- - Tuesday, February 21, 2012

ANALYSIS/OPINION:

Last summer, I wrote in this column that David Brock’s left-wing propaganda machine, Media Matters for America (MMA), was a “Democratic training camp” waging a taxpayer-subsidized “war” on Fox News. It turns out that that was an understatement.

Thanks to new reports from Tucker Carlson’s Daily Caller, we now have a much more colorful portrait of Mr. Brock, whom the Caller describes as a drug-addled, paranoid activist surrounded by gun-wielding protectors. It is an astonishing account of MMA’s inner workings, and surely will draw deserved attention.

But while news of guns and drugs may well attract the most headlines, it is critically important not to ignore what these reports should mean for MMA’s tax-exempt status. As I wrote last summer, MMA enjoys tax-exempt status as a charitable organization under Section 501(c)(3) of the tax code, and it leverages that taxpayer subsidy for the partisan purpose of waging war on Fox News, simply because Fox airs political viewpoints often consistent with the Republican Party’s.

Indeed, Mr. Brock announced last summer that MMA’s “war on Fox” was intended “to disrupt [Rupert Murdoch’s] commercial interests” and to turn regulators against News Corp.’s media outlets.

In a letter I subsequently filed with the Internal Revenue Service challenging MMA’s tax-exempt status, I listed several other examples of MMA’s partisan activities, ranging from attempting to scare Fox’s advertisers to “outing” a Republican official’s purported same-sex relationships.

The Caller’s coverage lays out even more examples of MMA’s taxpayer-subsidized misconduct. MMA planned to hire investigators “to look into the personal lives of Fox News anchors, hosts,” and others. And Mr. Brock’s team assembled an “enemies list,” ranging from Fox News and other media outlets to Rupert Murdoch, the Koch Family Foundations, and even PayPal co-founder and libertarian philanthropist Peter Thiel.

Anyone is free to promote or criticize political views of any stripe, using one’s own money and other resources. But MMA’s partisan success was built on a much different model: it uses the taxpayers’ subsidy, through Section 501(c)(3)’s tax exemption, to try to punish private persons and companies for airing political views.

By granting and maintaining MMA’s tax-exempt status, the federal government necessarily does two things.

First, it “tilts the playing field” in favor of MMA, by giving it subsidies not enjoyed by its victim, Fox News. Second, tax-exempt status effectively legitimizes MMA, by having the government affirm that the organization’s operations are truly “charitable” and therefore consistent with the nation’s public policies.

This second point was stressed by the Supreme Court in Bob Jones University v. U.S. (1983), in which the court held that a university was not entitled to 501(c)(3) status when it prohibited interracial dating.

“When the Government grants exemptions or allows deductions all taxpayers are affected; the very fact of the exemption or deduction for the donor means that other taxpayers can be said to be indirect and vicarious ‘donors,’ ” the justices said. Accordingly, the Supreme Court concluded, when an organization such as MMA receives 501(c)(3) status, it is deemed by the government to “demonstrably serve and be in harmony with the public interest.”

The Caller’s reports confirm that MMA, as a matter of law, does not deserve a taxpayer subsidy to fund its war on its political enemies’ free speech. But taxpayers face an uphill climb in challenging MMA’s status; ultimately, the decision will largely be controlled by the IRS - i.e., by the Obama administration’s Treasury Department.

Unfortunately, the administration appears to have been a consistent collaborator with MMA. According to the Caller, MMA personnel have visited the West Wing, and they strategize with the White House on a weekly conference call.

Given the White House’s relationship with MMA, we cannot assume that that the administration will let the IRS do the right thing. Instead, it may be time to challenge MMA’s indefensible government privilege in court, on statutory and First Amendment grounds.

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