Scott talks to Grant Smith about his organization’s Freedom of Information lawsuit against the IRS, an attempt to get the agency to reveal its policies on tax-exempt organizations overseas. Of particular interest is the shocking fact that billions of dollars of tax-deductible money has been donated by American taxpayers in recent years to fund organizations that build settlements on Palestinian land. This makes no sense, says Smith, since the point of such tax policies is to offset “public good” costs that would otherwise be shouldered by the U.S. government. Not only do these activities service no such need, they are actually causing great harm to Palestinians.
Discussed on the show:
- “IRS Must Describe Its Search for Israeli Settlement Policies” (Antiwar.com Original)
- Neutrality Act of 1794
- Foreign Agents Registration Act
- Arms Export Control Act
- “1/10/20 Grant Smith on the Rise of the Virginia Israel Advisory Board” (The Libertarian Institute)
Grant F. Smith is the author of a number of books including Big Israel: How Israel’s Lobby Moves America, Divert!, and most recently The Israel Lobby Enters State Government: Rise of the Virginia Israel Advisory Board. He is director of the Institute for Research: Middle Eastern Policy in Washington, D.C.
This episode of the Scott Horton Show is sponsored by: NoDev NoOps NoIT, by Hussein Badakhchani; The War State, by Mike Swanson; WallStreetWindow.com; Tom Woods’ Liberty Classroom; ExpandDesigns.com/Scott; Listen and Think Audio; TheBumperSticker.com; and LibertyStickers.com.
The following is an automatically generated transcript.
All right, y’all welcome it’s Scott Horton Show. I am the director of the Libertarian Institute editorial director of antiwar.com, author of the book Fool’s Errand: Time to End the War in Afghanistan. And I’ve recorded more than 5000 interviews going back to 2003, all of which are available at ScottHorton.org. You can also sign up to the podcast feed. The full archive is also available at youtube.com/ScottHortonShow. All right, you guys on the line. I’ve got the great Grant F. Smith. He is the founder and director of the Institute for Research, Middle Eastern policy, that’s IR map, IR MEP, ir mip.org. And he wrote a bunch of great books, including big Israel and the latest, the Israel lobby. enters state government, Rise of the Virginia Israel advisory board. Welcome back to the show, Grant. How you doing?
Grant F. Smith 1:08
Hey, I’m doing well. Scott, thanks for having me on. Again.
Scott Horton 1:10
Very happy to have you here. Let’s talk about this new firstname.lastname@example.org. IRS must describe its search for Israeli settlement policies. Yeah. So it turns out that people can donate to Israeli racial colonies on the West Bank, and write it off on their taxes, just like when they donate to the Israeli Defense Forces, is that correct?
Grant F. Smith 1:38
That is correct, creates a huge tax gap. And as I argue there’s really no demonstrated social welfare benefit to it. That’s why you’re supposed to be able to get tax exemptions is there supposed to be some offsetting activity that relieves the US government of a burden, but there’s no evidence of that. And again, It’s worse than in the case of the settlements where you’ve just got active displacement, which seems to fit the exact letter of the neutrality act of 1794 that US citizens aren’t allowed to kind of declare a slow motion war against any group overseas. That’s Congress’s job to declare those slow motion laws against people overseas. So it’s, it’s an interesting question.
Scott Horton 2:28
Yeah. And now, so if I wanted to donate to say the Chinese People’s Liberation Army to help with their occupation of Tibet, could I write that off on my taxes?
Grant F. Smith 2:39
Well, it kind of depends on whether you were part of a well organized and franchise group of people who were somewhat in line with one or other party. If that were the case. You can probably do that, but I don’t think that Would it be possible in the case of Tibet, I don’t think anyone right now would particularly care about that if you were doing it for Taiwan, you’d probably get away with it. If you’re doing it for Gambia trying to ship them some arms, maybe now you’d be prosecuted. And in fact, Eric Holder prosecuted a case like that in 2015, against a couple of Americans. So the the rule here just like in a lot of other laws that are never enforced against the people doing the most damage, such as the foreign agents Registration Act, the rule is that if you’re small, disenfranchised, and not doing something at all in line with one or the other established parties, he probably could get into trouble. So I would say that’s a definite No, no. What you just propose Scott?
Scott Horton 3:51
Hmm. Okay. Well, it’s not that I was trying to but just hypothetically speaking, and I was wondering about the quote unquote, rule of law. And what it’s supposed to say about things like that.
