Chuck Todd, who is NBC’s “Chief White House Correspondent” and also NBC’s “Political Director”, is out there mischaracterizing the IRS scandal. To blame it on 501c4s is utterly incomprehensible.
Yesterday on MSNBC’s “The Daily Rundown”, Chuck Todd gave this statement:
CHUCK TODD: Time now for my “Takeaway.” The controversy surrounding IRS may be more than a year old but of course we’re still talking about it. On Monday, the IRS Commissioner testified before Congress. A week after the IRS told Senate investigators that two years of e-mails disappeared in a computer crash back in 2011. While this certainly doesn’t make the Obama administration nor the IRS look very good, it’s important to remember what this actual story is about because it’s gotten lost.
The question at hand is whether explicitly political organizations should be filing as tax exempt social welfare groups under the tax code and both political parties are pointing blame. Republicans say that just conservative-sounding groups were targeted by the IRS. That’s why they want to see the e-mails. Democrats have responded by claiming, hey, liberal groups were targeted, too. But here is the story many are missing. Why should primarily political organizations get a taxpayer exemption, basically get a handout from the tax code? Both sides are in an uproar because they couldn’t take advantage of a borderline shady way to raise money for political purposes or launder money for political purposes.
So while the IRS is certainly not a good guy here they have been terrible about being forthcoming. Are there any actual real victims? Folks, this scandal is not black and white since frankly two wrongs don’t make a right. We know what really is working here for Republicans. Beating up the IRS, good for the base. Good politics there makes for great fundraising e-mails. But let’s remember what the controversy itself is about.
The problem is that Chuck Todd is flat-out wrong. 501c4s are not a way to engage in political spending. They are issue advocacy groups, and always have been — for nearly 100 years. Never until this administration has anyone had a problem with 501c4s.
The real crux of the problem is that the IRS attempting to try to turn issue advocacy — which is a first amendment, free speech issue — into political speech, so they can try to curb it. This was clearly evident in the recent uproar with the IRS trying to re-write the rules on 501c4s, which generated tens of thousands of comments in protest.
The short version is that issue advocacy deals with issues (free speech) and is not “political”, whereas advocating for a candidate or a party is “political”. It may not be a perfect divider, but it has worked quite well, and no one has even suggested anything better.
Proving Chuck Todd to be even more clueless is the fact that 501 c4 organizations do not really get any tax benefits from their “tax exemption”. All a 501c4 is, is a group of people pooling their after tax money to pay for a non- deductible expenditure. There are never “profits”, the receipt of funds from its members is not income, and the expenditure of these funds are not “deductions”. Just as there is no tax effect from an individual spending on issue advocacy, there should be no tax effect from individuals pooling their funds for the same spending. The IRS granting of 501c4 status is just recognizing the obvious.
Chuck Todd is either disingenously preying on low-information viewers to not know the differences between 501c4s and other tax-exempt organizations, or else he really is that stupid. Either way, he should submit his resignation today.