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Thursday, June 23, 2011

The Case For Taxing Unions

Anybody concerned with undue influence of big money on politics should have the unions in their sights. They spend more on buying politicians than the three most "hated industry groups" combined. They are perpetual advocates for raising taxes on citizens and corporations alike, and they are tax exempt.

From the IRS Website:
A labor organization is an association of workers who have combined to protect and promote the interests of the members by bargaining collectively with their employers to secure better working conditions.

To show that your organization has the purpose of a labor organization, you should include in the articles of organization or accompanying statements (submitted with your exemption application) information establishing that the organization is organized to better the conditions of workers, improve the grade of their products, and develop a higher degree of efficiency in their respective occupations. In addition, no net earnings of the organization can inure to the benefit of any member.

Composition of membership. While a labor organization generally is composed of employees or representatives of the employees (in the form of collective bargaining agents) and similar employee groups, evidence that an organization's membership consists mainly of workers does not in itself indicate an exempt purpose. You must show in your application that your organization has the purposes described in the preceding paragraph. These purposes can be accomplished by a single labor organization acting alone or by several organizations acting together through a separate organization.
Benefits to members. The payment by a labor organization of death, sick, accident, and similar benefits to its individual members with funds contributed by its members, if made under a plan to better the conditions of the members, does not preclude exemption as a labor organization. However, an organization does not qualify for exemption as a labor organization if it has no authority to represent members in job-related matters, even if it provides weekly income to its members in the event of a lawful strike by the members' union, in return for an annual payment by the member.
Without too much stretch of the imagination, unions today can be thought of as corporations, with their members the shareholders. Unions do far more than "secure better working conditions" for their members - they negotiate and extract monetary reward from whatever entities they have unionized. A union member's dues is equivalent to their investment in the union, and that investment pays dividend income in terms of higher wages and more valuable benefit packages as a return on their investment.

In fact, with the strict and far reaching OSHA rules and regulations concerning workplace conditions, it isn't that difficult to make the argument that unions exist solely for their shareholders' financial gain. They also have  a curious aspect which corporate shareholders do not - the captive shareholder. In many cases, paying union dues is obligatory whether you are a member or not. You can't NOT buy the product the union is selling without forgoing your means of earning a living - your job. A shareholder, who is not happy with the performance of the company, can dump the stock, thus exerting pressure on the price of the stock and thus the management of the company.

Since unions exist for the financial gain of their members, their gross revenues, less operating costs should be subject to the same corporate income tax as the rest of the private sector. This way, they will also have an interest in a fair level of corporate taxation, since it will hit their bottom line equally as hard. As it stands now, they are able to pursue destructive economic actions for an extended period of time - and although they may destroy themselves in the long run, as John Maynard Keynes was fond of saying, "In the Long Run We're All Dead". Or, those that reaped the benefits of the over-reaching private sector grab, will unlikely be around to suffer the consequences of that greed.  It is time unions have an iron in the fire today, instead of 20 or 30 years from now.

Ask Detroit.

RH

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