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Why Should Any Of These Groups Have Tax-Exempt Status?

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Why Should Any Of These Groups Have Tax-Exempt Status?


Nope, I’m not going to defend the IRS, which appears to have acted in ways wholly inconsistent with their mandate for unbiased investigations into, in this case, whether certain political groups should receive tax-exempt status.  It is unclear how high up the chain of command these untoward actions went, but this morning’s news suggests it wasn’t just a few rogue auditors in Cincinnati. 

The problem wasn’t that the agency scrutinized these so-called “social welfare” organizations—as I’ll emphasize in a moment, tax law in this area is an accident going out to happen.  It’s that they violated neutrality, investigating conservative groups by searching on “tea party” and “patriot.”

Republicans will of course try to pin this on the President, despite the fact that since Nixon used the IRS to target his enemies, the president’s been barred from even discussing this kind of thing with the agency.

No, the problem here isn’t the president.  It’s the Supreme Court’s Citizen United decision and subsequent tax law written by Congress that gives these groups tax exempt status (under rule 501(c)(4)) as long as most of their activities are primarily on educating the public about policy issues, not direct campaigning.

Of course, the ambiguities therein are insurmountable.  Many of these groups, especially the big ones, spend millions on campaign ads mildly disguised as “issue ads,” and under current law they can do so limitlessly and with impunity.

According to today’s NYT:

The tax code states that 501(c)(4)’s must operate “exclusively” to promote social welfare, a category that excludes political spending. Some court decisions have interpreted that language to mean that a minimal amount of political spending would be permissible. But the I.R.S. has for years maintained that groups meet that rule as long as they are not “primarily engaged” in election work, a substantially different threshold.

Nowhere do the rules specify what “primarily engaged” means…

Again, I see no way that a government agency could fairly interpret and enforce these instructions.  What is “primarily engaged”–at which point does an issue ad cross the threshold into campaign ad—what kind of “education” is GPS Crossroads providing and how is it promoting “social welfare?”

Weirdly, the IRS hasn’t seemed particularly interested in going after the big fish here, like Rove’s Crossroads GPS on the right or Priorities USA on the left.  Instead, they appear to have systematically targeted small fry on the far right.  If so, not only is that clearly biased and unacceptable—it’s also ridiculous given the magnitude of the violations of tax exempt status by these small groups relative to the big ones.

At the end of the day, we should really ask ourselves what societal purpose is being served here by carving out special tax status for any of these groups.  If anyone can show me any evidence that the revenue forgone is well spent, that these groups are making our political system and our country better off, please do so.  If not, then no one’s saying shut them down—they’ve got a right to speak their minds.  But not tax free.

http://jaredbernsteinblog.com/why-should-any-of-these-groups-have-tax-exempt-status/





IRS Fallout: The Real Scandal Is Secret Money Influencing US Elections

The IRS is under siege for investigating conservative political groups applying for tax-exempt status. But the real problem wasn’t that the IRS was too aggressive. It was that the agency focused on the wrong people—“none of those groups were big spenders on political advertising; most were local Tea Party organizations with shoestring budgets,” writes The New York Times—and wasn’t aggressive enough. The outrage that Washington should be talking about—what my colleague Chris Hayes calls “the scandal behind the scandal”—is how the Citizens United decision has unleashed a flood of secret spending in US elections that the IRS and other regulatory agencies in Washington, like the Federal Election Commission, have been unwilling or unable to stem.

501c4 “social welfare” groups like Karl Rove’s Crossroads GPS, the Koch brothers’ Americans for Prosperity and Grover Norquist’s Americans for Tax Reform—which don’t have to disclose their donors—spent more than $250 million during the last election. “Of outside spending reported to the FEC, 31 percent was ‘secret spending,’ coming from organizations that are not required to disclose the original sources of their funds,” writes Demos. “Further analysis shows that dark money groups accounted for 58 percent of funds spent by outside groups on presidential television ads [$328 million in total].”

IRS guidelines for 501c4 groups state that “the promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office…a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity.” It’s ludicrous for groups like Crossroads GPS—which spent at least $70 million during the last election—to claim that its primary purpose is not political activity. Only the likes of Karl Rove would believe that running attack ads against President Obama qualifies as social welfare.

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So what did the IRS do about this blatant abuse of the tax code by some of the country’s top corporations and richest individuals? Virtually nothing. “When it comes to political spending, the IRS is more like a toothless tiger,” wrote Ken Vogel and Tarini Parti last year in a story headlined, “The IRS’s ‘feeble’ grip on big political cash.”

