Baucus to IRS: Start probing political groups

In one sense, this isn’t as outrageous as it first sounds.  After all, political groups use IRS regulations to receive exemptions on donations, allowing donors to deduct those donations and to get more money than they otherwise would.  On the other hand, though, when the US requires IRS approval to conduct political speech, this is the kind of power that one hands government:

Senate Finance Committee Chairman Max Baucus sent a serious shot across the bows of the growing ranks of groups, most of them on the right, playing aggressively in elections under non-profit 501(c)4 and (c)6 status, with a letter asking that the IRS commissioner examine them for violations of tax law.

A central, and endlessly complicated, legal question is whether an organization’s “primary purpose” is politics, and many find ways to spend 51% of their money, for instance, on policy campaigns. Different lawyers have offered different advice to groups on where, exactly, the line is — but many, like Crossroads GPS and Americans for Job Security, are operating under different versions of the non-profit status to both advertise in elections and keep their donors secret.

The IRS should examine whether the groups’ “political activities reach a primary purpose level” and “whether they are acting as conduits for major donors advancing their own private interests regarding legislation or political campaigns, or are providing major donors with excess benefits.”

The main practical problem is regulatory ambiguity.  No one really knows where the lines are drawn, and so it becomes impossible to have any certainty on compliance.  That may keep lawyers employed, but the lack of certainty means that the overall effect is to curtail speech and assembly for the purpose of political action.

In fact, that’s the entire purpose of creating these regulations, and everyone knows it.  It’s an explicit feature of such regulation.  Politicians talk about keeping the rich from running and buying elections, whether it’s the unions, the corporations, or the “special interests” boogeymen used by elected officials in passing these restrictions.  What they really do is protect incumbents by making outside challenges more difficult through speech restrictions and legal intimidation.  Even in this midterm cycle, where voter anger and engagement has almost reached a decades-long zenith, most people project a mere 60-80 seats in the House to change hands at best — which is less than 20%.  More than 80% of incumbents will return to their jobs even with voters rating Congress lower than the media.

Certainly the IRS should enforce the law as it exists (as should the entire government in areas like immigration, for example).  However, Baucus’ timing in demanding investigations speaks volumes about his motives.  It’s yet another reason that campaign finance reform should get shelved in place of systems that require and deliver full disclosure for political speech, and voters can provide the market for both the speech and the candidates.