Days Black People Not Re-Enslaved By Trump

Tuesday, December 14, 2004

The IRS, NAACP and short sightedness

The Wall Street Opinion Journal ran an article discussing the Tax trouble that the NAACP faces due to a speech given by Julian Bond where he flat out discussed George Bush which seems to be in violation of the 501c3 tax-exempt status of said organization.

My early warning system went up when I saw it was the Wall Street Journal that was attempting to defend the NAACP. It turns out, however that the Wall Street Journal isn't really bcking the NAACp as much as it would like to defend other organizations (which it would have more agreements with) from having the same threat carried out against them.

The NAACP is just one of 60 or so nonprofits now under investigation by the tax police. Our sources tell us that some of these outfits are conservative, and all fall under the 501(c)(3) section of the tax code, which prohibits them from endorsing candidates, making campaign donations or otherwise engaging in partisan conduct. Since the groups receive tax-deductible contributions, goes the reasoning, allowing them to engage in such activities would amount to an indirect subsidy from taxpayers.

One option is simply to tax the errant remarks. The seldom enforced 527(f) section of the code says that if a 501(c)(3) organization engages in campaign intervention, the amount that it expends on that activity is subject to tax at 35%. Why not tax the speech, thus eliminating the subsidy, and leave the status alone?

Let's understand something here, most "liberal" non-profit organizations cannot afford to lose their exempt status. On the other hand many "conservative" non-profits have many large corporate entities through which they can get their funds. Now follow me for a minute. Imagine if say an organization wanted to make a overtly political event which would violate it' tax exempt status, All it would need to do is make sure that they had a corporate backer to donate enough money to cover the fine and they could go on with thier program. Therefore they could undercut the entire "non-partisan" portion of the tax-exempt rules by simply having a corporate donor throw around some cash. That is a very scary thought. When I consider the number of churches that would LOVE to do overtly political actions but do not do so because of the tax laws, I hate to think that they would be able to buy themselves exemptions where smaller organizations could not do so on nearly the same scale.

Therefore as before, I hold that if the NAACP is found to have violated their status that they be stripped of that status. And all the other organizations that are found to be in violation should be stripped as well. This would serve as a message to other organizations that they must play by the rules or exit the game. There's enough money in politics already, let's not add more.


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