Reform? Don't Stop at the IRS

Statement

I flew down to Washington, DC this week with an extra measure of concern about the news. We have truly been divided by policy and politics in Congress and across the nation. We have some very serious policy issues that divide us, and then there is just political posturing as well, done with an eye towards gaining the upper hand for the next election. But now there is a legitimate issue that worries and offends all of us on both sides of the aisle. Revelations that the Internal Revenue Service used phrases like "Tea Party" or "Patriot" as flags to more closely investigate conservative groups who applied for 501(c)4 status are deeply disturbing and violate our sense of fairness. This problem should concern and unite Republicans and Democrats in Washington, because something like this can shake citizens' faith in government institutions and undermine confidence that there is fair and equal treatment for all. We must not single out any one group over others for special treatment. Period.

The Internal Revenue Service is an independent organization, with only two political appointments in the whole organization. It is required to be politically neutral. It cannot treat the Tea Party, which is conservative, or Move On, which is liberal, any differently from other organizations when it is trying to determine tax-exempt status. Sadly though, it did focus more intently on the conservative groups that applied for tax-exempt status. Was it done just as a "shortcut" as an IRS official explained, or was it politically motivated? No matter what the excuse is, there is no acceptable excuse.

This is the message that Republicans and Democrats need to blast out, and this is the moment to stand together to demand tough enforcement of our laws. The Justice Department has announced that there will be a formal inquiry. We need to know how, why, and who, and then make sure it can't happen again. I hope that a transparent and thorough investigation will restore peoples' confidence. I also believe that Republicans and Democrats should speak out against the targeting, but they need to be very cautious about generalizing. Victor Fleischer wrote in the New York Times that "The root of the problem is poor institutional design, not a political conspiracy." So far, it seems that way, but they did do wrong, and we need a thorough investigation. In the meantime, politicians should express appropriate outrage, since this is so clearly unfair and wrong, but be careful not to tag the innocent.

It is important to look at the 501(c)4 status that allows an organization to be tax-exempt, to see if there is another problem here. What is it, and why is the Internal Revenue Service trying to decide which organizations qualify? To obtain a 501(c)4 status, a group must be "operated exclusively for the promotion of social welfare." They should not be political. However, Karl Rove made them popular by using them to collect political donations under the pretext of a social welfare organization. The reason Rove and so many other groups, both liberal and conservative, love them is because they are tax-exempt and they do not have to reveal their donors. In other words, this status is being used and/or abused by all kinds of groups who want to get involved in politics, run the political ads we enjoy so much on television, and never have to say who paid for them. Ezra Klein from the Washington Post wrote that "According to data collected by OpenSecrets.org, 501(c)4s spent $92 million in the 2010 election. They spent $254 million in the 2012 election. That's a lot of social welfare going to the good people who live in swing states and competitive districts."

So, as Congress and the Justice Department investigate the IRS and the way they handled the granting of the 501(c)4 status, I hope the American people will investigate the actual status and demand change. We need to stop granting this status to groups that are not really engaged in "social welfare," and apply a cold eye to all groups who apply for that status. While these organizations can engage in some political advocacy, they are supposed to actually promote the social welfare. Does anybody believe that Karl Rove's group or the Democrats' group put together their 501(c)4 for any other reason than to win elections and keep donors' names private? I don't. Neither should you. Let's fix this problem and demand a little campaign finance reform while we're doing IRS reform.

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