I’m not an American, but in reviewing the political system, one cannot help but notice the growing influence of large political-oriented bodies in recent elections. Big donors were given the green light to spend freely on elections by the Supreme Court’s 2010 Citizens United decision. Everyone remembers those infamous super PACs which ran many of the costly attack ads for both presidential candidates during the last election. Moreover, the 2012 presidential election broke the $2 Billion milestone in its final weeks, becoming the most expensive in American political history. Super PACs supporting Obama and Romney alone spent more than $500 million in media ads. Politically oriented organizations that do not have to declare their finances or identify their fundraisers have spent hundreds of millions on so-called issue ads. No other democratic country that I know of goes through such incredible campaign costs as do the presidential elections in the States, and allows so-called non-profit “social welfare” organizations to engage so extensively in political activities and continue to be tax exempt.
According to the U.S. tax code non-profit “social welfare” organizations are normally those that benefit the community. Such organizations should usually include religious groups, cultural, educational and veterans organizations, homeowners associations and volunteer fire departments. However in recent years, it appears that, partly as a result of the Supreme Court’s decision, more overtly political groups have been claiming non-profit status. Such status would allow them to keep their donor lists secret and to avoid paying taxes on certain income. Critics note that the Internal Revenue Service (IRS) hasn’t done nearly enough over the years to rein in the subversion of the tax law by political groups claiming a tax exemption that is not legally permitted for campaign activity. Nor has it been able to enforce rules requiring that donors to those groups pay gift tax on their donations. This is just the way that big donors to political bodies like it, otherwise donations could quickly dry up.
Recently the IRS was alleged to be targeting the more conservative organizations, notably any incorporating names such as Tea Party, Constitution or Patriots. The IRS is accused of being “overly aggressive” in its handling of requests by conservative groups for tax-exempt status. At the same time, the IRS has been dealing with austerity measures that reduce or stagnate personnel and resources, while trying to deal with a backlog of tax-exempt claims involving hundreds of groups. So-called conservative groups represented but a third of recent claims. Consequently, criteria was introduced by the IRS providing a screening shortcut meant to help with the influx of applications following the Court’s decision. However, more extensive screening meant longer delays in the approval of claims, frustrating many of the groups, conservative or otherwise. All of this came out in the IRS Inspector General’s scathing report released earlier this month.
Republicans in Congress have jumped all over the report and called for heads to roll, claiming that the Obama administration was of course behind the IRS’s activities. Denying any involvement, the administration countered by blaming a few “rogue employees” in the IRS for abuses and bureaucratic mishandling of the process. Needless-to-say, the President called the agency’s misconduct was “inexcusable”, and the acting IRS Commissioner was forced to resign. U.S. Attorney General ordered a criminal investigation into the situation and informed a congressional hearing on the matter that investigators will look at the conduct of IRS offices nationwide. All this and more to come!
However, let’s go back to the beginning. What is the real problem? It would appear to me that the whole definition of non-profit “social welfare” organizations needs to be revisited and clarified. At some point the incredible amount of interest group funding to electoral campaigns and congressional lobbying on specific issues has to become accountable and reasonable. Greater transparency and public oversight has to be brought into the equation. Of course, no one wants to trounce upon anyone’s democratic rights, but the current subterfuge of beneficiaries of such tax breaks has to end. Simply blaming the civil servants who have a tough enough job to do is not the answer. Fix the system.
FROLITICKS 