seiu-1199-150x150-3426856Out of the clear blue sky, a provision making labor union dues fully deductible for state personal income tax purposes was inserted in New York’s final fiscal 2018 budget deal, which was enacted by the Legislature over the weekend.

Governor Andrew Cuomo had not previously advocated or included such an idea in his annual budget proposals, and it appears no standalone bill proposing an expanded tax deduction for union dues has been proposed in the state Legislature since 2007, when it was part of a one-house Assembly bill.

On both the federal and state level, union dues (and “agency fees” paid by non-union workers in jobs covered by union contracts) are already included in the category of “miscellaneous” itemized deductions, which are limited to amounts exceeding 2 percent of gross income.

Few taxpayers claim miscellaneous deductions on the federal or state levels. And itemized deductions in general are not common among the majority of New York taxpayers, thanks to a generous standard deduction—which, at $15,950 for married filing jointly, $11,150 for heads of households and $7,950 for singles, typically exceeds deductible expenses for the average worker or working couple. Higher standard deductions simplify the filing process and provide taxpayers with larger savings than they would collect by itemizing. The income distribution of households claiming itemized deductions is portrayed below.

screen-shot-2017-04-10-at-3-35-57-pm-4069725

As shown, more than 80 percent of filers with incomes below $50,000 and nearly 70 percent of households between $50,000 and $100,000 claim the standard deduction and do not itemize on their state returns. Itemizing becomes more common at income levels above $100,000, and itemizers become a majority among filers with incomes above $150,000.

Most New York union workers— such as home health aides, school bus drivers, office clerks, along with public employees in upstate rural areas and small cities—won’t save anything from this new deduction created by Part OOO of the “big ugly” revenue bill passed by the Senate last night and the Assembly a day earlier.

The benefits will flow almost entirely to the rarified class of union workers who make well above $100,000. These are mainly police officers, firefighters and school teachers in Long Island and the lower Hudson Valley, along with the higher-paid New York City building trades. Downstate workers also are more likely to be already itemizing large deductions for property taxes and mortgage interest on higher-priced homes.

Assuming that one quarter of New York’s 2 million unionized workers itemize deductions, and that the initially cited budget revenue impact of $35 million is correct, the average tax savings will come to $67.  Not so much a giveaway as a gratuity.

Think of it as dinner and a movie, on the taxpayers’ dime, flowing principally to some of America’s best paid public employees. Not incidentally, it’s also an indirect subsidy for the state’s most politically powerful unions.

About the Author

E.J. McMahon

Edmund J. McMahon is the Empire Center’s founder and research director.

Read more by E.J. McMahon

You may also like

New York lawmakers have sought to weaken police discipline

In the wake of George Floyd's death under a kneeling Minneapolis police officer, some New York State lawmakers are renewing calls for legislation designed to uncover police disciplinary records. But less than a year ago, state senators in both parties voted in favor of union-backed legislation that would make it harder to fire New York police officers credibly accused of using excessive force or other offenses. Read More

Ball of Confusion: New York’s Upcoming School Budget Votes Reshaped by Cuomo Order

As if the coronavirus hadn’t done enough to disrupt education in New York, Governor Cuomo has injected even more confusion and uncertainty into the public school budgeting and board selection process across the state. Read More

New York’s job losses were among the nation’s worst during April lockdowns

All but a few states imposed business lockdowns and "stay at home" orders in April. However, New York's private-sector job losses were well beyond the national norm—indicating the Empire State's economic recovery could lag behind the rest of the country Read More

NY’s job base is wrecked

It's official: the viral lockdown has been an economic catastrophe of historic proportions for New York State. Read More

Cuomo looks outside to track virus

New York State is deploying several thousand contact tracers, workers tasked with interviewing COVID-stricken residents and notifying the people they may have infected. But Governor Andrew Cuomo is taking a notable step that will likely make the effort faster and more efficient: he’s having someone else do the hiring. Read More

Hospitalization rising in some areas

Coronavirus hospitalizations are surging in parts of upstate, including three regions that the Cuomo administration authorized to begin reopening today. Read More

Uneven ‘relief’ for NY providers

A review of federal emergency payments to New York health-care providers reveals a striking disparity: Four of Manhattan's most prosperous private hospitals collected more individually than the 11 city-owned hospitals combined. Read More

Teachers work hard to stop working

New York’s statewide teachers union is exploiting a lack of direction from Governor Andrew Cuomo to force an early end to the school year. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.