Grant F. Smith 4:04
Right? Well, the whole the whole exercise here, though, with this Freedom of Information Act lawsuit that we filed against the IRS last year, was to flush out some policy from them, because it’s been obvious to me for 20 years that they have a policy and the policy is not to have a policy so that it can continue. So if you kind of corner an IRS commissioner, like I did with Douglas Shulman, a number of years back, if he talks to the tax payer advocate, Nina Olson and corner her she’ll also just bluster and edge around the issue. So, you know, what’s, what’s become obvious is that this is another place in The United States where there are huge stakes involved, and that government agencies, which are supposed to be following rule of law, are instead being ambiguous and avoiding any sort of action that they would surely pursue. In other cases, so the lawsuit was all about getting the IRS to release its internal policies on what amount to multiple billions of dollars that flow overseas and charitable tax exempt contributions every year, some of which are going to settlements A number of years ago, USA Today or USA Today implied that it was $50 billion had been invested in settlements, likely from the US
Scott Horton 5:48
over one time.
Grant F. Smith 5:49
Well, that was over decades. But the question is, well, okay, Mr. IRS commissioner, please tell us Exactly. So I can be sure that if I want to, you know, fund settlers and erielle, or I want to fund settlers who are pushing people out and burning olive groves over here, I just want you to assure me that that is tax exempt social welfare activity, and I want you to put it in writing. And they won’t do it. They allow it to continue. They’ve been sued at least once recently by Susan Apple Hauer on that very issue. And the appeals court where it was appealed, just didn’t get into that particular subject. They acknowledge there was harm going on. But they just wouldn’t say that the litigants had any rights to even be in court trying to obtain some relief from this massive tidal wave of cash. It’s causing so much damage to people who really do have sort of native indigenous ties to the land? So the purpose of the lawsuit was to try to get a judge to force the IRS to come clean on the issue. And the whole reason for writing an article is that the judge this week actually stood up on his, you know, his bench from wherever he’s working and told the IRS look, we’re not just going to fast track this feuless suit toward dismissal. I think all of the documents that have been filed so far and people can read those court documents, going to ir mep.org. And looking at foil lawsuits have indicated that they’ve been extremely disingenuous at the IRS about trying to respond to Treasury and State Department Request for Information about why they’re still allowing tax exempt status to remain in some of these organizations that are blatantly engaged in warlike activities. And the IRS won’t ever clearly respond even to other government agencies. And so, you know, it’s it’s just a, it’s such a, it’s become such a mess at this point that it’s clear that there is an operating policy. And I raised the question with the judge directly. I said, Look, we spent years litigating for clarity on why the arms Export Control Act isn’t enforced. Which bars any foreign aid to foreign nuclear powers that aren’t a members of the NPT, it looks like there must be another gag order. in place, such as there is in the nuclear weapons slash foreign aid issue at the IRS. So we want to see that gag order, there’s obviously something there that has meant immunized this five to $6 billion per year, from any sort of scrutiny and any sort of action on tax exempt status. And I think the judge agrees, if you look at the body of evidence there is there has to be a policy. So he did not allow the Department of Justice in this case to make claims of, Oh, we’ve got a pandemic. You know, our lawyers are being taken away from working on all sorts of pandemic related legal work. And we got to get them off this frivolous lawsuit, and he said, Now, why don’t you since you’re claiming that there isn’t the policy or nothing released, so Why don’t you clearly outline exactly where you looked. And so now that’s what they’ll be doing between now and June, they’re going to be trying to tell a judge where they looked, and why they couldn’t find anything after so many years of litigation, so many years of news articles, you know, even j Street, which is, I would say not so great on a lot of issues, as at least pointed out, that this is a serious issue. We included that in the lawsuit exhibits. You know, why isn’t a clear directive or a clear set of policies being issued, which, you know, obviously have been in place for years and years.
Scott Horton 10:47
Hold on just one second, be right back. So you’re constantly buying things from Amazon calm. Well, that makes sense. They bring it right to your house. So what you do though, is click through from the link in the right hand margin at Scott Horton. org. And I’ll get a Little bit of a kickback from Amazon’s into the sale won’t cost you a thing. Nice little way to help support the show. Again, that’s right there in the margin at Scott Horton. org. Hey, I’ll check it out the libertarian Institute. That’s me and my friends have published three great books this year. First is no quarter, the ravings of William Norman Greg. He was the best one of us. Now he’s gone. But this great collection is a truly fitting legacy for his fight for freedom. I know you’ll love it. And there’s coming to Palestine by the great Sheldon Richmond. It’s a collection of 40 important essays. He’s written over the years about the truth behind the Israel Palestine conflict. You’ll learn so much and highly valued this definitive libertarian take on the dispossession of the Palestinians and the reality of their brutal occupation. And last but not least, is the great Ron Paul. The Scott Horton show, interviews 2004 through 2019 interview transcripts of all of my interviews of the good doctor over the years on all The wars, money taxes the police state and more. So how do you like that? Pretty good, right? Find them all at libertarian institute.org slash books. You need stickers for your band your business will Rick and the guys over at the bumper sticker calm. We’ve got you covered great work great prices, sticky things with things printed on them. Whenever you need the bumper sticker calm, we’ll get it done right for you. The bumper sticker.com. Well now so is there what exactly is the law say? I mean, other than the neutrality act when it comes to, you know, IRS legislation, or is there anything or it would only be rules and regulations written by the IRS themselves?
