Michigan Bill Would Force All Taxpayers to Fund Unions

COMMENTARY Jobs and Labor

Michigan Bill Would Force All Taxpayers to Fund Unions

Jun 14, 2023 3 min read
COMMENTARY BY
Rachel Greszler

Senior Research Fellow, Roe Institute

Rachel researches and analyzes taxes, Social Security, disability insurance, and pensions to promote economic growth.
American Federation of Teachers President Randi Weingarten speaks during the Democratic Get Out the Vote Rally in Detroit, Michigan on October 29, 2022. Dominick Sokotoff/SOPA Images/LightRocket/Getty Images

Key Takeaways

If a worker pays only $500 in state taxes and $2,000 in union dues or fees, they will get back their $500 in taxes plus a check for $1,500 from Michigan’s Treasury.

The large portion of dues that unions spend on campaign donations and lobbying for political causes are counter to half the population’s beliefs.

With taxpayers paying the cost of union dues for which they are not members, many would be forced to indirectly fund political activity counter to their beliefs.

Suppose you received a bill asking you to pay for your neighbor’s gym membership. The next day, a bill arrives for another neighbor’s political contribution to a candidate you don’t much care for, and the following day, the company that painted your neighbor’s house an atrocious canary yellow hands you the bill.

This could happen to Michigan residents under a proposal that would require taxpayers to foot the bill for private services, purchased by others, and which are of no benefit or impose negative consequences for taxpayers.

House Bill 4235 would create an unlimited, fully refundable tax credit for all dues and fees paid to labor unions. (The credit appears to apply to both private and public sector unions). This would be an unprecedented assault on taxpayers.

While California Gov. Gavin Newsom has signed a bill that could provide up to $400 million in tax credits to offset union members’ dues, that proposal has a spending cap and is contingent on the legislature appropriating funds for the tax credit. Michigan’s proposal puts no limit on the cost. Moreover, the tax credit is fully refundable, which means that if a worker pays only $500 in state taxes and $2,000 in union dues or fees, they will get back their $500 in taxes plus a check for $1,500 from Michigan’s Treasury.

>>> Law Doesn’t Allow Unions To Destroy Company Property, High Court Affirms

Unions—both those representing public and private workers—are private organizations that provide exclusive services.

Michigan’s recent shift from a right-to-work state to forced unionism means that private sector workers can be forced to pay union dues or fees as a condition of employment. Unions’ argument in favor of this forced confiscation of a portion of workers’ paychecks is that they are providing representation services to those workers.

But that argument can’t be made for 85 percent of Michigan’s workforce—3.6 million workers in total—who aren’t members of or represented by unions and who will nonetheless foot the bill for union representation for others.

It’s bad enough that taxpayers would be forced to pay for services that are of no value to them.

It’s worse that those services could directly harm them. Unions’ push for above market compensation, along with their rigid pay scales that reduce productivity, result in higher prices for consumers. And the large portion of dues that unions spend on campaign donations and lobbying for political causes are counter to half the population’s beliefs.

It’s outright scandalous that Michigan lawmakers would sanction the collusion of union executives and unionized workers unlimited access to non-unionized taxpayers’ pocketbooks.

Since the bill provides no limit to the amount of fully refundable tax credits, unions could conceivably raise their dues to $10,000 per worker. If a worker owed only $1,000 in federal taxes, they would get a refund for the $1,000 in taxes they paid, plus a check from the government to reimburse them for the remaining $9,000 of their dues.

With taxpayers paying the full cost of each union member’s $10,000 dues, unions could then spend $5,000 of those dues on campaign donations to the politicians who support legislation such as House Bill 4235, and the other $5,000 on their own compensation. (This assumes that the workers do not declare themselves “objectors.” Objectors are forced to pay “agency fees” for representation services, but they cannot be forced to pay for unions’ political activities).

Taxpayers could be on the hook for more than the full cost of union dues and fees if unions use those funds to negotiate increased compensation that then forces companies to raise their prices for consumers. And if public sector unions negotiate higher compensation—say $3,000 raises—taxpayers would again be the ones footing the bill.

>>> It’s a Gloomy Outlook for Jobs Under Biden. Here’s the Formula to Change That.

The facts that Michigan passed legislation to force private sector workers to pay unions against their will and that lawmakers have now proposed that all Michigan taxpayers bear the cost of union membership suggests that unions are inept at serving workers and are instead functioning to serve politicians.

Michigan’s proposal would set a dangerous precedent. It would let politicians give their favored private sector organizations unlimited access to taxpayer dollars to provide “free” services to their members. This standard could potentially be extended to require taxpayers to pay for other people’s memberships in private organizations ranging from the National Rifle Association (NRA) to the Sierra Club.

While the forced subsidization of private organizations would come from taxpayers’ pooled dollars, it nevertheless goes against free speech interests because many unions use a significant portion of their members’ dues on political causes and candidates. With taxpayers paying the full cost of union dues for which they are not members, many would be forced to indirectly fund political activity counter to their beliefs.

If Michigan lawmakers want to empower workers, attract good-paying jobs to the state and not chase taxpayers away, they should revive Michigan’s right to work law, reform occupational licensing laws, and reduce or eliminate unnecessary regulations that reduce workers’ pay by driving up employers’ costs.

This piece originally appeared in the Detroit News