What happened at the IRS Determinations Unit wasn’t OK. It was a mess. But it was a mess born less of overregulation than underregulation. The core problem was that after Citizens United, a section of the tax code designed to allow people to donate anonymously to garden clubs became a popular way for billionaires to secretly funnel vast sums to Karl Rove (and his Democratic equivalents) to savage political opponents and sway elections. Even conservatives who oppose government restrictions on money in politics generally acknowledge that the public should at least know who is spending what. And yet Citizens United has turned 501(c)4s into a trendy way to avoid that.
To make matters worse, even the modest firewall against abuse (the fact that 501(c)4s couldn’t make electioneering their “primary purpose”) proved impossible for the IRS to competently uphold because it lacked enough well-trained staff. And because that lack of resources produced a scandal, congressional Republicans will now likely take the opportunity to kneecap the agency further. Already, Pulitzer-Prize-winning tax reporter David Cay Johnston notes, budget cuts have left the IRS with 20 percent less money per capita than it had in 2002. This hasn’t much affected its ability to collect taxes from the middle- and working-class Americans whose income taxes are deducted from their paychecks. But it has made it harder to collect taxes from corporations, “especially those operating on a global scale.” Now because of the current IRS scandal, those corporations will be more easily able to secretly determine the outcomes of American elections too.