WEEKLY NEWS DIGEST (September 20-26, 2010)


FBI probes were improper, Justice says.” By Jerry Markon. Washington Post. September 20, 2010. The FBI improperly investigated some left-leaning U.S. advocacy groups after the Sept. 11, 2001, attacks, the Justice Department said Monday, citing cases in which agents put activists on terrorist watch lists even though they were planning nonviolent civil disobedience. A report by Inspector General Glenn A. Fine absolved the FBI of the most serious allegation: that domestic groups were targeted purely for their activism against the Iraq war and other political activity, which would have violated their First Amendment rights. Civil liberties groups and congressional Democrats had accused the FBI of employing such tactics during George W. Bush’s administration. But the report cited what it called “troubling” FBI practices in the Bush administration’s monitoring of domestic groups between 2001 and 2006. In one instance, the report said, FBI officials falsely said an agent photographed antiwar demonstrators as part of a terrorism investigation, which led FBI Director Robert S. Mueller III to unintentionally give incorrect information about the incident to Congress. In another, agents investigated members of the environmental advocacy group Greenpeace over their protest activities “with little or no basis,” the report said. Agents kept the case open for more than three years, even though no charges were filed, and put the activists on a terrorist watch list, it said.
The groups that were monitored, which also include a Catholic organization that advocates for peace, compared the FBI’s actions to questionable domestic spying tactics the bureau usedagainst antiwar demonstrators and others in the 1960s under longtime director J. Edgar Hoover.
Related story:
F.B.I. Spying Not Fueled by Politics, Report Says.New York Times. September 20, 2010.
FBI Chastised for Spying on Activists.” Interpress Service (IPS). September 21, 2010.

What Should We Do With the Estate Tax?” No by-line. Wall Street Journal. September 20, 2010. Should the government take a big bite out of inheritances? Does taxing big estates help or hurt the economy and the country? And is such a tax fair to heirs, not to mention the people who worked and saved over the decades to build up those assets? The estate tax has always been contentious—but now the debate has taken on new life. Because of Senate inaction, the estate tax lapsed at the end of last year. While there’s no estate tax this year, heirs of those dying in 2010 may owe full capital-gains tax on sales of inherited property and may actually face a bigger tax bill than they would have if they had inherited in 2009. Many believe Congress will tackle the estate-tax question in the weeks before it adjourns, along with a slew of other tax matters. What’s likely to happen? Many think lawmakers will return the estate tax to its 2009 level—a $3.5 million exemption per individual and a top rate of 45%—and possibly raise the exemption. Heirs of those who die in 2010 may also get the choice of using 2009 rules. If lawmakers don’t step in, the tax will return in 2011 with a $1 million exemption per individual and top rate of 55%. So in the meantime, the debate rages on. And a huge amount of money hangs in the balance.
Related stories:
Keep it: It’s Fair, and We Need the Revenue.” By Michael J. Graetz. Wall Street Journal. September 20, 2010
Get rid of it: It’s Unfair, and There’s a Better Way.” By Ed McCaffery. Wall Street Journal. September 20, 2010.

Donor Names Remain Secret as Rules Shift.” By Michael Luo and Stephanie Strom. New York Times. September 20, 2010. Crossroads Grassroots Policy Strategies would certainly seem to the casual observer to be a political organization: Karl Rove, a political adviser to President George W. Bush, helped raise money for it; the group is run by a cadre of experienced political hands; it has spent millions of dollars on television commercials attacking Democrats in key Senate races across the country. Yet the Republican operatives who created the group earlier this year set it up as a 501(c)(4) nonprofit corporation, so its primary purpose, by law, is not supposed to be political. The rule of thumb, in fact, is that more than 50 percent of a 501(c)(4)’s activities cannot be political. But that has not stopped Crossroads and a raft of other nonprofit advocacy groups like it — mostly on the Republican side, so far — from becoming some of the biggest players in this year’s midterm elections, in part because of the anonymity they afford donors, prompting outcries from campaign finance watchdogs. The chances, however, that the flotilla of groups will draw much legal scrutiny for their campaign activities seem slim, because the organizations, which have been growing in popularity as conduits for large, unrestricted donations among both Republicans and Democrats since the 2006 election, fall into something of a regulatory netherworld. Neither the Internal Revenue Service, which has jurisdiction over nonprofits, nor the Federal Election Commission, which regulates the financing of federal races, appears likely to examine them closely, according to campaign finance watchdogs, lawyers who specialize in the field and current and former federal officials.
Related story:
Obama, Dems Try To Make Shadowy Conservative Groups A Problem For Conservatives.” Huffington Post. September 21, 2010.
Hidden Under Tax-Exempt Cloak, Political Dollars Flow.” New York Times. September 23, 2010.

