The Tax Law could offer a new way to channel political cash – and make it tax deductible: NPR


Donald Trump signs a one dollar bill for a supporter during a campaign rally in Richmond, Virginia, during the presidential campaign.

Chip Somodevilla / Getty Images

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Chip Somodevilla / Getty Images

Donald Trump signs a one dollar bill for a supporter during a campaign rally in Richmond, Virginia, during the presidential campaign.

Chip Somodevilla / Getty Images

Wealthy Americans can get a new conduit for the political money in the tax reform bill that is now being reconciled on Capitol Hill.

A small provision in the House bill version would allow large donors to donate unlimited amounts in unlimited amounts to independent political groups – and cancel contributions as charitable gifts.

"Not only can you help that candidate with a large contribution, he will not advertise it, and he will be able to take a tax deduction in addition to," said Michael Franz, a political scientist, who badyzes political advertising with the Wesleyan Media Group.

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The change would echo, or possibly dwarf, the inflow of unregulated, undisclosed campaign money triggered by two Supreme Court decisions over the past decade. The rulings allowed for unlimited contributions to tax-exempt social welfare groups that engage in politics. The groups operate under section 501 (c) (4) of the tax code, and do not disclose their donors.

The conservative network of Koch brothers and other ideological warriors, on both sides, deploy social welfare groups. Their television ads tend to be negative, even caustic, which helps make campaigns more divisive.

The tax review bill offers a potentially much larger loophole, one that political operatives will try to go through. I would politicize a different set of tax-exempt groups: 501 (c) (3) charities, where donors can take tax deductions for their contributions.

"This is going to create, possibly, tax-deductible elections." Franz said.

The provision would repeal the Johnson Amendment – a bit of tax legislation 63 years ago.

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Lyndon Johnson, who later became president, ran for re-election to the Senate at the time. And two Texas millionaires were using charities to attack him.

Then Johnson amended a tax bill with language to close them. It says that 501 (c) (3) groups can not endorse or attack candidates.

Although the Johnson Amendment almost never applies, religious conservatives have been pushing for its repeal, and President Trump is with them.

"I will do it". get rid of and totally destroy Johnson's amendment and allow our faith representatives to speak freely and without fear of reprisals, "Trump said last winter at the National Prayer Breakfast." I will do that. Remember. "

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The repeal would allow the clergy to promote or attack the candidates from the pulpit, but it could have an inconvenience for them as well.

" If religious figures can openly support candidates, they will be pressured to support the candidates, "said Professor Leslie Lenkowsky, who studies philanthropy at Indiana University.

originally drafted, the repeal provision applies only to religious organizations, but House Republicans extended it to apply to all 501 (c) (3) entities.

"You know, here we are on a slippery slope," Lenkowsky added. ] The IRS says that there are more than 1.3 million charities, approximately 15 times more than all the 501 (c) (4) groups.

If the repeal provision is becomes law, the IRS is not in a position to establish strict rules. He is still paralyzed by a three-year controversy over his attempt to regulate political welfare groups.

It seems that the consultants could do what they did with the social welfare groups: create new ones, with bland names, to channel money from the United States the richest donors in the political system.

And everything would be tax deductible.

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