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Friday, May 17, 2013

It’s time to end tax-exempt status - Lane Filler, Newsday - my commentary

Our comments in bold.
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(This author is mostly right, but mostly for the wrong reasons. I'll explain.)

You are a financial supporter of the Westboro Baptist Church. You know, that posse of full-blown whackdoodles from Kansas that descends on our nation’s most tragic moments, particularly military funerals, waving signs that say “Thank God for dead soldiers.” (Notice how  the author begins with an extreme example, which sets the reader up for future agreement based on a distaste for the extreme example.)

You don’t (please say you don’t) support Westboro by sending cash for their placard ’n’ magic marker budget. What you do pay, infinitesimally, is that church’s taxes, because it, like all houses of worship and so many other institutions, is exempt. You also pay the taxes of its contributors, because the money those folks fork over is tax-deductible. (This is incorrect. Tax-exempt organizations do not deprive the government of tax revenue. Legislators choose how tax law will be written, and carve out exceptions, benefits, and surcharges based on the societal outcomes they're trying to achieve. This is a conscious choice by government. No one is being coerced.

But more to the point, all money is privately possessed before it is taxed by government. Government is not entitled to tax anything and everything, simply because it exists. Therefore, its "failure" to tax something does not mean those who are being taxed have had a tax burden transferred to them.

Unless the author is willing to concede that a well-to-do person who pays a 28% tax rate is being burdened by someone else's 15% tax rate.)

Why is this notable this week? Because the Internal Revenue Service just got caught trying to crash the tea party, punk the patriots and deny conservative groups their 501(C)4 status. Such status exempts groups’ income from taxes. It also allows “nonprofits” to do political activism without disclosing donors, as long as the organizations also promote social welfare. (What is "social welfare?" The IRS uses this term.  It suggests that a tax-exempt organization is legitimate so long as its performing a role that government would do ordinarily.  For the second time in two paragraphs, the author makes an observation from a governo-centric perspective, as if everything and everyone revolved around what government does and doesn't do.)

To a politico, the distinction between “promoting social welfare” and “promoting the ideas and candidates that we believe will improve stuff ” is a line about an atom wide. But that’s an outrage for another day. (It's interesting that the Constitution uses the phrase "promote the general welfare" in its preamble, and the phrase "provide for the common defence and general welfare of the the United States" in the context of 16 powers [section 8]. I suspect that the IRS phrase sounds enough like the Constitution to lend it legitimacy.)

The IRS admits it’s been obstructing and scrutinizing right-leaning applicants for 501(C)4 status. This deployment of the IRS — exclusively against a political movement that opposes President Barack Obama like kids oppose calves liver cupcakes — is seriously nefarious. We should fire everyone involved and highlight their sins on a televised reality show called “So You Think You Can Screw Over Conservatives!”

After that, let’s change the tax code so Americans don’t have to fund movements and religions they don’t agree with. (How about, let's eliminate the tax code, repeal the 16th amendment, and defund the IRS so that they don't have any power? The problem is not the tax exempt status, the problem is the excessive power of the IRS!

Ironically, it is government that removes choices. It takes your money and spends it where its priorities are. You cannot choose. However, charities are voluntary.)

No institution, organization or individual should be exempt from taxes, nor should any donations be tax-deductible. (Agreed. Unions, operas, and environmental organizations included. No organization should be singled out for preferential treatment. The constitution forbids congress from making "any law," including favorable ones, regarding the establishment or free exercise of religion. Congress needs to get out of the faith and values business. In fact, it needs to stop meddling with peoples' lives at all levels.)

Nonprofits, hospitals, colleges, houses of worship and charities are sometimes the richest institutions on the block. (Untrue and irrelevant.) 

Yet they generally don’t help pay to sweep that block, or extinguish it if it catches fire, or to fight off another nation’s army or fund school districts. (Sure, and they don't have soup kitchens, clothing drives, volunteer at schools, fund hospitals, build houses for people, or send teams to help when hurricanes hit, either. Yup, that money just disappears down a rat hole, doesn't it?) 

And when their contributors throw them $100 or $1 million, these folks deduct those contributions off their tax liability, too.

Many tax-exempt institutions and organizations do wonderful things. When you identify one, support it with your cash. (Wait, I thought they don't help sweep that block or extinguish if it catches fire... etc.? I thought they were the richest institutions on the block? I thought they weren't paying their fair share?) 

Why, though, should that entitle you to pay less into federal or state coffers, and thus force everyone else, who may hate the college, church or charity you’re contributing to, to pay more? (Hmm. The author apparently doesn't understand the nature of charities. Charities meet needs, and they're very effective and cost efficient. People like helping, and having a choice on where their hard-earned dollars go, as opposed to government extracting it and spending it as it decides, regardless of your preferences. 

See, government does exactly what the author complains charities are doing. People who pay taxes have no voice on where that money goes. And a lot of it goes to supporting values that many find abhorrent. Whether it be illegal invasions of other countries, Planned Parenthood, Piss Christ, or a million other government initiatives, that money it spends was first extracted, with or without permission, from the pockets of private citizens. And the author complains about charities being subsidized by unwilling taxpayers?)

You can argue that a soup kitchen or other charity does work governments can’t afford to handle, thus saving taxpayers money, but it’s a circular argument. The government is broke in the first place because of all the tax exemptions. (At $2.8 trillion in revenue per year, the government is hardly broke. It is broke because it can't control spending. Increasing revenue always results in even more spending. The problem is spending, not revenue.)

What’s more, when a politician wants to fund the Department of Soup For All, I can vote for or against that person based on whether I agree. (A powerless choice, since the person may or may not get elected anyway in contravention of the author's "choice." And even if the author's vote succeeds in obtaining the choice he wants, there is the matter of all the other elected representatives, who may go in a way in opposition to the author's desires. But with charities, the entire transaction is voluntary.) 

But when we set up a tax system to buttress charities and institutions, I have no way to withdraw support if I think everyone should work for their soup, or would rather give all my financial support to education and none to soup kitchens. (Mr. Filler, tell us how well it would go for you if you decided to stop paying taxes? You complain about charities, but the government is the real sucker of wealth from your pocket.)

If a charity or church or college or “social welfare/political campaigning group” must escape taxes to survive, or needs tax-deductibility for its contributors to pull in enough funds to squeak by, it doesn’t have enough voluntary support to exist. It shouldn’t have any involuntary support at all. (Very few organizations are in this situation. But it isn't relevant. Charities aren't charities because of the tax benefits. They do so to meet needs in a very personal and productive way. People want to participate in doing good things. That's why they give to charities. I doubt that their desire to do good things hinges on what the government might do.)

Beneath the political skulduggery of what the IRS did in targeting these conservative groups lies a flawed question: What groups in America deserve tax-exempt status, and tax-deductibility for their patrons? The answer is “none.” (Agreed.)

The best way to avoid arguing over who should be members of the special, privileged classes is to not have any special, privileged categories at all.

Lane Filler is a member of the Newsday editorial board.

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