House Democrats want to raise taxes on corporations, high income earners and users of vaping products to pay their $ 3.5 trillion spending bill. But they are ignoring local newspapers by slipping a special publisher subsidy into their latest tax proposal.
Under the tax bill published by the House Ways and Means Committee this morning, local publishers would get annual tax credits of up to $ 25,000 for each reporter they employ, which could then be allocated to their employers’ share of payroll taxes of Medicare. The value of the credit would drop to $ 15,000 after the law comes into force for one year.
It would be a refundable tax credit. In other words, if the value of the tax credit exceeds the Medicare taxes that a publisher pays, the publisher will receive the difference in the form of an IRS check. This turns the policy of a targeted tax relief into a direct subsidy.
These tax credits would be available to local newspapers, defined as any print or digital publication with no more than 750 employees that produces “original content derived from primary sources”, which primarily serves a “regional or local community” and which employs at least one local journalist.
A local journalist, on the other hand, is defined as an “individual [who] regularly collects, collects, photographs, records, writes or reports news or information regarding local events or other matters of local public interest.
The idea of offering an effective wage subsidy to local journalists is not unique to this bill.
Interest in providing federal aid to struggling local newspapers increased during the pandemic, as advertising budgets dried up and problems at the post office meant many publications struggled to get their news. product to subscribers.
The Law on the Sustainability of Local Journalism—introduced for the first time in 2020 by Reps Ann Kirkpatrick (D-Arizona) and Dan Newhouse (R-Wa.) – allegedly created an identical tax credit to subsidize the remuneration of local journalists. This bill would also have granted tax credits to individuals who subscribe to local newspapers and to small businesses who buy advertising there.
“Journalistic efforts across the country face major economic struggles that seriously jeopardize the future of many publications. These struggles existed before COVID, but the pandemic has only made them more serious,” noted Kirkpatrick in June, as she reintroduced the bill.
The idea turned out to be surprisingly bipartisan, with 58 Democratic and 28 Republicans co-sponsors. “He has cosponsors as diverse as former Black Panthers Rep Bobby Rush (D-Ill.) And Tory Rep Louie Gohmert (R-Texas)” Noted Rick Edmonds in a column published by Poynter.
Despite its popularity, there are two serious problems with the idea.
The first is that taxpayers are forced to pay for local journalism that they would not have chosen to support otherwise. Giving government checks to distressed outlets only weakens their need to reach readers or convince donors of their value.
Theoretically, the House Democrats’ bill alleviates this problem by expiring their local journalism tax credit after five years. It is doubtful, however, that Congress will let such a grant expire on schedule.
The second, more serious problem is that it gives the federal government the responsibility of deciding what counts as a legitimate newspaper and who counts as a legitimate journalist under the tax code. Even the detailed definition included in the House Democrats’ bill leaves a lot to be determined by the IRS. Does a paper publish enough “original content”? Is it “mainly” local or regional?
Imagine that IRS agents examine a newspaper (or Substack) to see if it qualifies for special tax treatment. Not exactly a First Amendment image.
Journalism obviously plays an important civic function. But to maintain it in the long term, we must convince citizens that it offers value worth paying for, without making it dependent on federal benefactors.