Assembly Bill 158, approved by the Legislature in June, doesn’t specify the size of the credits for most dues-payers.
The bill instead sets out lawmakers’ intent to provide $400 million worth of the credits starting in 2024. It asks the state Franchise Tax Board to develop proposals for how much money union members might be able to get back — calculated as a percentage of their dues — with a $400 million allocation.
Anyone who pays $100 or less each year in dues would be eligible for a credit equal to their full dues.
While not included in the language of the bill, backers have talked about capping credits at about a third of dues. The Legislature would still have to appropriate the $400 million — and could reduce or increase the amount — in future budgets.
Backers say the benefit, dubbed the “workers tax credit,” would help address income inequality by providing a new tax benefit for low-income earners.
“The Workers Tax Credit is a win-win — it would help union workers in a way that is similar to what businesses have used for years, helps our efforts to improve conditions and equity for all employees, and is in keeping with beneficial solutions like the Earned Income Tax Credit and other credits the Legislature has enacted,” Senate President pro Tempore Toni Atkins, D- San Diego, said in an emailed statement.
About 2.5 million California employees — 15.9 percent of the state’s workforce — were union members in 2021, according to the most recent Bureau of Labor Statistics data.
Jon Coupal, president of the Howard Jarvis Taxpayers Association, accused California Democrats of tailoring the tax credits for their political base rather than low-income workers in general.
“It’s bad policy and it’s a political gift to union members paid for by California taxpayers,” Coupal said in an interview.
Federal law used to allow dues to be deducted, but the Tax Cuts and Jobs Act of 2017 removed the deduction, according to tax filing guidance from H&R Block.
California still allows taxpayers to deduct union dues. The deduction benefits those who itemize deductions on their taxes but not those who don’t. The proposed credit would benefit union members with lower incomes. It would cover both public- and private-sector employees.
The tax credits are part of a bill with several other tax-related provisions that was included in a budget package. It is rare for a budget trailer bill to be vetoed.
©2022 The Sacramento Bee. Distributed by Tribune Content Agency, LLC.
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