For months now, we’ve heard tales that the newspaper industry as we know it is “done.” Several big-name papers have announced that they’re closing down or making cuts. Philadelphia’s own Daily News, for example, is no more.
Newspaper owners blame a perfect storm of a downturn in the economy, combined with the rise of social and new media, for the decline of the print press. Are we really ready to say that the industry, which has existed in the US since the first daily, the Pennsylvania Packet, which fired up in 1784, is over?
Sen. Benjamin Cardin (D-MD) says not so fast. Cardin has introduced a bill that would allow newspapers to opt for tax-exempt status. And before you call the idea completely crazy, consider what the bill is based on: tax-exempt status of public radio.
In the 1950s, radio had trouble keeping up with the “new media” of the times: television. Noncommercial radio, in particular, was struggling to stay afloat. After years of trying various methods to set itself apart, noncommercial radio was thrown a bone by Congress when it was included in the Public Broadcasting Act of 1967. Three years later, National Public Radio (NPR) was created as a nonprofit corporation organized for tax-exempt purposes and still exists today.
Cardin believes that this kind of arrangement might be a way to save local newspapers.
Of course, those papers would have to make changes. To qualify as tax-exempt, they could no longer endorse political candidates, though they could cover elections (as NPR does). Fundraising would have to pass IRS muster, but if it did, advertising and subscription revenue would be tax-exempt to the papers.
What would this mean for readers? For one, a percentage of the subscriptions paid would be tax deductible – just like with NPR. The exact amounts would likely vary but in most cases, the actual cost of the item (in this case, the paper) is deducted from the donation to determine the tax-exempt amount. So, for example, if the actual cost of my Philadelphia Inquirer newspaper delivery is $2.50/week or $130/month and my subscription “membership” is $250, I would be able to claim $120 as a deduction on my individual taxes. Of course, those are just numbers that I made up – but you get the idea.
With the restrictions imposed by the IRS for tax-exempt organizations, this may not be the answer for all newspapers. But is it a start? John Sturm, president, and chief executive officer of the Newspaper Association of America, thinks so.
It’s a clever idea. I’m not completely sold but I am intrigued. I’m a big fan of public radio (my husband is more than a little addicted to Car Talk). I’m also a big fan of newspapers (we’re doing our part to keep the industry going, we have several subscriptions). I am concerned about the possible demise of print newspapers and I’m so pleased to hear that our Congressional officials are thinking “outside of the box” in terms of ways to save the papers. I really did expect just a blatant plea for a bail-out from the industry and it’s encouraging to see that not happen and instead, that the industry is open to alternate ways of keeping afloat.
What do you think? Would you support “public” newspapers in your hometown?
(Hat Tip: Huma)
I’d support the Naperville Sun, definitely. Heck, I even follow them on Twitter! 😛 But to kind of sum up what I said in my own blog post about this (http://bit.ly/xASyG), even paying full price every single day for a daily paper in addition to tax deductions and nonprofit status wouldn’t do much to cover operating costs considering just how much $$ papers get from advertisers, advertisers that would most likely back out if the paper started failing so as to require contributions from the local public. Le’sigh.
Interesting idea, but I’m not sure it’s the answer. Anyway, they’re already nonprofit, whether intentionally or not (tax joke…) Here in Seattle, the PI who just quit publishing hard copies is so blatantly liberal they’d definitely struggle with the restrictions. OTOH, if it meant better quality reporting and less advertorial’s it could be a good thing. But, other then the break on FUTA, as I understand it most newspapers aren’t going out of business due to their federal income tax liabilities – they don’t have any, because they have no income. The problem is cash flow, and the problem there is they aren’t attracting subscribers and advertisers in sufficient numbers to support their business. Fixing that will take more substantial changes then just becoming tax exempt.
Sounds like it could create a nasty feedback loop: the print media, which many people rely on for information about politics, could be beholden to politicians. That might lead to cartel-like behavior: in a close race, the newspaper strongly endorses a candidate who is going to raise their funding.
Since older people are more likely to read the paper, and more likely to vote, that could be a very powerful tool.
But if newspapers get nonprofit status, they wouldn’t be allowed to make endorsements, just report on political campaigns. There would be ways around it for the clever writer, I’m sure, but if they’re going to take such a drastic step, I figure the situation will be pretty closely monitored and any missteps will be taken care of.
I’m sure, but if they’re going to take such a drastic step, I figure the situation will be pretty closely monitored and any missteps will be taken care of.
Has that ever happened, in the history of government? Are there any government news sources that represent the interests of tax-payers over those of tax-spenders?
FOX News told me they do. =/
Hah.
But yeah, it’s a good point. Even though the non-profit status would take away the power of endorsements, there would be many ways to get around that.