Taxpayers' subsidization of war on Fox News

From: Washington Times

David Brock, the conservative turned liberal advocate, has recently garnered a considerable amount of press coverage for his attacks on Fox News for, among many other things, allegedly taking over leadership of the Republican Party. What the news coverage has ignored is his use of tax-free funds for his organization, Media Matters for America (MMA), for these attacks — a form of government support for activities that clearly do not merit tax-exempt status and that as a result infringe on Fox News’ First Amendment rights.

MMA was originally established as an Internal Revenue Service Section 501(c)(3) organization, that is, an organization that can receive tax-deductible contributions to engage in educational activities. The more precise purpose was to counter alleged media bias and so to “identify occurrences of excessive bias in the American media, educate the public as to their existence, and to work with members of the media to reduce them.”

What MMA actually is doing, however, moves far afield from identifying possible bias to mounting a campaign to undermine a major media outlet and to promote the Democratic Party and progressive causes associated with it. Mr. Brock himself has described this new strategy as “a war on Fox,” an effort “to disrupt [Rupert Murdoch‘s] commercial interests” and look for ways to turn regulators against News Corp.’s media outlets.

MMA’s activities should disallow its tax-exempt status in two fundamental ways. First, IRS rulings make clear that attacks on individuals, statement of positions that are unsupported by facts and use of inflammatory language and other distortions will cost an organization its tax-free status. Second, in declaring “guerrilla warfare” on Fox as the “leader” and “mouthpiece” of the Republican Party and in developing a sophisticated Democratic-leaning media training boot camp, MMA has transformed itself into an aggressive advocate for Democratic and progressive causes and thus produced a second deviation from exempt educational activities.

MMA’s role as a Democratic training camp parallels exactly the operations of the American Campaign Academy (ACA), which was denied tax-exempt status by the IRS in 1989. ACA operated a school of intensive training for people planning to be campaign professionals. The facts showed, however, that most of the program’s graduates were Republicans, as were the officials who ran it and the funders who donated to it, and it was based on materials developed by the Republican National Committee.

It would obviously be highly discriminatory to allow tax-free donations to go to Democratic Party advocates when they are (properly) denied to Republican advocates. But the problem goes beyond a question of evenhanded IRS interpretation of the tax code.

As we are learning in connection with efforts to cut spending and reform the tax code, tax deductions are similar to appropriations outlays in the sense that they are a form of government spending. Tax-exempt status confers government support — support that cannot be used to attack speech without violating the constitutional bar on government’s abridgment of free speech.

No one would deny anybody the right to use his own or other private funds to criticize media coverage. But equally no one would argue that it would be appropriate for Congress to provide taxpayer funds to organizations for the purpose of financing attacks on free speech. Yet that is the effect of allowing tax deductions for such attacks.

An analogy might be the Supreme Court’s decision in 2008 to strike down the so-called “millionaire’s amendment” of the McCain-Feingold campaign finance law, which allowed a candidate to receive excess contributions if he was facing a wealthy opponent who was spending more than a certain amount of his own funds. The court held that Congress violated the First Amendment by creating incentives that burdened the exercise of speech. Here we have a subsidy for attacks on speech, which the speaker — Fox — can avoid only by curtailing speech that the subsidized attacker — MMA — does not like.