(Editor’s note: This editorial is reprinted from the Des Moines Register, where it was first published.)
After stepping on numerous land mines recently, the Obama administration jumped on another one last week with proposed rules designed to rein in campaign spending by nonprofit organizations. The benefits that could come from this proposal are worth whatever pain may be inflicted on the administration to get it approved, however.
The Treasury Department and Internal Revenue Service issued proposed rules that would prevent charitable organizations from claiming tax exemptions for money spent on political campaign activities. This would close a loophole in federal tax and campaign finance rules that allow corporations and other donors to make secret contributions to campaigns on behalf of political candidates.
When such contributions are made to political action committees, the identity of donors must be publicly disclosed. But political donors have in recent years shifted their campaign spending from PACs to charitable organizations that do not have to disclose their donors. Questions have been increasingly raised when these contributions are spent on behalf of political candidates or funneled to PACs that can make direct contributions to candidates.
Under the proposed rules, this sort of spending on political campaigns could jeopardize those groups’ tax-exempt status under Chapter 501(c)(4) of the federal tax code. In other words, groups that are organized to “promote social welfare” could be redefined for tax purposes if they are, in fact, operating as political campaign organizations.
Critics say the proposed rule change is an attack on the First Amendment rights of charitable groups. But that’s not what’s happening. Those groups would not be deprived of their right of free expression or to advocate on behalf of political candidates. They are still free to express their opinions on any issue of the day, including political candidates. The rule change would only mean that groups that function primarily as political campaign organizations would not be subsidized by the taxpayers by allowing donors to deduct from their taxable income those political donations.
Congress is free to grant tax exemptions to political campaign spending. But existing exemptions should be fairly and equally enforced. They should not apply just to groups that play by the rules while ignoring those that rake in secret donations to support political candidates. That principle should apply to organizations across the political spectrum.
The Obama administration’s motives have been called into question in proposing this change, especially in light of evidence that some IRS officials had singled out conservative organizations with “tea party”-like names for special scrutiny. But the inspector general’s office at the Treasury Department reported those efforts criticized the current rules as being too vague in defining acceptable political activities by nonprofits. So it makes sense to clarify them.
The rules regarding contributions to political campaigns should be clear that public disclosure is most important. Everyone should have the right to spend their money as they wish on behalf of political candidates and causes. It should be clear, however, who is spending that money and on what.