When it comes to original, in-depth reporting that records and exposes actions, issues and opportunities in our communities, nothing has replaced newspapers. Most, if not all, sources of journalistic information, from Google to broadcast news or punditry, gain their original material from the laborious and expensive work of experienced newspaper reporters diligently working their beats over the course of years. Not hours, years.
Eric Schmidt couldn't have said it any better. But I'm not sure if I understand exactly why we need a new tax-code definition - the "Qualified Newspaper Corporation" - to allow newspapers tax-exempt status.
Under current law, any company may organize and operate as a tax-exempt charity as long as it meets the exemption requirements listed under Section 501(c)3 of the IRS code. A legitimate purpose of a 501(c)3 nonprofit is education, and newspapers surely qualify under the existing definition.
The big flap has been over Cardin's statement that nonprofit newspapers "would not be allowed to make political endorsements." But the bigger concern, especially for smaller papers, could be Cardin's explicit limits on the amount of advertising that may be published under the tax exemption: Cardin would require that nonprofit newspapers contain at least as much editorial content as advertising.
Cardin is trying to protect nonprofit newspapers from paying taxes on advertising as unrelated income. But what if advertisers also are donors? Who's to say which advertising has educational value and which does not? And who's going to measure the column inches? It seems he'd be better off not going there at all. If this bill became law - however unlikely that may be - this part almost certainly would get hashed out in court. So why create a standard that could limit nonprofit newspapers' success?