LOD: Scandal Behind the Scandal

More media outlets and bloggers are looking beyond the initial uproar over the IRS’s reprehensible targeting of 501(c)(4) applications from groups on one end of the political spectrum. The targeting is bad enough, but the scandal behind the scandal is the refusal of the IRS to challenge the biggest abusers of the c-4 tax-exempt privilege on the left and right – or even to use the post-Citizens United upsurge in applications to push Congress to clarify the difference between a “social welfare” organization and a political organization. (The video at this link gives a clear explanation of all this.) The Supreme Court’s Citizens United decision said campaign finance regulators could not stop corporations (including Section 501 corporations) from spending their money on candidate advocacy, independent of any candidate or party. But the decision did not say the government should give a corporation’s political money special tax privileges or shield it from disclosure requirements. Yet we’ve seen hardly any progress at the national level in those two areas. Political tricksters are using a loophole in a longstanding IRS rule that “social welfare” must be a c-4’s “primary” purpose, not “exclusive” as the law actually says. The tricksters put piles of secret money in the c-4 and calculate they can spend 51% on so-called “issue education” or lobbying and the rest on candidate advocacy; if they overshoot the election spending percent, they’re just liable for a small excise tax penalty. It’s a sweetheart deal for the politically active wealthy elite, so why shouldn’t it be okay for the Tea Party and other grassroots advocates, even if the public good and fair elections are the loser?