The Cynical Dark-Money Game Behind the Effort to Impeach the IRS Commissioner

By
No, jackbooted thugs sent by the IRS are not about to break down the doors of poor conservative activists. Photo: Moodboard/Getty Images

One of the most remarkable propaganda victories won by conservative media in the last few years has involved the admitted IRS special scrutiny of right-wing groups applying for tax-exempt status. To read most of the coverage of this “scandal,” you’d think the only points of controversy were over how much targeting occurred and whether it was as consciously political in motivation as conservatives claim.

What seems to have gotten lost in the focus on “discrimination” are the underlying facts of what the IRS was actually doing and what the groups involved were seeking. For all the loose talk about “persecution” and “hounding,” and so forth, we’re not talking about audits or any other kind of IRS enforcement activity. The alleged outrage is the deliberate slow-walking of applications for 501(c)(4) status. As for the consequences of not quickly receiving tax-exempt status, tax liability is not generally among them; the kinds of groups engaging in or wanting to engage in political activity typically don’t make the kind of net profits that would require tax payments.

So if being exempt from taxes is not the point of seeking tax-exempt status, what is the point? It is, as Eliza Newlin Carney points out in a fresh look at the whole issue, the ability to shield the names of donors from disclosure to the Federal Elections Commission. And thus 501(c)(4) groups have become the spear tip of the entire Citizens United–driven “dark money” drive.

Now you can agree or disagree with the idea that big donors to political campaigns ought to be disclosed as a matter of public policy. Maximum disclosure used to be, interestingly enough, the default conservative answer to the problem of special-interest political spending, in contrast to the progressive preference for spending or contribution limits. But it is really, really difficult to argue that hiding one’s donors is some sort of innate right essential to American liberty, or that asking for disclosure of donors is a sinister or even tyrannical activity.

Yes, some conservatives believe, or say they believe, that disclosed donors will suffer from left-wing persecution. But there’s no particular evidence of that, other than the same vague allegations that underlie the claim that the IRS is persecuting conservatives by not immediately giving them the right to hide donors. It’s all a conspiracy theory within a conspiracy theory, advanced so aggressively that it’s led House Republicans to the absurd conclusion that the IRS commissioner be impeached for failing to ’fess up to his agency’s nefarious scheme.

Is this whole issue of tax-exempt status for political groups, then, just a nothing-burger all around? Well, not exactly. As Carney points out, the corrupt nature of the “dark money” all these would-be tax-exempt groups want to hide has been graphically illustrated by the leaked material from Wisconsin’s abruptly terminated “Joe Doe investigation” of funny business in the state:

Court documents leaked to The Guardian newspaper last week paint a vivid picture of the brazen way elected officials—in this case Wisconsin Governor Scott Walker—solicit big checks from CEOs, hedge fund managers and other corporate donors for non-disclosing tax-exempt groups that help them politically. The Guardian obtained 1,500 pages of sealed documents from an investigation into whether Walker coordinated with the Wisconsin Club for Growth, a “social welfare” group that helped Walker beat back a recall campaign in 2011 and 2012. Such coordination is expressly forbidden by law.
“Get on a plane to Vegas and sit down with Sheldon Adelson. Ask for $1 million now,” wrote one fundraising consultant to Walker. The email also urged the governor to “create a list of legislation that passed and benefits whom.” Walker complied, meeting with corporate donors around the country and pulling in millions for the Wisconsin Club for Growth, including $15,000 from now-GOP presidential nominee Donald Trump. “I got $1 million from John Menard today,” wrote Walker in one email, referring to the billionaire owner of a home improvement store chain. One $10,000 donor wrote on his check to the Wisconsin Club for Growth: “Because Scott Walker asked.”

501(c)(4) organizations are not, in other words, just brave but frightened little tea-party groups that want to circulate petitions to audit the Fed or ban the New Black Panthers. Conservative demands that the IRS rubber-stamp applications for tax-exempt status are not as innocent as they sometimes sound. If all they cared about was non-discrimination, perhaps they’d join many progressives in calling for an end to the whole 501(c) scam. But as Carney points out, more comprehensively regulating tax-exempts is precisely something this Republican Congress has prohibited the IRS from doing.

The more you look at the issue, calls for impeaching the IRS commissioner while ignoring the easy-to-abuse underlying rules governing nonprofits serve as a big smoke screen for protecting dark money. Meanwhile, reinforcing the paranoid belief of grassroots conservatives that IRS auditors will soon be pouring over their personal records or that jackbooted federal thugs will kick down their doors is just gravy for the cynical pols promoting this “scandal.”