![]() ![]() Instead of balancing the playing field, then, the TCJA further tilted it against workers by eliminating the deduction for unreimbursed employee expenses, including union dues. ![]() By contrast, the expenses that companies incur in setting worker pay-including negotiating with unions and even resisting unionization-have always been fully deductible. 6 As a result, though union dues were deductible, only some workers actually deducted them. 5 This meant that (1) only the portion of union dues plus any other unreimbursed business expenses exceeding 2 percent of the taxpayer’s adjusted gross income (AGI) was deductible and (2) taxpayers could claim that deduction only if they did not claim the standard deduction, which was $12,700 for a couple filing jointly in 2017. In 2017, tax law only allowed union dues to be deducted as an unreimbursed business expense. 4 The TCJA made a flawed union dues deduction worseĮven before the major provisions of the TCJA went into effect in 2018, the deduction of union dues was subject to limitations. Nearly two years after the law’s enactment, there is no indication that the corporate tax cuts are trickling down to workers 3 or that workers have benefited broadly. 2 Yet the economic reasoning behind these claims was deeply flawed. In their efforts to pass the TCJA, President Donald Trump and officials in his administration claimed that its provisions-particularly its slashing of the corporate tax rate-would provide “rocket fuel” for the economy and increase the average household’s income by at least $4,000 annually. The law also reduced or eliminated many individual tax benefits, such as the itemized deduction for unreimbursed employee expenses, which includes union dues. High-income Americans received larger tax cuts, even as a share of their income, than middle- and lower-income Americans. Meanwhile, pass-through businesses-which do not pay corporate tax-received a special new tax deduction, overwhelmingly benefiting the wealthy owners of such entities. companies’ current and future overseas profits relative to their domestic profits and included provisions that reduced companies’ tax bills if they have more of their physical assets overseas, potentially rewarding offshoring. ![]() Corporations receive large, permanent tax cuts, including steeply discounted tax rates on their past overseas profits. ![]() The TCJA is tilted in many ways toward the wealthy and corporations. The 2017 tax law heavily favors corporations over workers In other words, workers cannot deduct an important cost of earning their income, while employers can deduct the costs of maximizing their profits at the expense of workers. Meanwhile, workers, who are often represented by unions in these negotiations, cannot deduct the cost of the dues they pay to support their unions. Employers, especially large corporations, have the upper hand at the negotiating table for many reasons, including their ability to fully write off, or deduct, management and legal costs, such as those involved in resisting unionization campaigns and negotiating with unions. Among its many flaws, the act worsened a tax code double standard that tilts the scales against workers. In December 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA) into law. ![]()
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