Overview
Title
To amend the Internal Revenue Code of 1986 to end the tax subsidy for employer efforts to influence their workers’ exercise of their rights around labor organizations and engaging in collective action.
ELI5 AI
The bill H.R. 2692 wants to stop companies from getting tax discounts when they spend money trying to convince workers not to join unions or do things together for their rights. It also says companies have to tell the government about this spending, and if they don’t, they might have to pay big fines.
Summary AI
The bill, H.R. 2692, aims to change the Internal Revenue Code to prevent companies from receiving tax breaks for trying to influence their employees' decisions about joining labor unions or participating in collective actions. It asserts that such employer spending, which can include unfair labor practices, should not be deductible, similar to how public election influence expenses are treated. The bill also establishes penalties for companies and third-party consultants who fail to report required information about such activities. This proposed law is known as the “No Tax Breaks for Union Busting (NTBUB) Act.”
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
Summary of the Bill
H.R. 2692, known as the "No Tax Breaks for Union Busting (NTBUB) Act," seeks to amend the Internal Revenue Code of 1986. The primary objective is to eliminate tax deductions for employers who spend money to influence their employees' decisions regarding joining or participating in labor organizations and engaging in collective bargaining. This legislation highlights the importance of preventing undue influence by employers on workers' rights to unionize. The bill targets practices where employers invest significant funds into campaign efforts that might sway employees against joining unions.
Summary of Significant Issues
The bill raises several important issues, many of which revolve around ambiguity and potential burdens on affected parties:
Potential Bias in Findings: The reliance on data from the Economic Policy Institute, a think tank with a progressive stance, may lead to concerns regarding the impartiality and comprehensiveness of the findings presented in the bill.
Ambiguity in Legal Terms: Terms such as "attempt to influence" and "labor organization activity" are broad and could lead to varied interpretations, posing challenges for compliance and possibly leading to legal disputes.
Burdensome Reporting Requirements: Extensive reporting requirements could impose a significant administrative burden on businesses, especially smaller employers, who may struggle to manage the complexity and volume of information needing submission.
Severe Penalties for Non-Compliance: The penalty structure is stringent. It can be financially burdensome for smaller employers due to cumulative penalties for extended non-compliance. However, these penalties may not be effective in deterring larger employers.
Financial Implications for Employers: By denying tax deductions for expenditures intended to sway labor organization activities, the bill could significantly affect financial planning and tax liabilities for employers.
Impact on the Public
Broadly, if passed, this legislation could bolster workers' rights by reducing employers' financial incentives to discourage union activity. By ensuring that union-busting activities are not subsidized through tax deductions, it attempts to uphold the integrity of workers' rights to organize without facing undue pressure or influence from their employers. This step can lead to a fairer workplace environment, potentially increasing union membership and strengthening collective bargaining power for many employees.
Impact on Specific Stakeholders
Employees: Workers stand to benefit as the bill aims to protect their rights to join or form labor organizations without facing financial coercion from their employers. Increased protection may encourage more workers to exercise their rights freely, potentially leading to better working conditions and benefits through collective bargaining.
Employers: Employers, especially larger ones, might see a financial disadvantage as they lose tax deductions for expenditures aimed at influencing their employees' decisions on unionization. Small businesses, in particular, could face increased administrative challenges due to the complex reporting requirements and penalties for non-compliance, potentially leading to higher operational costs.
Regulators: Agencies overseeing labor practices may face an initial increase in workload due to the need for implementing new rules, providing guidance, and ensuring compliance with the new provisions.
In conclusion, while the "No Tax Breaks for Union Busting (NTBUB) Act" presents an opportunity to reinforce employee rights, its implementation could pose challenges due to potential ambiguities and the administrative burden on employers. By addressing these challenges, the bill aims to create a more equitable environment where workers can exercise their rights without undue corporate influence.
Financial Assessment
The bill, H.R. 2692, introduces several key financial considerations in its aim to limit tax advantages for employer efforts that influence employee decisions regarding labor unions or collective actions. The financial implications are both direct, through penalties and deductions, and indirect, affecting employers' financial strategies.
Key Financial References
The bill seeks to eliminate current tax deductions for employer expenditures intended to influence employees about participating in labor unions or collective activities. The bill draws attention to the $340 million annually that companies reportedly spend on external consultants for such purposes, as stated by the Economic Policy Institute. These efforts, according to the drafters of the bill, interfere with employees' free choice regarding labor associations and should not benefit from taxpayer subsidies.
Penalty Structure
A significant financial component of the bill is its detailed penalty structure for failing to comply with reporting requirements related to these expenditures. If an employer fails to report such spending, they would incur a penalty which is the greater of $10,000 or $1,000 multiplied by the number of their full-time equivalent employees. Additionally, if non-compliance continues beyond 90 days from notification, there is an escalating penalty that can be levied every 30 days, capped at $100,000.
Issues Related to Financial Aspects
Burdensome Reporting Requirements: The bill requires employers to report specific information regarding their expenses on activities aimed at influencing labor organization practices. Small businesses, in particular, might face disproportionate administrative burdens due to the complexity and detail involved in these reporting processes.
