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Newspaper Revitalization Act could save newspapers or threaten First Amendment

newspapersA new bill would give tax breaks to struggling news organizations if they restructure into non-profit organizations, but critics worry it could threaten “Freedom of the Press.”

Rep. Carolyn Maloney, D-N.Y., introduced the “Newspaper Revitalization Act of 2009,” on Sept. 17, and conducted a Joint Economic Committee hearing yesterday to “examine the treacherous economic landscape newspapers face.”

“This hearing comes on the heels of my submission of H.R. 3602, a bill which will enable local newspapers to take advantage of non-profit status as a way to preserve their place in communities nationwide,” she wrote in The Hill’s Congress Blog. “I think that the government can help foster solutions for this industry in ways which protect the independence of newspapers and enables their objective reporting to thrive in a new economic and media climate.”

What is the Newspaper Revitalization Act?

The bill gives struggling newspapers tax breaks if they restructure as non-profit 501© (3) organizations.

To qualify for 501© (3) status, an organization must:

  1. Publish newspapers for general consumption “on a regular basis.”
  2. Publish news stories that are “necessary and valuable in achieving an educational purpose.”
  3. Prepare its material following “methods generally accepted as educational in character.”

Concerns

Critics worry the bill could threaten the news industry’s First Amendment Right to Freedom of the Press by prohibiting news organizations from expressing political opinions or commentary. 

Under the Internal Revenue Code, “public statements of position (verbal or written) made… in favor of or in opposition to any candidate for public office” could revoke an organization’s 501© (3) tax-exempt status and subject it to “certain excise taxes.”

The Daily Times editorial section warned that, under the IRC, “newspapers whose coverage annoyed one political party or the other might find themselves threatened with government action and their tax-exempt status put in jeopardy.”

Support

Sen. Benjamin Cardin, D-Md., who introduced a similar bill in March, said the non-profit status would be “similar to public broadcasting” – like PBS and NPR.

“Newspapers would not be allowed to make political endorsements, but would be allowed to freely report on all issues, including political campaigns,” Cardin said.  “Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible.”

In an interview with the editors of the Pittsburg Post-Gazette and the ToledoBlade, President Obama said he would be “happy to look at” bills before Congress that would give struggling news organizations tax breaks if they were to restructure as non-profit businesses.

“I haven’t seen any detailed proposals yet but I’d be happy to look at them,” he said.

According to the Columbia Journalism Review, newspaper ad revenues have fallen to 1965 levels.

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