Tax Bill Could Offer New Way To Funnel Political Cash — And Make It Tax Deducti Big-money donors can already donate anonymously through social welfare groups. If Congress keeps a provision in the House tax bill, it would allow charitable organizations to play politics.

Tax Bill Could Offer New Way To Funnel Political Cash — And Make It Tax-Deductible

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MARY LOUISE KELLY, HOST:

Now let's look at another provision in the House version of the tax bill. This one would let churches and charitable groups engage in political activity. Advocates say it would promote religious freedom. But it would also give the wealthy new platforms for wielding political influence, as NPR's Peter Overby reports.

PETER OVERBY, BYLINE: If you were anywhere near a television in the past decade, you might have heard ads like these.

(SOUNDBITE OF MONTAGE)

UNIDENTIFIED WOMAN #1: Too dangerous to have real power over real people.

UNIDENTIFIED WOMAN #2: Oh, really, congressman? You voted for skyrocketing debt?

UNIDENTIFIED WOMAN #3: How can we afford this tax? We're already struggling.

UNIDENTIFIED MAN: Broken promises. Financial neglect. A dishonest campaign.

OVERBY: Messages from so-called social welfare groups, or as the tax code classifies them, 501(c)(4) organizations. Supreme Court rulings in 2007 and 2010 made 501(c)(4) groups valuable political vehicles. They're used by the conservative Koch brothers' network and other ideological warriors on both sides. Now the tax bill offers a potentially much bigger loophole, one that political operatives will try to drive right through. It would politicize a different set of tax-exempt groups - 501(c)(3) charity organizations. Political scientist Michael Franz says big donors would get an added benefit.

MICHAEL FRANZ: You not only get to help that candidate with a big contribution, it's not going to be publicized. And you're going to be able to take a tax deduction on top of it.

OVERBY: That's right. Big donors can already make unlimited secret contributions. Now they'd be able to write them off on their taxes. Franz the political scientist is with the Wesleyan Media Project, which has tracked political ads since 2010.

FRANZ: This is going to create possibly, you know, tax-deductible electioneering.

OVERBY: All of this stems from the potential repeal of what's called the Johnson Amendment, a bit of tax law from 63 years ago. Lyndon Johnson was running for re-election to the Senate. A couple of Texas millionaires used charitable organizations to attack him. He changed the tax law to shut them down. The Johnson Amendment says 501(c)(3) groups cannot endorse or attack candidates. That includes charities, nonprofit colleges and hospitals and churches. Religious conservatives have been driving to repeal the Johnson Amendment, and President Trump is with them.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: I will get rid of and totally destroy the Johnson Amendment and allow our representatives of faith to speak freely and without fear of retribution. I will do that. Remember.

OVERBY: That was Trump last winter at the National Prayer Breakfast. Totally destroying the Johnson Amendment would do two big things. First, clergy could promote or attack candidates from the pulpit. But that would have a downside, too.

LESLIE LENKOWSKY: If religious figures can do outright endorsements of candidates they will be pressured to endorse candidates.

OVERBY: Professor Leslie Lenkowsky studies philanthropy at Indiana University. The other big thing repeal would do?

LENKOWSKY: You know, we are on a slippery slope here.

OVERBY: With 501(c)(3) groups, the political opportunities would be enormous. The IRS counts about 1.3 million charitable organizations, roughly 15 times more than all of the 501(c)(4)s. The IRS is in no condition to set strict rules. It was crippled by political controversy after it tried to regulate the political social welfare groups. If the Johnson Amendment is repealed, consultants could create new groups using anodyne names to funnel money from America's richest donors into the political system, and all of it tax-deductible. Peter Overby, NPR News, Washington.

(SOUNDBITE OF PETE ROCK'S "A LITTLE SOUL")

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