Wednesday, April 16, 2014

Political Activity Regulations Will Be Re-Written Again . . . and Again (from scratch!)

Let's face it, any attempt at regulating political activity by grass roots organizations, charitable or otherwise, is bound to fail.  Why?  Because nobody has ever explained why engaging in political speech is not a public good, less deserving of subsidization than education, poverty relief, or any of the many other activities considered charitable or advantageous to the social welfare.  What's wrong with political participation through grass roots organizations?  Don't we want more political participation?  Of course we do, but somewhere along the way somebody decided, without ever explaining why, that political engagement was neither charitable nor beneficial to the social welfare.  And by the way, if the evil to be avoided is "capture" of the political process by those wealthy enough to pay to broadcast their speech to wider audiences, wouldn't subsidizing political speech through deductions, exemptions, credits, (maybe with a dramatic cliff so that those who don't need subsidization don't get it) reduce the advantage of money (even if only slightly)?  Why in the world do we assume that one taxpayer should not subsidize another's participation in the political process, when we -- "we" are the government, the government is not "them" -- subsidize all sorts of activities about which there can be no unanimity of opinion.  Remember, too, that we would not be subsidizing a particular viewpoint, just the act of participation.  Just participation.  Seems to me we are wasting an awful lot of time and money trying to stamp out something we don't even think is a bad thing.  And that really is why the effort to regulate political speech subsidized by tax exempt dollars will inevitably fail.  We don't even know why we think political activity is a bad thing.  Something about Lyndon Johnson trying to put a political opponent out of business, right?  I doubt anybody even thinks engaging in the political process is a bad thing.  I'll even go one step further.  Engaging in the political process, even as a staunch lunatic partisan, is probably consistent with most people's conception of "civic duty."  So we should do away with the various prohibitions of and limitations on political activity via collectives.  Then people can support whatever political cause they want through whatever non-governmental organization they want.  I don't necessarily support your position just because I am willing to subsidize (if failing to tax really is a subsidy) your participation in the process.  Look, the rich can talk to more people more often whether we limit nonprofits from engaging the political process or not.  Limiting grassroots participation by denying tax exempt organizations for groups that do only exacerbates that advamtage.  

But I digress.  Every [law school] administrator knows that when everybody complains about something you have done, you either have it perfectly right or all wrong.  Well, everybody is complaining about the proposed "candidate related activity" regulations.  The Service apparently believes the complaints indicate it has the proposed regulations all wrong and apparently is going to start all over again with the effort to stamp out (that is really what we are trying to do, isn't it?) political speech by social welfare organizations.  The Washington Post Blog reports:

The head of the Internal Revenue Service this week signaled that his agency will re-write proposed new limits on the political activities of nonprofit advocacy groups, quelling concerns from the left about overreach but failing to win over conservatives. Lawmakers and policy analysts on both sides of the political spectrum have voiced opposition to the draft guidelines, which would prohibit tax-exempt organizations from engaging in certain election-related activities including voter-registration and get-out-the-vote drives. Conservatives have argued that the proposals are part of an Obama administration plot to silence criticism from the right. Liberals have said the plans go too far and need reworking.

"Re-write" as in start all over again.  Just one big waste of time and effort unless and until we agree on a fundamental theory explaining the motivations for the exercise in the first place.

dkj

 

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Comments

but what you are actually saying is that the congress needs to rewrite the relevant statutes. the treasury and IRS are charged with interpreting the statute, and the statute does suggest that at least (c)(3)s cannot engage in much or any advocacy, which could imply that this is not "social welfare." it cannot be the case that the congress intended anonymous donors to fund huge political advertising campaigns. no one else is doing anything. the treasury and IRS had to try to do something.

Posted by: russ willis | Apr 18, 2014 6:50:41 PM

Darryll, I understand where you're coming from, but there are potential flaws in your argument for political activity as a public good that protects the little guy. See part II here, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2055384 . More briefly, consider that there is no rule that prevents more powerful interests from using the same tax-exempt forms to pursue their own goals, potentially at the cost of any access by the less-powerful.

Posted by: BDG | Apr 19, 2014 1:53:20 PM

Yes, you are both correct. My argument is with Congress not the IRS. Somebody ought to organize a Congressional colloquy to study the rationale behind disfavoring political engagement (not speech, per se) in the tax code. The IRS has an impossible task -- mandated by the Congress, but no less impossible to the extent that political engagement is neither banned outright nor allowed to exist unhindered. Where and how to draw the line? I should have done a little homework and linked to Brian's article. I'll have to read it soon. But I don't see the apparent answer to my student's observation in [Tax Policy] class a few days ago. The wealthy will always be advantaged, whether tax exempts may engage in politics or not. Which is to say that disfavoring political activity by tax subsidized organizations (or disfavoring expenses for political activity under IRC 162) does not impact individuals' relative ability to publicize their speech. My interest is piqued though by the suggestion that there might be a crowding [out] effect if that is indeed what Brian is suggesting. I will really have to read more. But on the blog I am venting for the most part and haven't thought through the issue as dispassionately as I might if I were writing in another venue. Thanks for the comments.

Posted by: Darryll Jones | Apr 22, 2014 1:30:42 PM

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