Cogito Ergo Non Serviam

IRS Tea Party Scandal Misses Big Picture

The IRS has admitted that some of its agents were excessively rigorous in determining whether certain right-wing advocacy groups qualified for tax-exempt status under section 501 (c) of the US tax code. The acting commissioner resigned yesterday, and it appears the powers that be have punished the agents involved. The Republicans are not satisfied; Speaker John Boehner (R-OH) wants to know who's going to jail? However, the entire problem is merely a symptom of something bigger -- the abuse of charitable status for political purposes.

Under the US tax code, charitable giving entitles the giver to tax deductions. For those whose income-tax bill is small (that is the working poor), there is no tax benefit to such giving. These deductions only kick in if one itemizes deductions. Most people take the standard, flat-deduction. So, this is a tax-break for the well-off, exaggerating America's income inequality. For those with money, this is a subsidy from the tax-payer to the causes the well-off support.

Only a handful of the most extreme Ayn Rand fans oppose the concept of charitable giving. However, one can debate whether a tax deduction for the donation is a net positive to society. After all, the tax deduction for the donation to the art museum reduces the funds the government has for defense and education. A reasonable person might support a cap on the deduction, while another equally reasonable person might oppose it.

Where the current mess arises is in the abuse of the tax code for political purposes. A tax-exempt organization must engage in social welfare activities. Political advocacy cannot be considered to fit that category. Yet, the IRS approved at least 75 rightist organizations for tax-exempt status after the excessive investigation of their applications. Lawrence O'Donnell of MSNBC went into great detail last night about how the IRS has misinterpreted the law for decades.The IRS considers it OK if the organization is "primarily"involved in social welfare, but the law as written requires it to be "exclusively" involved.

The main scandal here is not the targeting of rightist groups by the IRS, although it isn't a good thing. The real problem is the way various organizations have worked to thwart campaign finance laws and the tax code. The solution is not going to come from Congressional hearings, forced resignations or the appointment of a special prosecutor.

The solution lies in changing the funding of political speech in America. Public finance and spending limits run up against reality and the First Amendment. Instead, political speech (and the Supreme Court has ruled that money is speech in the Buckley Valeo case) must not be anonymous. Any organization buying air time or ad space should have to provide the names of its officers and boards or directors upon handing over the check, and those names must be posted on the Internet. Ultimately, a natural person must stand behind the words.

One has no problem with the Salvation Army, Wounded Warrior Project or the ASPCA. Indeed, these are the good guys. What must stop is the use of this class of organization to fuel anonymous political rumor mongering. In truth, the scandal is not that the IRS investigated too harshly bur rather that it allowed these groups a tax-payer subsidy for political action.

© Copyright 2013 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.



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