Occupy Wall Street garners $150,000 in donations …

How do the food trucks keep on coming to the Occupy Movement protests?  In part through direct contributions, but increasingly through tax-deductible donations.  A couple of days ago, CNN reported that the Alliance for Global Justice, a far-left organization that backs anarchist demonstrations and anti-military protests as well as operating as a sponsor for the more notorious World Can’t Wait “resistance” group, has set itself up as a receiver for donations to the Occupy Movement.  So far, they’ve raised a substantial amount of cash, despite some early organizing problems:

Occupy Wall Street teamed up with the Alliance For Global Justice, a Washington, D.C.-based nonprofit group, to receive tax-deductible donations.

Unfortunately, the initial influx in funding was so large it exceeded the limit the credit card processor, e-onlinedata, had on the AFGJ’s account, freezing it for 48 hours. The result: roughly $144,000 worth of rejected donations, according to AFGJ National Co-Coordinator, Chuck Kaufman.

“The timing could not have been worse,” Kaufman said. The account froze, “just at the time when potential donations spiked.”

But since the account was reactivated late in the day Friday, tax-deductible funding has continued to pour in. After going through the AFGJ, the money is being deposited into Occupy Wall Street’s accounts at the Lower East Side Credit Union and Amalgamated Bank.

Bank?  They’re keeping the money in a bank?  Shouldn’t they use a really big mattress?

AGJ is constituted as a 501(c)(3) charitable organization, which means that these donations are tax deductible.  And that means, of course, that taxpayers will end up subsidizing a part of these donations, perhaps as much as 35%.  One tax attorney who prefers to remain anonymous e-mailed me about this arrangement:

I’m a liberal in good standing and an attorney with a good deal of experience with charities..  While I obviously disagree w/ you on most things political, you’ve always struck me as reasonable, and my loathing of the abuse of charitable status is one of those things that really gets under my skin.  You may or may not think any of this is interesting, but if you do I’d greatly appreciate confidentiality.

That said: I saw the other day that Occupy Wall Street had gotten $150k in contributions, so that led me to the site to figure out their tax status, assuming that there wouldn’t be anything in particular, which would mean the income should be taxable.  That, in turn, led me to their donation page at an organization called “Alliance for Global Justice.”  It turns out that AGJ is a 501(c)(3) tax exempt public charity, and it’s using its exemption to collect tax deductible contributions and then disbursing the funds to the protesters (under the aegis of “fiscal sponsor,” a generally accepted tool for charities).  So AGJ is taking the position that the protests are “charitable,” and getting the taxpayers to subsidize the protests to the tune of 35 cents per dollar contributed.  On their 3/31/11 Form 990, they report zero lobbying expenses, which, based on a cursory review of their website, seems absurd.  Granted, “lobbying” is a bit of a term of art in exempt organization law, so it may or may not be accurate.

At any rate, this is flatly outrageous.  While I couldn’t stand the tea party, at least they didn’t have the nerve to call themselves a charity and accept deductible donations.

They may not spend any money on lobbying, since most of their activities comprise direct action activities — protests such as we see now.  Our correspondent is considering a complaint to the IRS over AGJ’s status and activities, but I’d bet that AGJ has had to defend its status on more than one occasion.  It’s a stretch, however, to claim that the Occupy Movement amounts to charitable work, so maybe the IRS might be inclined to take a second look.

What makes this ironic is that Barack Obama proposed limiting these tax breaks (to 28%, from 35%) as part of the jobs plan that these protesters would presumably endorse:

According to Internal Revenue Service figures, individuals claimed nearly $34.9 billion in charitable deductions on their federal tax returns in 2009. Households reporting $200,000 or more in annual income claimed $19.14 billion, or 54.9 percent, of these deductions.

Prior to the new jobs initiative, the president previously had gone after the charitable deduction in his fiscal 2012 budget proposal. That proposal called for limiting the tax deduction for high-income earners by as much as 30 percent.

So let’s recognize reality and do some simple math. Here is the reality: At least some well-to-do households will reduce their charitable donations if the tax deduction is cut, because more of their money will go to government, making less available for charity. Logically, at least some fraction of the $19.14 billion now going to charity would disappear.

Now for the math: A 5 percent reduction in charitable giving by those claiming a tax deduction in 2009 would have reduced total contributions by $957 million. A 20 percent drop in giving would have reduced charitable contributions by $3.8 billion.

And who are the most likely to actually claim those deductions through itemization?  Those who make enough to get a payoff from itemizing rather than just taking the standard deduction — in other words, the very people that AGJ and the Occupy Movement want to target for their redistribution demands.  Well, it seems they’re getting it one way or the other.

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