House Bill 9495 (Part 1): How a Tax Bill Could Quash Political Dissent
Last month, the U.S. House of Representatives passed a bill that gives the president and his cabinet appointee broad discretion to stifle political dissent.
A provision in the Stop Terror-Financing and Tax Penalties on American Hostages Act allows the secretary of the Treasury to unilaterally strip a nonprofit organization of its tax-exempt status under certain conditions, or through an executive order from the president.
Those conditions are met if the secretary decides that a nonprofit gave a terrorist organization any form of “material support,” which can include money, advice, or even the brief use of a mobile phone. Proponents of the bill have made it clear that speech and political protests are also in their sights.
And while there are only a few dozen organizations currently designated as terrorist (one such list is here), the bill includes a clause that the president can lean on to draw up a new list just for the purpose of this bill, with no parameters or restrictions on how that decision can be made (beyond a broad definition of terrorism and terrorist activity).
As a result, if a student group occupies an administrative building during a political protest, and damages some property in the process, it could be classified as a terrorist group. Perversely, by feeding, housing, and educating that group’s members, the university itself could be deemed “terrorist supporting,” and lose its tax exemption. Because the bill is silent on whether it excludes indirect support, it could even cover the foundations, corporate charities, and philanthropic trusts that donate to the university.
Losing tax exemption would not just scare away donors, but shut the nonprofit out of the financial system – banks, fearful of running afoul of counter-finance of terrorism laws, will refuse to hold accounts or process transactions for the group. As there is no judicial review, the only avenue of appeal is through the very secretary who made the designation in the first place.
It is no exaggeration, then, when Oxfam America said the bill “would allow the Treasury Secretary to effectively shut down any non-profit organization, including news outlets, universities, and civil society groups.” They are joined by a broad spectrum of opponents, including not just the American Civil Liberties Union, but Amnesty International, the Sierra Club, the NAACP, Cartoonists Rights, the Montana Nonprofit Association, and the Greater Pittsburgh Arts Council.
It is already a crime under existing laws to knowingly provide material support to terrorist groups. (That’s how we know that “material support” is broadly interpreted – because prosecutions and court cases under these laws have shown us.) But this bill lowers the bar for action further, by removing the “knowing” qualifier and taking the courts out of the process.
Didn’t know that the freelance journalist you bought a few articles from might have moonlighted for Hamas? Too bad, your organization could effectively be shut down.
TRACE International has long recognized the important role that free speech and a free press have in increasing commercial transparency and good governance. Organizations that expose evidence of malfeasance – including corruption – have often been labelled as terrorists by those in power. For instance, when allegations surfaced about the “gas for gold” plot, a multi-million dollar bribery scheme meant to skirt US sanctions on Iran, Turkish Prime Minister Recep Tayyip Erdogan dismissed them as the workings of political rivals that he later designated as a terrorist group. Al Jazeera, which has repeatedly been accused by the U.S. and its allies of supporting terrorists, is the same network that uncovered the laundering of more than $1.5 billion by high-ranking officials in the Maldives.
The bill is now in the hands of the Senate. Though Majority Leader Chuck Schumer might not bring it up for a vote in this session, it could resurface in January when Republicans control both houses of Congress, as well as the presidency.
Note: This is the first of a three-part series discussing the potential impact of the bill. In subsequent posts, we will explore its broader impact on civil society, and how similar laws in the financial crime sphere have been weaponized by autocratic regimes to clamp down on dissent. |
President and Founder, TRACE