Friday, May 31, 2013


Imagine this scenario if you will:

A local police department has instructed its officers to pay special attention to cars with progressive bumper stickers-Obama-Biden/Coexist/That silly one about bombers and bake sales/etc.-and issue citations for any violations that are observed. When word of this politically based profiling gets out, liberals are naturally outraged at the unequal treatment that they are being subjected to at the hands of the law. Conservatives meanwhile say that the real problem is not that progressives have been targeted for their political beliefs, but rather that the government has been issuing too many drivers licenses to people who really shouldn’t have them in the first place.

That would be an absurd counterargument, would it not? Yet, that’s essentially the one that many liberals have been making to explain away the abuses of power that have emerged in the IRS scandal. Sure, it was wrong that the IRS specifically targeted conservatives group for extra scrutiny they say, but the real problem is that there are too many 501(c)(4) groups who are trying to undeservedly qualify for tax-exempt status. While that may very well be true-and I can think of a few liberal groups whose tax-exempt status is more than a little dubious-it isn’t relevant to the issue at hand which is that a government agency provided different treatment to American citizens based solely on their political views. We should all be able to agree that such actions are chilling and threaten the basic precepts upon which system of government is based.

An editorial in today’s WSJ provides A Tax-Exempt IRS Primer:

Congress wrote the 501(c) code to provide tax-exempt status to a broad range of groups. While so-called social-welfare organizations are the current object of Democratic ire, the code covers 28 categories of organizations. So 501(c)(3) groups include charities and educational institutions. The 501(c)(4) category covers social-welfare groups. The 501(c)(6) label includes trade associations and chambers of commerce. And there is the Democratic favorite: 501(c)(5)s, or labor unions.

These categories have different requirements, and a few impose stricter rules if organizations want to claim tax-exempt status. Charitable 501(c)(3) groups, for instance, are barred from partisan campaign activities. That hasn't stopped Media Matters for America, the left-wing agitprop outfit, from claiming 501(c)(3) status for its daily attacks on conservatives.

The categories that cover the main players in politics—social-welfare groups, labor unions, trade associations—have the same general rules. The majority of their money (understood to be at least 51%) must go to their "primary" purpose—social welfare, business-community support, union activities.

Beyond that, however, the groups have significant spending leeway, including for partisan political campaigning. The caveat is that they are supposed to pay taxes on their political spending, and the contributions to these groups are not tax deductible as charitable giving (as they are for (c)(3) groups).

Viewed in this context, the IRS targeting of conservative 501(c)(4) groups is even more scandalous. The organizations were singled out for scrutiny not merely from other 501(c)(4) groups, but from all other groups that spend heavily on politics.

The editorial concludes by saying “The tax code would be cleaner, and our politics fairer, if no one enjoyed any tax-exempt advantages.” Amen to that. If Democrats want to put a proposal together that would eliminate tax-exempt status for any group involved in political activities-including of course unions-I have a feeling that many Republicans would be more than happy to make it a bi-partisan effort at reform. But to try to conflate that issue with the current IRS abuse scandal is dishonest and nothing more than an attempt to distract attention from the real problem we are trying to get to the bottom of.