We now know that the IRS did not only target conservative groups seeking 501(c)(4) status. The applications of tea party and progressive groups alike were subject to scrutiny. However, the lack of a scandalous conspiracy at the IRS is no reason to allow this behavior to continue. The IRS does not belong in the business of evaluating political conduct, nor did Congress ever intend to award political organizations with a tax-exemption reserved for groups "operated exclusively for the promotion of social welfare." The blurry line between social welfare and political advocacy, as well as vague IRS regulations extending eligibility to groups "primarily engaged in promoting in some way the common good," may have always left 501(c)(4)s vulnerable to abuse. Yet that abuse did not become rampant until the Supreme Court's 5-4 ruling in Citizens United v. FEC.
Before Citizens United, outside organizations intent on influencing elections were required to form separate groups, also known as 527s, that were subject to regulations from the Federal Election Commission. That distinction between social welfare nonprofits and 527s was tossed aside by the majority in Citizens United, effectively transforming 501(c)(4)s into a new kind of political monster. Since they do not have to disclose their donors, 501(c)(4)s could be established for the sole purpose of funneling millions of dollars to allied Super PACs. And with the vague definition of social welfare to begin with, they could even supplement the work of Super PACs by financing opinion polls, voter education campaigns, and other thinly veiled political activities.
The piecemeal regulatory and legislative fixes proposed thus far may or may not help the IRS better navigate the minefield of politically-motivated 501(c)(4) applications. Acting Commissioner Dan Werfel, for example, has announced a new fast-track to 501(c)(4) status for groups that certify no more than 40 percent of their resources will be spent on political activity. Unfortunately, this rule change falls short. It still undermines the exclusive social welfare mission Congress intended to reward, and it still fails to curb abuses by business alliances, unions, and other 501(c) entities. Legislatively, even if Congress passed the DISCLOSE Act -- which it should do in order to shine a bright light on election spending -- the voices of the people could still be drowned out by corporations, special interests, and their wealthy allies.
Ultimately, Citizens United severely limits our ability to get money out of politics. The 5-4 majority's assertion that somehow outside spending in our elections does not cause government corruption, and is therefore protected speech, defies reason. We know all too well that the surge of 501(c)(4) and Super PAC spending has exacerbated Washington's dysfunction. The American people have been left disenchanted and doubtful about our ability to govern on their behalf.
There is a way to give the American people their voices back, and that is exactly what Senator Bernie Sanders and I have proposed with the Democracy is for People Amendment. Our amendment would restrict the ability to spend money in our elections to actual people -- immediately barring corporations and other private entities, including 501(c)(4)s -- from participating in our elections. No IRS agent would ever again be tasked with evaluating the political conduct of a tax-exempt nonprofit. Like 501(c)(3) charities and other nonprofits, 501(c)(4)s would be prohibited from intervening in elections. The Democracy is for People Amendment also brings constitutional legitimacy to reforms put in place by the people to keep big money out of our elections, like monetary limits, public financing, and disclosure rules. All Americans, from CEOs and hedge fund managers to store clerks and nurses, could still establish committees to support candidates they believe in. But those committees would have to abide by the rules we put in place to prevent free speech from becoming something only the wealthy can afford.
Regulatory tweaks and one-off pieces of legislation will not stop corporations and other entities that do not vote from spending unlimited sums of money to sway elections in their favor. Nor will they enshrine in our Constitution our right as a people to protect the integrity of the electoral process, limit the influence of private wealth in elections, and ensure that elected officials are accountable to the people. Only a constitutional amendment can accomplish what is needed, and the Democracy is for People Amendment is the one that will do it.
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