We analyze optimal redistributive income taxation in unionized labor markets in the extensive labor-supply model of Diamond (1980) and Saez (2002). We employ a right-to-manage model, where unions bargain with firms over wages in each occupation/sector and firms determine employment. Optimal income taxes and unemployment benefits are shown to be lower in unionized labor markets, because income redistribution from employed to unemployed workers raises wage demands and thereby creates involuntary unemployment. Net participation subsidies (EITC programs) are always desirable for low-skilled workers whose social welfare weight exceeds one. In addition, net participation subsidies could be optimal as well for low-skilled workers whose social welfare weight is below one when labor markets are unionized. Furthermore, increasing the unions' bargaining power may be socially desirable when participation subsidies lead to overemployment. Involuntary unemployment then acts as an implicit tax, which off-sets explicit subsidies on labor participation. However, unions are never desirable if labor participation is taxed on a net basis, since the implicit tax of involuntary unemployment only exacerbates distortions of explicit taxes on labor participation. Our simulations demonstrate that optimal taxes and transfers are much less redistributive in unionized labor markets than in competitive labor markets.