A conservative think tank called the Kansas Policy Institute has run ads critical of a proposed increase in Johnson County’s property tax levy.
The group is perfectly within its rights to do so. The Supreme Court has said corporations have First Amendment rights, and KPI is duly registered in Kansas as a corporation.
But KPI is a special kind of company. It’s considered a nonprofit charity — just like a church or the United Way. Charities pay no income taxes, and its donors can remain secret.
Also, contributions to a charity are tax deductible for the giver.
The government provides a tax break for charitable donations because charities do good things and they need money. The Salvation Army is a charity. So is the American Red Cross.
The tax break comes at a cost, however. The federal government will forgo about $250 billion in revenue over the next five years to provide the deduction. It’s called a “tax expenditure,” which means the rest of us must pay what charitable givers don’t.
To prevent costly overuse of the deduction and to ensure charity donations actually go for charity, the IRS has established standards a nonprofit charity must meet. A charity, it says, “may not attempt to influence legislation as a substantial part of its activities.”
Which is where the Kansas Policy Institute comes in.
KPI’s website includes opinion essays on school funding, tax policy and more. KPI’s president, Dave Trabert, routinely testifies before the Kansas Legislature. He is also a lobbyist who has spent more than $2,800 this year buying lunches for lawmakers, state records show.
Is KPI trying to “substantially” influence legislation? In an email, Trabert said KPI’s charity status is justified. “We are permitted to educate the public on issues of this nature,” he said. And many other charities on the left and right engage in policy debates: the Kansas Center for Economic Growth, Rex Sinquefield’s Show-Me Institute and Missouri Jobs with Justice, to name a few.
But these groups, and others, have options. They could file as nonprofit social welfare organizations, not as charities. That would give them more leeway to influence public policy.
They don’t want to file that way, though, because donations to social welfare organizations aren’t tax deductible.
Taxpayers subsidize charities because charities are good to have. Political organizations aren’t charities and shouldn’t get subsidies from the rest of us.