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Lawmakers consider tax deduction for union dues

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(The Center Square) — New Jersey could become the latest Democratic-led state to allow union members to pass on the cost of their dues to taxpayers under a newly filed legislative proposal.

Legislation filed by a pair of Democratic lawmakers in the state Assembly and Senate would allow New Jersey union workers to deduct yearly dues from their state personal income taxes. If signed by Gov. Phil Murphy, the bill would take effect immediately and apply to the current tax filing year.

The federal Tax Cuts and Jobs Act, which was signed into law by then-President Donald Trump in 2017, prohibited workers who aren’t self-employed from deducting union dues from their income taxes. The move aimed to blunt the impact of unions on the political process, and Democratic party politics in particular.

While the federal ban on union-due deductions is set to lapse with the law in 2026, several Democratic-led states have tried to find a way around the restrictions.

Last year, California Gov. Gavin Newsom, a Democrat, signed a bill diverting $400 million towards paying union dues through tax-credit subsidies. Maryland Gov. Wes Moore signed a bill in May allowing union members to deduct their dues on state taxes. Delaware and Michigan lawmakers are considering similar proposals.

In Congress, a Democratic bill co-sponsored by New Jersey Sens. Bob Menedez and Cory Booker to restore the deduction of some work expenses and union dues before the federal tax cut law expires in 2026.

Nearly 15% of New Jersey’s workforce belonged to a union in 2022, a decline from the previous year, according to the Bureau of Labor Statistics. The national rate was 10.1% of the overall U.S. workforce in 2022, down slightly from 10.3% in 2021.

Groups like the Heritage Foundation have cautioned against state policies allowing union workers to deduct their dues from taxes, arguing that it sets a dangerous precedent by shifting the costs for private memberships to the taxpayers.

Other fiscal watchdogs point out that the tax credits could become taxpayer-funded rebates for union workers if the yearly dues exceed their state tax obligations.

“This proposal means taxpayers, not union members, will be paying 100% of union dues ― and the dues themselves will most likely increase once the bill is enacted,” the Mackinac Center for Public Policy said in a recent report on Michigan’s proposal. “In other words, your tax dollars will pay for union politics and policies.”

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