinized, too. One small yet important fix to the tax code deserves greater attention in the effort to strengthen workers’ rights.

Firms are currently allowed to deduct the costs of their anti-union activities as ordinary and necessary business expenses from their corporate taxes. In other words, taxpayers are effectively subsidizing anti-union activities.

These types of anti-union actions are sadly very common. Estimates suggest that three-quarters of employers hired anti-union consultants in union elections with more than 50 workers. Union-avoidance consulting firms seek to ensure that workers vote against the union — and, more cynically, their goal is often to prevent a union election from taking place at all. Indeed, one union-avoidance consulting firm advertises that it can help employers “not only to win your election but also teach your staff advanced techniques for union avoidance to ensure your company never goes through a union election again.”

Compounding the challenges for workers is that companies may even break the law in their anti-union campaigns: One study estimates that employers are charged with violating the law in nearly 42 percent of all union elections.

While proposals such as the PRO Act are essential to strengthen workers’ rights, even if the PRO Act were to pass, Americans would still be indirectly supporting employers’ anti-union actions because of the way tax law is currently structured.

But tax law can be changed, too. Congress has, in several circumstances, limited deductions for certain corporate expenses. For example, corporations may not deduct expenses related to lobbying and other political spending, excessive executive compensation and illegal activities such as bribes.

Congress should add anti-union activities to this list — as the Center for American Progress Action Fund has long advocated — which is exactly what the No Tax Breaks for Union Busting (NTBUB) Act introduced today by Sen. Bob Casey (D-Pa.) would do.

This reform would not only help give workers a fairer shake, but it would also save taxpayer money. Rough approximations of a more limited proposal suggested savings of around $71 million per year, indicating that the NTBUB Act would produce even more significant savings.

Importantly, Congress can pass this type of tax law change during the budget reconciliation process — a process that allows certain spending and tax bills to clear Congress with a simple majority and avoid the possibility of a filibuster in the Senate. For example, former President Donald Trump’s 2017 law that cut taxes for the wealthy included provisions prohibiting corporate deductions for certain fines and penalties and was passed under the budget reconciliation process with 51 votes in the Senate.

Pro-union policy reforms should be a top priority for policymakers because, as President Biden has highlighted in numerous speeches, stronger unions are essential to addressing the most pressing challenges our country faces. Unions help ensure workers’ wages increase faster than the cost of living; reduce extreme economic inequality; shrink gender pay gaps; close racial wealth gaps; boost economic mobility; and help ensure that politicians listen to the will of the people.

When Congress passed the National Labor Relations Act in 1935, it recognized how important unions are to American society. Indeed, the law’s stated purpose is “encouraging the practice and procedure of collective bargaining.”

Sadly, current law falls well short of this goal. Many policy changes are needed to promote unions and collective bargaining, as well as rebalance the power between workers and employers. Fixing the tax code so that it no longer encourages employer actions that run counter to this goal would be a step in the right direction.

David Madland is the author of “Re-Union: How Bold Labor Reforms Can Repair, Revitalize, and Reunite the United States” and is a senior fellow at the Center for American Progress.