I bet you didn’t know that Republican Party political mastermind Karl Rove, pictured above with his ex-boss, President George W. Bush, was very interested in social welfare. I will also wager that you weren’t aware that political fixers Charles and David Koch were also very interested in social welfare.
You probably thought that Rove, who solicits money from billionaires, and the billionaire brothers were focused on politics, but the Internal Revenue Service (IRS) disagrees. The IRS treats Rove’s Crossroads Grassroots Policy Strategies and the brothers’ Americans for Prosperity (AFP) as “social welfare organizations,” according to the law. That means neither group pays a dime in taxes.
Are these two organizations “social welfare organizations?” Of course, they are. And I’m the best athlete in the country. I can’t get that picture out of my mind now.
In fact, Rove and the Koch brothers’ organizations are highly partisan political organizations that should not be allowed to make tens of millions of dollars and not pay their far share of taxes. The less they pay, the more we pay. During the 2012 election campaign, Crossroads spent $71.2 million and AFP spent $36.4 million, the two groups themselves reported in documents filed with the Federal Election Commission (FEC). That made them the No. 1 and No. 2 spenders among “politically active nonprofits,” according to this Center for Responsive Politics report.
Why are these two organizations “social welfare organizations?” Basically, because they said so. The IRS rule is that an organization is a social welfare organization if more than 50 percent of its expenditures are on social welfare. Rove and the billionaire brothers declared that this is true so it is, according to the law.
The Center for Responsive Politics reports that they – and many other politically active “social welfare organizations” – send “grants” to each other and those “grants” constitute social welfare expenses because, well, they’re grants to social welfare organizations. This, to me, is money laundering, pure and simple.
But I’m not surprised. This blog is the third part of a 4-part series on the dangers of a political and judicial system that Americans should no longer trust. The series is being pegged to the U.S. Supreme Court’s announcement of several major decisions at the end of its 2013-2014 court term. This article summarizes some of the cases that will be decided within the next week or two.
The first part of the 4-part series was entitled “Supreme Court Is Political, Not Judicial” because I have long believed that the Court doesn’t make decisions based on the law. The most egregious decision was the 2010 Citizens United vs. FEC ruling that declared that corporations are people and money is speech.
The second part of the series was entitled “Billionaires’ Influence Growing Thanks To Supreme Court” and focused on the attempt by billionaire Sheldon Adelson to get his way on personal financial matters by donating millions to Democrats and Republicans.
The core of the second part of the series was that a billionaire was being transparent in his effort to subvert our democracy via his money. This blog documents an even worse trend. Rove and the Koch brothers’ organizations aren’t transparent at all. In fact, EVERYONE who donated to those two groups is anonymous. Thus, you have no idea who is trying to influence the results of political campaigns when you watch a political advertisement. In addition, Rove and the Koch brothers’ organizations can spend as much money as they want to on political campaigns thanks to the Citizens United decision.
Since 2008, the Americans for Prosperity has spent about $185.5 million and Crossroads, which was formed after the Citizens United decision, has spent about $253.6 million. The two groups claim they spent $33.5 million and $92.1 million respectively on politics (because the money they gave to other political groups isn’t political spending).
Here are a few more facts:
* The American Action Network reported to the IRS that it spent about $5 million on political ads, but reported to the FEC that it spent about $20 million on political ads. This discrepancy allowed the group run by ex-senator Norm Coleman (R.-Minn.) to claim it was a social welfare organization. Crossroads’ two reports also had wildly different numbers.
* The Center to Protect Patient Rights sent more than $70 million in grants to “social welfare organizations” while reporting it had no activities. The group was formed merely to raise money from anonymous donors and send that money to partisan organizations.
* Altogether, organizations that don’t disclose their donors spent $336 million during the 2012 election campaign. About $256 million of that money was spent by conservative groups, about $55 million by liberal groups, and about $24 million by other groups, according to the Center for Responsive Politics. The CRP also said that about $90 million of the $336 million had “Koch links.”
The bottom line is that shadow money groups are pretty much allowed to do what they want to do, while having a tax-exempt status, reported Center for Responsive Politics writers Robert Maguire and Viveca Novak.
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