It’s obvious that our Wild West campaign-finance system needs more, not less, scrutiny and much tighter, not looser, regulation. Yet conservative groups are exploiting the IRS scandal to further dilute regulatory agencies that are already on life support. Writes Andy Kroll of Mother Jones:

The IRS’s tea party scandal, however, could hinder the agency’s willingness to ensure politically active nonprofits obey the law. The IRS will likely operate on this front with even more caution, taking pains not to appear biased or too aggressive. That in turn could cause the agency to shy away from uncovering 501(c)(4) organizations that do in fact abuse their tax-exempt status by focusing primarily on politics.

The Rove’s of the world would like nothing more than for the public to believe that conservative groups had too few opportunities to influence the 2012 election and were wrongly persecuted by evil Washington bureaucrats. Yet the 2012 election should have taught us precisely the opposite lesson—that our patchwork regulatory system is far from equipped to deal with the new Gilded Age unleashed by Citizens United. As Rep. Keith Ellison told Hayes last night: “We need to redouble our efforts to bring real campaign-finance reform forward.”

Read Ari Berman on why North Carolina’s voter ID bill is reminiscent of a poll tax. The bill has since passed state House of Representatives.



Read more: http://www.thenation.com/blog/174320/irs-fallout-real-scandal-secret-money-influencing-us-elections#ixzz2TKMvEbu8
by on May. 14, 2013 at 10:17 PM
Replies (11-16):
NWP
by guerrilla girl on May. 15, 2013 at 12:45 PM

Me neither...even though there is evidence warnings may have been ignored. Hind sight is 20/20. WE can could-da should-da would-da in those situations as much as we want to spin them in whatever direction we wish.

That said, I definitely blame Bush for throwing us into the Iraq war for made up reasons that did not benifit the American people.

Quoting MsDenuninani:

 I understand this point, but. . .still. . .I'd never blame Bush for 9/11.  I just wouldn't.  There are limits.


Quoting yourspecialkid:

 I was interested until I got to the part where "Republicans will try and pin this on the president." 

The president is responsible for EVERYTHING that happens under his watch.  It doesn't matter if he ordered it or not.  He sits in the big chair and that is where the buck stops.

People have not hesitated to blame Bush for everything from Hurricane Katrina to the housing collapse.  Obama will have to suffer his lumps just like the rest of them.  If he isn't up to it then he needs to resign.

 




Neon Washable Paint

LindaClement
by Thatwoman on May. 15, 2013 at 12:48 PM
1 mom liked this

Interestingly, the only power the President really has is the veto. He can't 'make' anything happen, all he can do is stop it... before it's enacted into law.

What bureacrats, Senators and Governors do is entirely their own responsibility.

Quoting yourspecialkid:

 I was interested until I got to the part where "Republicans will try and pin this on the president." 

The president is responsible for EVERYTHING that happens under his watch.  It doesn't matter if he ordered it or not.  He sits in the big chair and that is where the buck stops.

People have not hesitated to blame Bush for everything from Hurricane Katrina to the housing collapse.  Obama will have to suffer his lumps just like the rest of them.  If he isn't up to it then he needs to resign.

 


MelanieJK
by Silver Member on May. 15, 2013 at 7:19 PM

Ah so the  democrats getting the IRS to abuse their power in going after the Tea Party is somehow Karl Roves fault?      Gotcha.

Try to site some non leftwing smear groups when presenting your thoughts.    it'll have more credibility.

Raintree
by Ruby Member on May. 16, 2013 at 8:09 AM

I don't think conservative groups were the only scrutinized groups when applying for exempt status.

I also think that they should ALL be scrutinized. For example, I really don't think that you can claim non-political tax-free status on most of the groups like crossroads gps and.. the coffee party. These are clearly political.

mikiemom
by Ruby Member on May. 16, 2013 at 12:27 PM

 

oh they don't blame Bush lol - they only blame Obama.

I completly agree with this article these organizations should not be tax exempt.

Quoting MsDenuninani:

 I understand this point, but. . .still. . .I'd never blame Bush for 9/11.  I just wouldn't.  There are limits.

 

Quoting yourspecialkid:

 I was interested until I got to the part where "Republicans will try and pin this on the president." 

The president is responsible for EVERYTHING that happens under his watch.  It doesn't matter if he ordered it or not.  He sits in the big chair and that is where the buck stops.

People have not hesitated to blame Bush for everything from Hurricane Katrina to the housing collapse.  Obama will have to suffer his lumps just like the rest of them.  If he isn't up to it then he needs to resign.

 

 

 


 

mikiemom
by Ruby Member on May. 16, 2013 at 12:28 PM

 

You can not hold someone accountable for something they had no control over.

Quoting yourspecialkid:

 I was interested until I got to the part where "Republicans will try and pin this on the president." 

The president is responsible for EVERYTHING that happens under his watch.  It doesn't matter if he ordered it or not.  He sits in the big chair and that is where the buck stops.

People have not hesitated to blame Bush for everything from Hurricane Katrina to the housing collapse.  Obama will have to suffer his lumps just like the rest of them.  If he isn't up to it then he needs to resign.

 


 

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