Lower Housing, Energy Costs Magnify Right to Work Tax
On April 16, according to the nonpartisan, Washington,
D.C.-based Tax Foundation, “Tax Freedom Day” (TFD) 2019 finally arrived.
The Tax Foundation’s entire analysis is available at
www.taxfoundation.org — the group’s web site.
As the Tax Foundation explains, TFD is “the day when the
nation as a whole has earned enough money to pay its total tax bill for the
TFD “takes all federal, state and local taxes and divides
them by the nation’s income.”
According to the Tax Foundation’s current estimate, this year
Americans will pay “$3.42 trillion in federal taxes and $1.86 trillion in state
and local taxes, for a total tax bill of $5.29 trillion . . . .” That’s 29% of
all the nation’s income.
In Right to Work States, Employees Get Nearly Two Extra
Weeks’ Take-Home Pay
Besides calculating when TFD comes annually each year in the
nation as a whole, the Tax Foundation
calculates when TFD arrives in each of the 50 states.
Not surprisingly, the burden of taxation is not borne
equally by all Americans.
Several factors significantly influence when TFD comes for
individual taxpayers and households.
The Tax Foundation highlighted two in its report: The total
tax burden borne by residents of different states varies considerably due to
differing state policies and the progressivity of the federal tax system.
Soon after the Tax Foundation issued its report on TFD 2019,
the National Institute for Labor Relations Research calculated average TFD’s
for the 27 Right to Work states as a group and the 23 forced-dues states as a group.
To derive aggregate TFD’s for states where compulsory union
dues are either permitted or prohibited, the Institute used state personal
income data for 2018 as reported by the U.S. Commerce Department and the
estimated 2019 TFD’s for the 50 states as reported by the Tax Foundation.
The Institute estimates that this year residents of
forced-unionism states are forking over 30.6% of their total peronsal income in
“That’s a 13% higher share than the Right to Work state
average,” commented National Right to Work Committee Vice President Greg
“TFD in compulsory-unionism states as a group didn’t come
until April 22 this year.
“In contrast, TFD in Right to Work states as a group came on
April 9, or nearly two weeks earlier than the forced-unionism average.”
Cost of Living-Adjusted Employee Compensation Higher In
Right to Work States
Mr. Mourad continued:
“In part, TFD comes significantly earlier in Right to Work
states than in forced-unionism states because state and local taxes typically
consume a smaller share of income in jurisdictions where unionism is
Another advantage for Right to Work states is their lower
As the Institute reported earlier this year, interstate
cost-of-living indices calculated by the Missouri Economic Research and
Information Center show that on average forced-unionism states were 27.6% more
expensive to live in than Right to Work states in 2018.
Thirteen of the 14 most affordable states have Right to Work
laws on the books, but not one of the 14 least affordable states has one.
When cost-of-living differences are factored in, the average
compensation per employee is higher in Right to Work states than in
However, progressive federal income taxes are levied on nominal,
rather than cost of living-adjusted incomes.
Households in High-Cost Big Labor Stronghold States ‘Get
Consequently, explained Mr. Mourad, households in high-cost
forced-unionism states like California, New York, New Jersey, Connecticut and
Massachusetts “get socked twice.”
“They have to fork over more for housing, food, energy,
health care, and other necessities,” Mr. Mourad noted.
“And then they have to pay the same federal income tax rate
as a household in a low-cost Right to Work state like Texas or North Carolina
making the same nominal income, even though that nominal income goes much
further in Right to Work states.”
The TFD disparity, concluded Mr. Mourad, is a prime example of how the forced-unionism system hurts practically everyone, and not just freedom-loving employees and business owners who are directly affected.