Thursday, 16 May 2013

Everybody bashes the Taxman

If you have been following the news in the US, you might have noticed an almighty hullabaloo over the the IRS (their tax man) having targeted Tea Party and Conservative groups. Much hot air and righteous indignation is being spouted and Obama has fired the IRS chief yesterday. Almost everybody on earth loves to bash the taxman (rightfully so !) and this is all good fun.

Except that I believe that in this case the bashing is wrong. Or at least much exaggerated.

What happened is this. The IRS admits that it subjected groups which bore the name tea party, or patriot to extra scrutiny. The fact that such groups are exclusively Republican and that the President is a Democrat seems to indicate political targeting. That is, of course, against the law. Hence all this noise.

But why did the IRS do this - after all, they are not fools. If you try and answer this question, a different picture emerges.

The problem all started with, in my view,  the appalling judgement by the US Supreme Court in the Citizens United case in 2010. In layman terms the Supreme Court decided that organisations were people and had the same right of free speech as you and me. Therefore there could be no curbs on their political activities and donations.

Overnight, all sorts of action groups sprung up and the money started being being poured into US elections of all kinds.  Many of these outfits do not want to disclose who really gives them money. The way to achieve this is to register as a social welfare organisation under the tax code which then grants you tax exempt status - something called Sec 501(c)(4) exemption !! You are not prohibited then from indulging in political activity - its just that the primary activity has to be social welfare in nature. The main purpose of these groups is not to avoid tax (for they do not really seek to make a profit). The primary purpose is to avoid disclosing who is giving all the money.

It is probably a safe bet to say that the majority of these groups (Republican or Democrat) have zero interest in social welfare and are primarily there for  political activity.

From 2010 to 2012, the number of such organisations doubled to some 3400. A large number of them were "tea party" or "patriots". Do you really expect the IRS to sit tight and watch all this. After all, it is their job to check whether these outfits really were primarily involved in social welfare. 

The IRS did not prosecute them or withdraw their status. All they did , in true Ramamrtiham style, is to harass them with lengthy requests for information, do audit reviews, delay decisions on their applications and commence painstaking procedures. In this my sympathies are entirely with the said groups as we all know what the incredible capabilities of Ramamritham are.

The real culprit is the political donations sloshing around consequent to that awful Supreme Court verdict.  In true US politics style, this will not be addressed - instead the IRS will be hauled over coals. Yuk !

I never thought I would ever write a post in defence of Ramamritham, but there you go ... !


Appu said...

The last line is epic! anything can happen :) :)

gils said...

kalakrenga thala...thalaikku teriatha matteray lethu :)

Shachi said...

Found the whole issue amusing when I read the news and now this post from you - hail Ramamritham :) :) :) :)!

Hopfrog said...

Quite a mess it is and the groups appear to have a legitimate complaint about being targeted.

I think it has less to do with Obama being in office than the fact that these groups are generally anti-tax.

I agree with you that the biggest issue, and imo one of the biggest flaws in our democracy is the lobbyist brigade.

Ramesh said...

@zeno - Anything can happen indeed :)

@gils - Lots of useless information !

@Shachi - Shhhh. Don't go to that extent of hailing the bandicoot !

@Hopfrog - Great to see your comment. Trust you are doing great. I think you have hit the motive on the head - they got the IRS's goat because they are anti tax; not anti Obama.

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Indu said...

A post that will clarify the topic for most. Strange, how the political parties – all of them need these agents to get the funds moving; But, they ultimately have the power one way or the other to prevent being caught themselves. So, what do they do? - change the story and divert the attention somewhere else!!!! Now, Obama & his team can be called sincere, if they also continue such investigations on all organizations with political connections. May be then really, all the l sh.. would hit the fan. Would be messy, but that would be fair –yes?

Anyway, In another sense, I am a bit disapoointed.. These things are discussed in such great detail only because of the Mei Guo involvement. Has Ramesh also fallen for it? I hope another post will come up soon enough, on our own Ramamritham and the various other avatars of him in a similar situation closer to home. I hope this time, it will be praising him for his courage and integrity ( of not letting the political motivations influence him) . Hail Ramamritham!

Sriram Khé said...

gils, enna nee thideernu telungu "lethu" use panni intha englishified thamizha kolai pannare? karunanidhitta complaint pannanum ;)

Ramesh, you need to explain your lack of consistency regarding Ramamirtham in relation to government policy.
In the post on gas cylinders, I argued that Ramamirtham is not be blamed, because it really is an insane government policy that has even created this role for a Ramamirtham. While agreeing that the policies are to be blamed,you asked why Ramamirtham has to be such an eager-beaver in carrying out the policy the way he does.

Now, in the American context, it is the law that has created these monsters that qualify as "non-profits" that have a mission to educate people, even though all those non-profits do is partisan politics. Eager-beaver Ramamirthams in the IRS offices in Cincinnati did what they did because they thought they were implementing those laws in the fullest. But, here, you are defending the Ramamirtham.

What gives?

Gils, americala panninaa athu rightu, indiala panninaa thappunnu thalai sollarappila ;)
(for the non-Thamizh folks, I am kidding here that Ramesh says it is ok when the American Ramamirtham does it, but not when the Indian Ramamirtham does what he does .... muahahaha)

And, btw, "Mei Guo"? English, Tamil, Telugu, and now Chinese? what the what???? ;)

Ramesh said...

@Indu -Oh no no - no partiality to Mei Guo. I write a fair bit about Zhong Guo too !!

But asking for a post in praise of the Indian Ramamritham is a bit too much. Pathologically, I can't do it, having suffered, and continuing to suffer, from his unwelcome attention

Ramesh said...

@sriram - Now that you have put it so starkly in your very logical way, I suppose I have to agree to the unintended bias.

I shall atone by ruthlessly criticising your Ramamritham in a future post :)

You are in scintillating form today - even catching out Gilsu's Telugu !

Indu said...

Not that i am in love with ramaritham - He was a major reason why i ran away from practice. I was hoping to make peace some day thro your post. Doesnt look like that!

Sriram Khé said...

ok, i shall watch out for the post in which you wash away your sins, ramesh ;)

indu, good to "see" you here ...

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