Paying A Government Employee Union Tax, Too?
Although taxpayers will not see this “tax” show-up on their tax bills, Kristina Rasmussen of the National Taxpayers Unon has authored a study (if you prefer, the study’s press release) in which she shows that taxpayers do indeed pay a “union tax.” She defines it as:
“the premium charged to taxpayers for covering the inflated salaries and benefits of organized public employees.”
She opens her study by saying:
“As more state governments face projected budget shortfalls in an uncertain economy, spending cuts are under serious consideration. At the same time, elected officials are also looking to take concrete steps, such as enacting tax cuts, to help stimulate economic activity.
“A reduction in the "government employee union tax" . . . should be an attractive solution for state leaders seeking to balance budgets and/or provide tax cuts.”
She explains that public employee unions represent a high cost of state government, e.g., pointing out that:
“In 2007, state government employees had median weekly earnings of $772, while private sector workers brought home a median weekly wage of $666. From 2000 to 2007, public sector workers enjoyed a 16 percent jump in compensation, while private sector employees received an 11 percent increase.
“Much of this gap can be explained by the generous increases guaranteed through collective bargaining. The state government workforce is far more likely to be unionized: 30.4 percent of state workers are members of unions compared with 7.5 percent in the private sector. In 2007, unionized state employees commanded median earnings of $865, versus $731 for non-unionized state workers.”
Virginia’s “union tax” is 5.17% with only North Carolina’s lower. Elimination of Virginia’s “union tax” would represent a household income tax savings of $149.43. On the other hand, Michigan’s “union tax is 43.07%, or almost $677 per household. No wonder Michigan is experiencing a net outmigration.
While recognizing the political clout of public sector unions, Rasmussen says, “A compensation realignment between government jobs and private sector positions is long overdue.” We agree.