With Tax Hikes, Look For the Union Label

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An advertisement supporting Washington State's Initiative 1098, which would create a new tax on the state's upper income earners, starts provocatively with William Gates Sr. taking a dunk in a pool and then declaring that he's okay with getting soaked by the new tax. So, apparently, is his much richer and more famous son, Microsoft founder Bill Gates Jr., who also supports the initiative.

The sight of rich people pleading to be taxed more has attracted attention to the November ballot initiative. But otherwise, support for the ballot measure, which would slap a tax of from 5 percent to 9 percent on the income of those earning more than $200,000 a year ($400,000 for those filing jointly), is entirely predictable. The chief force behind it is the state's unions, who've contributed some $2 million to the campaign for the initiative, led by the state employees' union, the teachers' union and the Service Employees International Union, the largest union in the state with 100,000 workers, many of them working in the heavily-regulated area of health care.

This is the nature of tax hike campaigns these days. When the union movement in America crossed a crucial threshold recently, as membership in public sector unions surpassed private sector union enrollment for the first time, the event signified deeper changes in labor in America. The new labor movement, dominated by government workers, is an increasingly white-collar interest group, culturally progressive and fiscally liberal, and it has become the chief organizer of efforts to raise taxes in America, especially at the state and local level, where these government worker unions wield their greatest influence. Their efforts have helped boost local taxes this year more than any year since 1979.

Find a tax increase campaign and you're almost certain to find a government union behind it. The California Teachers Association, for instance, is the chief force behind a November ballot initiative in the Golden State which would raise business taxes. The CTA alone has contributed some $6.4 million of its members' dues money to the campaign, according to filings with the California Secretary of State's office. Other public unions have anted up another $2.5 million.

In fact, since the budget squeeze hit states and municipalities starting in 2008, such tax and spend campaigns have been typical. Researchers at the Heritage Foundation counted some 25 public union-driven efforts in that time. They include successful efforts by Arizona's unions to raise the state's sales tax earlier this year, a ballot initiative in Oklahoma sponsored by the state's teachers' unions to raise education spending by $1 billion, a successful $8 million campaign in Oregon by public unions to defeat initiatives seeking to roll back corporate and personal income tax hikes, and a $4 million advertising effort this past spring designed to pressure New Jersey Governor Chris Christie to raise taxes in his state, which failed.

It hasn't always been this way. At the crucial point in the country's labor history when public sector employees were first earning the right to organize, the union movement was largely blue-collar, culturally conservative and often pro-economic growth in its efforts. At that time, union leaders led by George Meany, former head of the AFL-CIO, lobbied heavily for one of the most significant tax cuts of the 20th century, the historic 1964 tax package, originally proposed by President Kennedy the previous year with union support.

Meany, ironically, was one of the private labor leaders of that era who looked with suspicion on the growing movement to grant collective bargaining rights to government workers. Critics worried that because government is a monopoly whose management is composed of elected officials, public unions might wind up with a big hand in electing those they must bargain with. Some in Meany's circle also resented the notion that public employees, already protected by civil service laws, wanted to identify themselves with the long struggles of America's industrial workers.

But politicians like New York City Mayor Robert Wagner saw even back then that public workers could be valuable political allies. Once a few big city mayors like Wagner began granting collective bargaining rights to public workers, the trend proved irreversible and over time these unions garnered enormous resources which made them among the biggest political players in many states and cities. To understand why, just consider that in California, membership in the teachers' union grew from about 170,000 at the time when unionization began to about 340,000 today. The CTA is nourished by annual union dues of more than $1,000 per member (do the math), one reason why the union can kick in millions of dollars to support tax-hike initiatives.

In the current election public unions face a backlash from voters who seem to have figured out that the union movement in America is now the chief proponent of higher taxes, and that the increases have often gone to burnish the pay and benefits of government workers. Even union members have figured out that they, too, can become targets of these higher taxes. And not all of them like it.

In 2009 the New York State United Teachers ran a $1.5 million advertising campaign aimed at increasing taxes on families earning $250,000 or more in the Empire State. The ads provoked the ire of some educators. As the head of the Eastchester Teachers Association wrote on the union's website:

"My wife and I are both employed as science teachers in Westchester County, and earned a gross household income in 2007 of more than $240,000. This year, we may top the $250,000 figure with step increases and extracurricular activities. Thus, NYSUT is suggesting that union teachers who worked hard to get good-paying jobs be taxed at a higher percentage than others."

Yes, that's exactly what public unions have been advocating for decades. Even their own members are starting to figure it out, and not all of them like it.



Steven Malanga is an editor for RealClearMarkets and a senior fellow at the Manhattan Institute

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