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Tea Party gets taste of profiling

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Over the weekend, a lot of Republican politicians learned to hate profiling. This is a positive development.

They were shocked, and rightfully so, that some employees of the Internal Revenue Service's Exempt Organizations Determinations office in Cincinnati decided the groups most likely to abuse rules governing 501(c)4 organizations would be conservative. They started by flagging groups that had words like "Tea Party," "Patriots" or "9/12" in their names. They broadened their search to groups that "criticize how the country is run" or that sought to educate the public on how to "make America a better place to live."

There is a certain logic to this. There was a boom in the number of groups seeking non-profit 501(c)4 status after the Supreme Court's Citizens United decision in January 2010 allowed corporations to donate to political campaigns. But with direct corporate donations, or donations to "super PACs," names are disclosed, something many donors wished to avoid.

Even before Citizens United, Karl Rove, the GOP political mastermind, quickly identified the opportunity offered by 501(c)4 status: Donations to a 501(c)4 "social welfare" corporation would not be tax-deductible, but its donors could stay anonymous. Donors could have a big impact on elections without leaving a trail. Meanwhile, the (c)4 itself didn't have to pay taxes.

Under IRS rules, (c)4s could not donate money directly to candidates, but could donate half of their income on certain "educational activities" without reporting it to the Federal Election Commission. Direct or indirect, if a corporation is buying an attack ad, it's a distinction without a difference.

In 2010, (c)4s spent some $89 million on political campaigns, 83 per cent of it for Republican causes. That went up to $250 million in the 2012 election cycle and the percentage stayed roughly the same. Studies have traced much of the Tea Party funding to corporate-funded 501(c)4s.

So if you're an IRS investigator in Cincinnati, charged with examining the legitimacy of tax-exempt organizations, you decide to hunt where the ducks are. You think, "Most of this money is going to conservative causes. There's a lot of stuff with 'tea party' and 'patriot' in it. Let's check 'em out."

Like a cop in Missouri stopping black drivers 70 per cent more often than white, you profile. Like former GOP presidential candidate Rick Santorum and U.S. Rep. Peter King, R-N.Y., who want to focus on Muslims in terrorist investigations, you profile. Like Missouri GOP chairman Ed Martin, who once observed, "if there's a bunch of Mexicans out there, I guess some of them are probably not legal." You profile. As George Clooney said in Up in the Air, "I'm like my mother. I stereotype. It's faster."

It doesn't make it right, but the guess here is that nearly everybody profiles, at least a little bit. But the IRS can't. Not only is it unethical, unfair and remarkably stupid politically, it undermines confidence in the tax system. There's little enough of that already.

"If in fact IRS personnel engaged in the kind of practices that have been reported on and were intentionally targeting conservative groups, then that's outrageous. And there's no place for it," U.S. President Barack Obama told reporters Monday.

"And they have to be held fully accountable. Because the IRS as an independent agency requires absolute integrity, and people have to have confidence that they're... applying the laws in a non-partisan way."

Mr. Obama can roll as many heads as he wants -- and he should roll a bunch of them -- but it's not likely to make the IRS controversy go away. An odious practice that stemmed from the country's deep partisan divide is likely to make the divide even wider.

Republicans, who have been chasing fairy tales in their ginned-up outrage over the attack on the U.S. Consulate in Benghazi, Libya, now have another line of attack. This one is legitimate.

Even before it became politicized, the 501(c)4 scam was outrageous. Even when the rules aren't broken, it's outrageous. The integrity of the political process was compromised before the bright idea surfaced in Cincinnati.

Wealthy donors who don't have the courage of their convictions spent millions to tilt the table ever more their way. They are helped by eager political hacks who set up groups to accept dark money and foster an industry that subverts fair elections.

The IRS, its budget cut by 17 per cent since 2002, can't possibly keep up with the finaglers. Here's an agency that returns at least $7 for every $1 invested in it, and Congress is cutting its enforcement budget. The sequester has hit the IRS particularly hard, this when the idea should be to capture every legitimate tax dollar possible.

Even before the 501(c)4 controversy broke over the weekend, there was little inclination in Washington to do anything about abuses in the campaign-finance system. The terms of all six members of the Federal Election Commission have expired. Replacing them doesn't seem to be a priority for Mr. Obama, perhaps because he knows anyone committed to reform will have a hard time getting a confirmation vote. Congress and the entire political class exist on torrents of campaign dollars.

In a better political world, Mr. Obama would use the 501(c)4 controversy as an opportunity. Point out the IRS abuses, sure, but make it clear abuse didn't start in Cincinnati. Fix the system that created the problem. It would be nice to live in that world.

Republished from the Winnipeg Free Press print edition May 15, 2013 A9

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