Labor Unions are not dead. They are reloading.
Labor unions suffered a setback in Wisconsin last week, but anyone who thinks they've been knocked dead is living in a dream world. There are laws on the books which ensure that the unions will always bounce back. Scott Walker knocked them down, but they will come back up like a bobo doll, and long after he is out of office, they will continue clutching for more power. All the laws are on their side.
The only certainties are death and tax [exemption]
Labor unions are categorized as tax-exempt 501(c)5 organizations. In 2010, these organizations collectively held $32,498,906,714 in assets. This number comes from the combined assets of all labor unions and farm bureaus. After all their expenses, lobbying efforts, and voter intimidation efforts, these organized labor gangsters still have more money than the entire GDP of many countries. None of it is taxed, and 92% of them are in violation of Dept. of Labor audits.
If this 32 billion were taxed at the corporate tax rate, it could pay for the entire Army Reserves budget and have 3.5 billion left over. For those counting at home, that's about as much as the U.S. government loses in the time it takes our president to play a round of golf.
In other words, labor unions have more money that Wisconsin has. They are not afraid of Scott Walker. They will not wither up and die anytime soon. They are protected by tax exemption. If they have a bad year in Wisconsin, they will simply shift the funds around and pick a fight in another state where they can win, or they will lobby the federal government to override the states. Tax exemption guarantees that they will always have plenty of money for political work, and it is no secret that they own the soul of our president already.
Tax-exempt status was given to unions as a favor by a couple of leftist hacks during the passage of the Revenue Act of 1913, which came on the heels of the 16th Amendment (the income tax). The act was sponsored by Oscar Underwood, a career Democrat from Alabama, and Furnifold Simmons, a white supremacist Democrat from North Carolina. Tax exemption ensured that labor unions would have plenty of money on hand for political work, and that they would use it to reward the politicians who allied with them and punish those who didn't. As long as this clause remains in the Revenue Act, unions will always have an advantage.
If there was any hope of limiting the growth and influence of tax-exempt labor unions, it was intentionally undermined in 1914 by the Clayton Anti-Trust Act. This law tightened restrictions against monopolistic business activities. However, it specifically went out of its way to include a clause giving labor unions freedom to monopolize against entire industries and spread inexorably into others. The law is a clearly stated government mandate for unions to monopolize labor markets against businesses, written into a law ostensibly about ending monopolies. This clause was added specifically to ensure that unions would always have the upper hand against businesses. Businesses pay the highest tax rate and are restrained from monopolizing. Unions pay no taxes and are encouraged to monopolize. The deck has been stacked this way for 100 years.
This is how one of our biggest unions, the AFL-CIO, has managed to accumulate over two billion in total assets and get its hands into the pockets of 57 different sectors of the U.S. economy, including nearly every teacher in the U.S. public school system, the U.S. postal service, and the National Football League without raising a single anti-trust eyebrow.
All of their political influence would be irrelevant if the unions operated as charitable organizations. Charities are tax-exempt 501(c)(3) organizations. The only stipulation on this status is that they avoid all political activity. If the pastor of a church starts telling people whom to vote for, the church loses its tax-exempt status and is taxed at the regular corporate tax rate of 35%. Labor unions, of course, participate in extremely aggressive political activism without any restraint. In 2010, during the midterm elections, the AFL-CIO put over $20 million into a budget column openly labeled the "Militancy/defense Fund." Think about this fact for a while. Do you think an organization with 20 million "militancy" dollars will simply fade away because of Scott Walker? Do you think an organization like this deserves to be tax-exempt?
What exactly is a militancy fund for? All sorts of things. In 1973, in United States v. Enmons, the Supreme Court ruled that labor unions are exempt from prosecution for violence related to collective bargaining goals. If you are upset that none of the threats against Governor Walker's life were prosecuted, it is because they were legal. They have $20 million in their militancy fund, and permission from the Supreme Court to commit violence without prosecution. Do you think they are afraid of a new rule in Wisconsin?
Not only do they have $20 million marked off for militancy and defense, but they have another $23.8 million in the solidarity fund. What is that for? It is for "Political and Issues Mobilization work." Not only do they have as much money as a small country, but they also have their own political wing and their own military/defense wing. The only difference is they don't believe that their own members should have the right to vote.
If you're counting, that's a total of about $44 million spent on militancy and political mobilization, or about 40% of the AFL-CIO's total annual budget. They are awash in money they don't know what to do with, but nobody in Washington is willing to tax them because a century ago a couple of liberal cogs got cozy with the unions and wrote it into law.
Their bold political activism aside, the most salient element of the unions is that they operate as businesses, not as charities or religious institutions. A labor union charges money to its clients in exchange for a service. The services they provide include higher wages, better benefits, and better job security. In other words, they charge money in exchange for a service with tangible value. That is what businesses do, yet businesses are taxed and restrained by anti-trust laws. The fact that unions have a government endorsement to monopolize, to pay no taxes, and to openly engage in intimidating and violent political activities is an absurdity only a government could conjure. As long as unions are unrestrained, they will maintain their political influence.
In a nation with the second-highest corporate tax rate in the world and running an unimaginably high deficit, you would think our representatives would start looking for new revenue bases. Instead, they keep calling for higher taxes on those who already pay the highest taxes, as though more of the same failed taxes will somehow produce less of the same deficits. Taxing the unions makes sense on every level. It is one of the only tax increases a conservative can support in good conscience. It should have bipartisan support, right?
There are two clear solutions for this lunacy. First would be to tax unions at the corporate rate just like every other business. This is the obvious solution, but if you think our pandering, lazy representatives are going to try it, I have a shovel-ready job contract to sell you.
The other solution would be to simply give labor unions the same deal that charities have. Let them keep their tax exemption, but don't let them use it for political activism. Give the unions a choice. Either shut up or pay up. If they decide to drop the partisan activism, they'll be able to cut membership dues by 40%. If they decide to pay their taxes, they can help chip away at the deficit. Either way, the working people of America come out ahead.
T.S. Weidler can be contacted by emailing tsweidler at yahoo dot com.