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Jim Nelson of Yorba foundation has a hair raising blog post on the reasons IRS denied a 501(c)(3) statute to Yorba:
501(c) is the section of the United States' tax code dealing with tax-exempt organizations. The third type (i.e. 501(c)(3)) are for organizations that are "organized and operated exclusively for one or more of the following purposes: religious, charitable, scientific, testing for public safety, literary, educational, fostering national or international amateur sports competition, or the prevention of cruelty to children or animals".
The Yorba Foundation applied for 501(c)(3) in December 2009. We applied as a charitable, scientific, and educational organization. Remember that we only needed to meet the criteria for one of those to receive 501(c)(3) status.
What follows are the most hair-raising statements in their denial letter and my interpretation and response (IRS' statements are in italics):You have a substantial nonexempt purpose because you develop software published under open source compatible licenses that authorize use by any person for any purpose, including nonexempt purposes such as commercial, recreational, or personal purposes, including campaign intervention and lobbying.
There's a charitable organization here in San Francisco that plants trees throughout the city for the benefit of all. If one of their tree's shade falls on a cafe table and cools the cafe's patrons as they enjoy their espressos, does that mean the tree-planting organization is no longer a charity?
Mere publishing under open source licenses for all to use does not show that the poor and underprivileged actually use the Tools. ... You do not limit your distribution and do not know who uses the Tools much less if they use them for artistic purposes. ... you do not know who uses the Tools much less what kind of content they create with the Tools.
In other words, we (and, presumably, everyone else) cannot license our software with a GNU license and meet the IRS' requirements of a charitable organization.
The purpose of source code is so that people can modify the code and compile it into object code that controls a computer to perform tasks. Anything learned by people studying the source code is incidental.
Which is like saying the only point of an algorithm is its final answer, and so Einstein publishing E=mc2 offered nothing more to the world than a way to accurately measure the amount of energy in, say, a cube of sugar or a block of cheese. Any deeper learning is incidental.
The development and distribution of software is not a public work even if published under open source or creative commons compatible licenses because software is not a facility ordinarily provided to the community at public expense. ... In the face of such consistency of the key characteristics over four centuries we are constrained from extending the term public works to encompass intangibles such as software.
The "four centuries" of terminology being referenced here is that software is not a lake, dam, bridge, highway, etc. In other words, because 17th century English Common Law doesn't mention IMAP email clients or JPEG decoding, software is not a public work.
And the list of IRS aberrant motivations continue (do RTFA, this space is too short for all of them).
(Score: 2) by khallow on Thursday July 03 2014, @01:17AM
since I am not convinced that taxes fund expenditures.
I don't see that this lack of convincing matters. It's pretty clear that taxes do fund expenditures since tax revenue is much greater than borrowing for the US. Similarly, why would anyone lend to the US, if they didn't expect payback in some form? Tax revenue insures there is a payback.
(Score: 2) by buswolley on Thursday July 03 2014, @03:08AM
Ours is a fiat currency. Since the debts of which you speak are in held in U.S. dollars, all debts in that currency are payable merely by issuing sufficient currency by order of fiat, a constitutionally given power. The only real limit to monetary policy is deflation and inflation. For a primer, http://soylentnews.org/article.pl?sid=14/03/01/0550250 [soylentnews.org]
subicular junctures
(Score: 2) by khallow on Thursday July 03 2014, @02:30PM
Ok. So there's the mechanism that enforces the condition I observed.
(Score: 2) by buswolley on Thursday July 03 2014, @03:37PM
Yes it enforces the condition, except we have not examined what causes hyper-inflation. Hyper-Inflation occurs when there are to few goods relative to the supply of money. While printing money can lead to inflation, historically this has occurred by exogenous variables that disrupted that capacity to ramp up production to meet demand. Zimbabwe, Germany,et, these occurred because of external pressures or breakages of the capacity to produce more goods and services. Can you name a historical example where hyperinflation occurred merely by printing too much currency and in the absence of a disruption to production capacity? The fact is, at high unemployment, currently there is a shortage of dollars, not the capacity to produce goods and services.
subicular junctures
(Score: 2) by khallow on Friday July 04 2014, @05:04AM
You already mentioned Zimbabwe and Wiemar Germany. No society can ramp up production to cover the number of orders of magnitude of currency devaluation of these two examples. Conversely, production disruption was insufficient to cause the degree of hyperinflation observed by many orders of magnitude.
Instead, it's worth noting the painfully obvious. The same sort of government which decides that hyperinflation is actually a valid approach, will by its very incompetent nature, disrupt production. This is an obvious common factor between hyperinflation and just about any other unpleasant economic problems a country can face.
(Score: 2) by buswolley on Friday July 04 2014, @04:17PM
These examples show that increasing the supply of money when you are at max production is bad. These examples do not demonstrate that countries that are underproducing relative to max capacity should not print dollars.
subicular junctures
(Score: 2) by khallow on Friday July 04 2014, @04:55PM
Neither country was anywhere near something that could be considered max production. But they weren't 6+ orders of magnitude away from it either.
(Score: 2) by khallow on Friday July 04 2014, @09:49AM
There's also the willingness of other parties to lend to the country in question or accept the currency as payment. And why do so many people think it is relevant that the observation that a country can "pay" its debts merely by printing a bunch of money? There are huge, negative consequences to such an act - namely, the hyperinflation that you mention in your reply. If a country does that hyperinflation, how is it going to pay for anything in its currency ever again? It's a one time scam which never works again.
(Score: 2) by buswolley on Friday July 04 2014, @04:19PM
In a closed system, simply by raising taxes to remove the money from the system.
subicular junctures
(Score: 2) by khallow on Friday July 04 2014, @04:50PM
There's nothing simple about it. The dollar is honored as a medium of exchange because the US doesn't play such games with it. And you can always create a new, informal medium of exchange(say trading fixed units of a commodity) if the currency fails to be adequate to the task.