California winery clashes with church: Is ‘mission’ faith or tourism?USA Today. September 23, 2010. After the Mediterranean climate and sandy soil, winemaker Ray Falkner said his greatest asset is the view of rolling vine-covered hills from the top of his property in Southern California. Confident the Temecula Valley wine-grape region’s strict zoning limits would protect that view, he built a multimillion dollar banquet hall with floor-to- ceiling windows peering across a gorge to a nearby vineyard. Now he’s worried that vantage could be ruined by a Christian congregation’s request to change the region’s zoning so it can build on part of the vineyard. Falkner’s property has become the front line of a bitter divide between churches and growers in Temecula’s wine country, where vintners fear a push to allow more houses of worship would hurt views, limit wine sales and cause conflicts between grape growers and congregations. “We are in an economic development zone specifically targeted with the mission of being able to enhance the development of new wineries and the growth of existing wineries,” Falkner said. “How does a church help that mission?” Supporters of the Calvary Chapel Bible Fellowship’s expansion plans said they have nothing against the
wineries, but Riverside County’s zoning rules violate a 2000 federal law prohibiting governments from discriminating against religious institutions. “Morally, constitutionally, it’s just wrong. It’s just flat-out un-American to say you just can’t build a church,” said Clark Van Wick, pastor of Calvary Chapel. Van Wick’s cause has been taken up by Riverside County-based Advocates for Faith and Freedom, which has represented churches in zoning disputes in the past but is best known as a courtroom combatant in the fight over gay marriage.

Americans Vastly Underestimate Wealth Inequality, Support ‘More Equal Distribution Of Wealth’: Study.” By William Alden. Huffington Post. September 24, 2010. Americans vastly underestimate the degree of wealth inequality in America, and we believe that the distribution should be far more equitable than it actually is, according to a new study. Or, as the study’s authors put it: “All demographic groups — even those not usually associated with wealth redistribution such as Republicans and the wealthy — desired a more equal distribution of wealth than the status quo.” The report (pdf) “Building a Better America — One Wealth Quintile At A Time” by Dan Ariely of Duke University and Michael I. Norton of Harvard Business School (hat tip to Paul Kedrosky), shows that across ideological, economic and gender groups, Americans thought the richest 20 percent of our society controlled about 59 percent of the wealth, while the real number is closer to 84 percent.
Related story:
Law Professor’s Blog Post Sparks Controversy Over Why The Rich Don’t Feel ‘Rich’.” Huffington Post. September 21, 2010.
Superrich Americans Driving Income Inequality.” Morning Edition/National Public Radio. September 23, 2010.

Washington state wrestles with tax-the-rich ballot measure; America’s wealthiest man backs it, but others say it would hurt more than help by deterring new business.” By Kim Murphy. Los Angeles Times. September 25, 2010. Imagine if the slash-and-burn budget cuts that have become a new way of life for recession-stricken state governments could be ended by simply soaking the rich. Here in Washington, they’re taking that literally. A TV spot for a proposed new income tax on the state’s wealthiest citizens shows Microsoft founder Bill Gates’ 84-year-old father, William Gates Sr., plunged by giggling kids into a dunk tank and left to drip in his wet khakis and Oxford shirt. “Some people say Initiative 1098 is about soaking the rich. But it’s really about doing something for the next generation,” Gates says. “You see, state cutbacks have put our kids at risk, and we can’t just sit here and do nothing about it.” The fight over what would be Washington’s first state income tax since 1933 is shaping up as a battle of the titans: Both the elder Gates, a prominent retired lawyer and philanthropist, and his son, the richest man in America, are backing I-1098. But three of the state’s other biggest businessmen — current Microsoft Chief Executive Steve Ballmer, Amazon.com founder Jeff Bezos and John Nordstrom of the Seattle-based retail chain — are throwing big money into the campaign to defeat it. Washington voters are being asked to endorse a tax philosophy that is in many ways similar to President Obama’s approach to shrinking the federal deficit: Keep the tax burden off low- and middle-income families while raising taxes on the wealthy.

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