Receive important education news and comments straight to your inbox. Sign up for The 74’s daily newsletter here.
Mike Antonucci’s Union Report appears mostly on Wednesdays; see the complete archive.
TThe National Education Association has expressed its support for the Biden administration’s “Better Construction” agenda, which includes the American Salvation Plan, the American Family Plan, and the American Employment Plan.
In a July 13 letter to Congress, Marc Egan, director of government relations for the NEA, presented a long list of spending priorities that the union hopes to implement, as well as a desire that “corporations and the richest Americans pay their fair share “.
To this end, the union wants to see the following changes in federal tax law:
- Restoration of the highest marginal tax rate of 39.6 percent – the level that was in effect before the GOP Tax Act 2017 lowered it to 37 percent.
- Increase in the corporate tax rate to 28 percent – still well below the 35 percent that was reduced to 21 percent before the 2017 GOP tax proposal.
- Establish a minimum tax rate of 21 percent on corporate offshore profits that will be applied from country to country.
- Introduce a minimum tax of 15 percent on corporate profits reported to investors.
- End special tax breaks for the production of fossil fuels.
- Make it harder for US companies to evade US taxes by adopting a fake international address.
- Strengthening IRS Enforcement.
These recommendations come from an organization that, along with its state subsidiaries, has nearly $ 1.7 billion annually and pays no corporate or capital gains tax.
Corporations and the richest Americans have their own lobbyists and congressional influence, so tax policy may or may not be carried out in the usual ebb and flow of political maneuvers. It is the last recommendation to “strengthen IRS enforcement” that deserves some context.
The price that NEA and its affiliates, along with all other nonprofits, pay for all of this tax-free income is the obligation to provide annual financial reports to the public. The Internal Revenue Service has a Form 990 which is the same as a tax return, except that no or very little tax is paid.
As with tax returns, the 990s come in short and simple versions for small organizations and more detailed long forms for larger ones. They require keeping records of all income and expenses, executive salaries, and itemized assets in broad categories. Filing the report is not particularly troublesome given the benefit of the tax exemption.
Union Report: #GreenForEd? NEA and its state-owned subsidiaries raised $ 1.6 billion in 2018, according to the Federal Disclosures Show
However, the enforcement of the IRS leaves a little to be desired. Tax-exempt status is not revoked until an organization has filed a 990 for three consecutive years. Technically, an organization could file a 990 every three years without automatically revoking its tax-exempt status. If it is revoked, the organization can restore it simply by paying a fee and re-applying. In most cases, the reinstatement will be retroactive to the revocation date, meaning there is no further penalty for non-filing.
Despite extended deadlines due to the pandemic, dozens of NEA members have been automatically revoked from their tax-exempt status since March 2020. These include at least 20 local affiliates of the California Teachers Association, 15 of the New Jersey Education Association, and teacher unions in Georgia, Illinois, Indiana, Iowa, Michigan, New Hampshire, Oregon, Pennsylvania, Washington, Wisconsin, and West Virginia.
By far the largest controversial local subsidiary of both the NEA and the American Federation of Teachers is the Hillsborough County Classroom Teachers Association of Florida, which was revoked last September. It is not listed as a reinstatement request on the IRS website.
In its last filing in February 2017, the Tampa-based union reported revenues of more than $ 6.3 million.
So, by all means, let’s step up the enforcement of the IRS. Union members who lose their tax-exempt status should pay millions on their earnings. This should happen after just one year of non-disclosure notices, not three. And the IRS should set the penalties for each additional year that the 990s are not filed. That would only be fair.
Sign up for the The 74 newsletter
Send a letter to the editor