"When tax-exempt organizations don’t contribute to the public purse, the rest of us pay more to compensate. ... How is your life better when organizations can escape taxation while anonymously funding attack ads against political candidates?" [Yes, I'm talking about the Kochs and similar organizations]

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Rein in nonprofits' secret political attacks
The Livingston Daily, March 15, 2014

If you want to attack a political candidate, not disclose who provides the money and enjoy preferential tax treatment, the U.S. government has a deal for you. Open a 501(c)(4) and you can do all that legally. So-called “social welfare organizations” have become the driving force behind coercive politics and prevent transparency in the electoral process, which is the foundation of our democracy.

The federal rules for these groups need to be revised.

The Internal Revenue Service and Treasury Department decided to take on the task. They proposed rules late last year to clarify and limit political activity of these groups, particularly near election time. When the public comment period on the proposal was recently closed, a government website had received more than 140,000 comments, the most ever for the IRS.

Both conservative and liberal groups are complaining. The rules would limit free speech, stifle get-out-the-vote campaigns and cut the money that could be used for political advocacy, they say. The outpouring of opposition could mean the rules will be significantly revised.

Fine. But the Obama administration should not abandon this effort. And Congress should finally address this country’s antiquated and nebulous tax law related to nonprofit organizations.

It seems any group with any mission can gain preferential tax status and join the other 1.5 million nonprofits that aren’t contributing to the public purse. Everything from cemetery companies to professional sports leagues to hospitals that don’t provide a single penny in charity care receive preferential tax treatment.

Members of Congress know there are serious problems. U.S. Sen. Chuck Grassley, R-Iowa, has expressed outrage over tax-exempt groups, including a community organization with offshore accounts, evangelical preachers spending donations on $23,000 marble-topped commodes, and colleges paying presidents more than $1 million annually.

Yet Congress does essentially nothing except say it’s up to the IRS to rein in abuses and address messy problems through rules.

Everyone sees how well that’s working out for the IRS.

While social welfare organizations complain about proposed rules that threaten their activities, the rest of us should be asking a more fundamental question: Why is a group set up exclusively to mentor young people in a specific political philosophy or drive a specific political agenda able to avoid taxation in the first place? How does this promote “the common good and general welfare of the community” as 501(c)(4)s are supposed to do? And why should any group receiving preferential tax treatment be allowed to hide the identity of its donors?

None of this makes sense to the average American.

When tax-exempt organizations don’t contribute to the public purse, the rest of us pay more to compensate. Uncollected revenues contribute to the national debt and deprive local governments of needed dollars. It isn’t clear how the public is benefiting from this lost revenue. How is your life better when organizations can escape taxation while anonymously funding attack ads against political candidates?

Antiquated tax law and nebulous IRS rules on nonprofits need to be updated. The status quo makes a mockery of what it truly means to be a charity or social welfare organization, and it is costing the country a fortune.
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