IRS SCRUTINY OF 501(C)(4) APPLICANTS: A PLAGUE ON BOTH THEIR HOUSES!

6/25/13

Congressional Democrats yesterday released IRS documents that purportedly show that the special scrutiny the agency gave to applicants for 501(c)(4) status was not limited to conservative groups.  (See my 5/13/13 piece THE IRS, THE OBAMA ADMINISTRATION, AND THE CONSERVATIVES:  LESSONS FROM WHAT SEEMS LIKE YESTERDAY for background on this issue.) While terms like “patriot” and “tea party” were used to flag applications for closer looks, so was the term “progressive.”  It was also learned that groups pushing for one side or the other (or the other or the other, one supposes, but I digress) in the various Middle Eastern conflicts were flagged along with people arguing on either side of the health insurance debate.    

Perhaps assuming that these documents are correct is an inadvisable leap of faith.   They were released in the heat, or at least the intense afterglow, of a bitter partisan battle by a side desperately trying to extinguish an issue that is potentially very damaging to its leader and leaders.  However, those who, like yours truly, have a healthy disdain for both sides of the political preening and primping that masquerades as governance today are as willing to believe one side in any partisan argument as we are to believe the other...not much at all.   But there is no more reason to believe that the documents showing scrutiny of liberal groups were somehow fabricated than there is to believe that documents showing excessive scrutiny of conservative groups were similarly fabricated.  So let’s assume both the new and the old evidence is correct and that the IRS was “targeting” both liberal and conservative groups and groups involved in Middle Eastern politics.   If this is true, I say “Good.”  If I were given to the bouts of emotion that would lead someone to say something like “Hooray,” I would probably say that as well.

Why am I so happy that the IRS was “targeting” for more intense examination liberal and conservative groups applying for 501(c)(4) status?   Applications for such status were pouring into the IRS like water over Niagara Falls.   When the government decides to dispense tax breaks for anything, even the most anti-government groups get in line and push as closely to the front as possible.   Given the deluge of 501(c)(4) applications, the IRS had to winnow down the workload; it had to act efficiently.  I, for one, applaud the efforts of any agency to act efficiently and save the taxpayers some money.   The IRS was simply trying to cull the phonies, or the leaches or the barnacles, in the most efficient way possible. 

Everyone would like to have the taxpayers (i.e., you and I) finance his or her efforts to advance his or her agenda, especially if he can make advancing his or her agenda and opinions a full-time job.   Fulminating beats working for a living, and if one can have the government finance such a sinecure, one has found the career equivalent of valhalla.

There is, however, a larger point here.  As I said in my aforementioned 5/13/13 post,

The IRS doesn’t make the tax laws; the people we elect make the tax laws.  The IRS simply enforces the tax laws and is usually not as unreasonable and unyielding as some would have you believe, but that is grist for another mill.

The best solution to the problem with 501(c)(4) organizations is not to have an  under-resourced and overworked agency find clever ways to work through the pile of applications more efficiently and to winnow out the frauds who are only looking for a subsidy for doing what concerned citizens in a self-governing republic ought to do as part of their civic duty, i.e., advocate for clauses.  The best solution would be to eliminate the 501(c)(4) designation altogether.  Why in the world should one be entitled to a tax exemption if one is conducting an enterprise that is in the business of pushing political positions?   If I want to make my living advocating for causes, that’s my business.   But I am not entitled to have you as a taxpayer subsidize, though the tax code, the organization I have set up to engage in my advocacy.

Like many of my proposals, the elimination of 501(c)(4)s will probably never be achieved.  Our esteemed public servants in Congress and in the White House derive too much benefit from such organizations that serve an ancillary, or perhaps not so ancillary, purpose of keeping these poltroons in office.  Why would Congress eliminate an indirect subsidy to the lifelong larks they call careers, especially when beating up on those who administer the program can provide further avenues for fun, profit, and posturing for the popinjays in Washington?  

To ask Congress to eliminate 501(c)(4)s is nearly as quixotic as asking it to impose term limits.   But that doesn’t make the elimination of 501(c)(4)s and the imposition of term limits bad ideas.