The Unions’ Heavy Grifting

Published April 26, 2023

Over the years, the unions, especially the public employee variety, have heaped abuses on just about all of us. But finally, there are the seeds of resistance.

Tax exempt status

For starters, as 501(c)(5)s, unions have a special tax-exempt status with the IRS that is accorded to “Labor, Agricultural, and Horticultural Organizations.” As Mike Antonucci reports, the National Education Association took in $375 million during the 2019-20 school year, all of it tax-free. Additionally, the NEA sold more than $209 million of its stocks and securities during the year, but the union is also excused from paying capital gains taxes.

Antonucci further explains that the NEA doesn’t operate entirely tax-free. It still must pay income tax on “unrelated business income.” For example, revenue from businesses placing ads in NEA publications, book sales, etc. All told, the union paid $7.2 million in direct taxes of all types on more than $603 million in gross revenue in 2019-20 – an effective tax rate of 1.2 percent.

The NEA also has no sense of hypocrisy. At the same time the union benefits from this egregious tax exemption, it came out with a “playbook” in 2020. In the “Tax Fairness” section of the manifesto, the union maintains that we need to repeal or amend tax breaks for the wealthy and corporations, and replace them with a progressive tax system. The NEA also opposes “tax loopholes or giveaways that reduce revenues and shelter corporations and high-income individuals from paying taxes.”

Release time

Then we have the quaint notion of “release time” or, perhaps more accurately, “union time, taxpayer dime,” which is common at all levels of government. This swindle allows public employees to conduct union business during working hours, with the taxpayer footing the bill. These activities include negotiating contracts, lobbying, processing grievances, and attending union meetings and conferences.

A 2020 Goldwater Institute policy report detailed the pervasive nature of release time provisions in union contracts. This bit of thievery costs taxpayers millions of dollars annually and forces them to fund private union activities, which are very often political in nature and work against the interests of the taxpayers. Even more painful is the fact that many local governments don’t bother tracking release time, meaning this corrupt practice is often carried out in secret.


Since 2018, courtesy of the Supreme Court’s Janus ruling, no public employee has to pay a penny to a union as a condition of employment. As a result, the unions have stepped up their ongoing complaint about “free riders.” The objection revolves around the fact that unions are forced to represent all workers during collective bargaining and that any non-payer is a “free rider.” But in reality, it is the competition-phobic unions that are the problem. No law forces the responsibility of exclusive representation on the unions – in fact, the unions themselves demand it. As Mike Antonucci explains, “The very first thing any new union wants is exclusivity,” whereby “no other unions are allowed to negotiate on behalf of people in the bargaining unit. Unit members cannot hire their own agent, nor can they represent themselves.”

According to the Mackinac Center for Public Policy, the NEA, American Federation of Teachers, Service Industry Employees Union, and American Federation of State, County, and Municipal Employees “have all signed a public statement opposing any change to labor laws that would allow them to represent only paying members. The statement indicates all four unions are “strongly opposed to state and local policy proposals that … [w]eaken the concept of exclusive representation in the workplace.”

Jade Thompson, a Spanish teacher in Ohio, has sued to remove herself from the collective bargaining process. She began litigation against her union because it bargains for policies with which she disagrees, including the exclusion of merit factors in lay-off policies and its rigid seniority system.

In another lawsuit, Kathy Uradnik, a professor of political science in Minnesota, wants out of her union because it discriminates against non-union faculty members “by barring them from serving on any faculty search, service, or governance committee, and even bars them from joining the Faculty Senate.”

The cases, which began in 2018, have made it to the Supreme Court for consideration, but have not yet been granted a hearing.

Dues collection

Yet another racket involves how public sector unions collect their dues. A great majority of teachers nationwide have their union dues deducted from their monthly paycheck by the local school district in the same way that federal and state taxes are withheld. 

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