Severe Penalties for Non-Compliance: The outlined penalty structure could be financially punitive, especially for smaller employers who may struggle with the resources necessary to comply promptly. This aspect has raised concerns about the fairness and financial burden placed on smaller entities, contrasting with the probably lesser impact on more substantial employers who might absorb such penalties more easily.
Financial Implications of Denied Deductions: With the implementation of this bill, employers would no longer be able to claim tax deductions for expenses related to influencing employee decisions on labor participation. This change would potentially increase their tax liabilities, prompting companies to reconsider their spending strategies on labor relation activities.
Ambiguities and Interpretations
The bill's language uses terms like "attempt to influence" and "labor organization activity," which could be interpreted in various ways, creating unpredictability in how these financial rules would apply. The lack of precise definitions might lead to legal challenges and further complicate financial strategies for companies trying to comply with these new requirements.
In summary, H.R. 2692 brings financial implications primarily through its restrictions on tax deductions, its robust penalty mechanism, and potential administrative burdens associated with compliance. For many employers, especially smaller businesses, navigating these financial requirements could prove challenging, and clarity on ambiguous terms within the bill would be crucial to alleviate potential compliance issues.
Issues
Potential Bias in Findings (Section 2): The reliance on the Economic Policy Institute as the primary data source could introduce bias given its perceived progressive stance, potentially affecting the impartial interpretation of employer behavior in labor-related activities.
Ambiguity in Legal Terms (Section 3, Section 6720D, Section 6039K): The bill uses broad and potentially ambiguous terms like 'attempt to influence' and 'labor organization activity,' which may lead to varied interpretations and result in legal disputes.
Burdensome Reporting Requirements (Section 3, Section 6720D, Section 6039K): The extensive reporting requirements could impose significant administrative burdens on employers, particularly smaller businesses, due to the complexity and volume of information needed.
Severe Penalties for Non-compliance (Section 6720D): The penalty structure, which accumulates over extended non-compliance, could be financially onerous for smaller employers and may not be sufficient to deter larger employers.
Unclear Definitions and Terms (Section 6039K): Lack of specific definitions for terms like 'activities' described in section 162(e)(1)(E) introduces ambiguity and may complicate compliance efforts.
Financial Implications of Denied Deductions (Section 3): The denial of tax deductions for expenditures aimed at influencing labor organization activities could have significant financial implications for employers, potentially affecting their tax liabilities.
Complexity in Financial Implications (Section 2): The discussion surrounding financial implications of tax deductibility for employer influence is complex and may be difficult for some stakeholders to comprehend without further simplification.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of this act provides its short title: it may be referred to as the “No Tax Breaks for Union Busting (NTBUB) Act.”
2. Findings Read Opens in new tab
Summary AI
Congress makes several findings in this section, noting that while employees have the right to join labor organizations under the National Labor Relations Act, many employers unlawfully interfere with these rights, often resulting in unfair labor practices such as illegal firing and coercion. Furthermore, significant amounts of money are spent by employers to influence workers' decisions, prompting a suggestion that such spending should not be tax-deductible, similar to spending meant to influence public elections.
Money References
- (6) Whether or not there are charges of unlawful behavior, employers spend millions of dollars to sway the opinions of their employees with respect to whether or how to exercise their rights under the National Labor Relations Act and the Railway Labor Act.
- According to the Economic Policy Institute, companies spent $340,000,000 yearly on outside consultants to sway their workers' opinions about labor organization activities.
3. Denial of deduction for attempting to influence employees with respect to labor organizations or labor organization activities Read Opens in new tab
Summary AI
This section of the bill proposes changes to the Internal Revenue Code to disallow tax deductions for expenses related to influencing employees about labor organizations or activities. It also details penalties for failing to report these expenses and sets forth rules for reporting by third parties conducting these activities on behalf of others.
Money References
- “(b) Determination of penalty amount.— “(1) IN GENERAL.—The amount of the penalty under this section for any failure described in subsection (a) shall be the greater of— “(A) $10,000, or “(B) the product of $1,000 and the number of full time equivalent employees of the employer (as determined under section 45R(d)(2)).
- LIMITATION.—The penalty imposed under this paragraph with respect to any failure shall not exceed $100,000.
6720D. Failure to include certain information with respect to employer activities relating to labor organizations Read Opens in new tab
Summary AI
If a taxpayer doesn't provide certain information about spending on employer-related labor activities in their tax return, they could face a penalty. The penalty is at least $10,000 or could be more depending on the number of employees. If the mistake isn't corrected within 90 days of receiving notice, the penalty increases but will not exceed $100,000. There are exceptions if the failure was due to reasonable cause and not willful neglect.
Money References
- — (1) IN GENERAL.—The amount of the penalty under this section for any failure described in subsection (a) shall be the greater of— (A) $10,000, or (B) the product of $1,000 and the number of full time equivalent employees of the employer (as determined under section 45R(d)(2)).
- LIMITATION.—The penalty imposed under this paragraph with respect to any failure shall not exceed $100,000.
6039K. Information with respect to certain employer activities relating to labor organizations Read Opens in new tab
Summary AI
Any person carrying out specific activities related to labor organizations for someone else must file a report with the government. This report should include details such as the person's identity for whom the activities were carried out, the dates of the activities, a statement categorizing the type of activity, the total cost, and any other information the government might require.