Grant F. Smith 12:44
Well, you know, the IRS has done some terrible things. You know, what the law says is that any organization that has gotten IRS tax exempt status should be again, relieving US government burden and be engaged in some social welfare benefit. But what the IRS has done instead is allow a whole giant ecosystem of Americans for Israel organizations to sprout up in this country, which raise and just funnel hundreds of millions of dollars to counterpart organizations in Israel, whether it’s for the defense forces, like you say, or for the Weizmann Institute, to develop nuclear weapons technology. And the IRS has delegated all oversight responsibility to the mainly New York offices of these organizations. And there is no oversight. And so that’s something I detailed in the book, big Israel, the entire evolution of tax policy to even allow for organizations to be doing this sort of foreign counterpart, fundraising, and then the fact that they just happened to me gauged and self regulation were less one of the one of the charities sort of outs itself, there’s never going to be any oversight. They don’t really have any idea where the money’s going. And it’s only gotten worse. In the 2008 revamp of tax reporting for charities, which is public, you have to actually publish your IRS Form 990. They allowed an argument to be made that actually we don’t want to give any of the names of the foreign counterparts or exact destinations anymore because it could present a security risk. So this is a black hole at this point into which billions of dollars flow and then Americans basically have to make up because of the huge tax cap that it creates. So not only is it creating a huge tax gap, in that all these deductions are taken on the money donated but then it comes back and bites us. I mean, as you’ve repeated heatedly gone over on your show. When the 911 hijackers were plotting against the US one of the major points of contention with US policy was this horrible ongoing treatment and ethnic cleansing going on. So we’re basically allowing a constellation of Israel affinity organizations to keep that fire stoked. And there seem to be all sorts of laws on the book, including the ancient neutrality Act, which would forbid that sort of activity from going on, but the IRS Treasury all asleep at the switch won’t respond. You know, take a front to being challenged on this stuff,
Scott Horton 15:42
huh? Well, now, so the judge has ruled, I guess, you know, in a in a hearing here that in your favor and in your maps favor and saying the IRS now has to go back and come up with any pertinent regulations and cough them up to you into the court. Is that right?
Grant F. Smith 16:02
Yeah, there’s this thing called avant index in which you know, for, for this foi a game, what agencies typically do is they narrowly define what constitutes responsiveness to your request. They conduct extremely circumscribed searches for that information, and then they come back and they say, Yep, we couldn’t find anything. So, you know, what we’re going to see in June because this judge demanded it because I think he saw the hypocrisy of this, oh, we can’t find any policy when there clearly isn’t policy. He just said no, why don’t you send a detailed description of where you looked and anything you passed over? And so that’s called avant index. We’ve used it before with requests against the State Department against the Department of Energy, and it’s an effective tool. I mean, FOIA in general has been so gutted by precedents which are overly different The federal agency claims of secrecy and little, you know, damage harm national security. If we say anything about that topic, that it’s just become very difficult to get anything these days at the FBI, you can get mainly pro forma responses saying, you know, we’re not, if there were information like that the so called glow my response, we wouldn’t be able to even discuss whether it exists or not that sort of response has been growing. And there’s no evidence the IRS has even looked for any information. So what the judge has said is, before we rush for the exits here, on the basis of Justice Department boilerplate, you got to prove you actually looked for something. And the lawsuit itself is full of evidence that all sorts of information exists. All sorts of views are held, all sorts of internal pressure has been generated to come up with a policy that if they come back again, And they just say, Actually, there really isn’t anything here. I think it’s gonna perhaps not fly with this particular judge. Now, another thing I did mention in the article is we’ve had a terrible judge on some of our other cases, which were effectively captured by that judge, who in one single year dismissed three different cases. And in one instance, didn’t even justify why so that we couldn’t effectively appeal. So it’s as though you know, someone with a rubber stamp has, you know, been working away hard inside the DC circuit, but this guy this contrary, this seems to be cut from a different bolt of cloth.
Scott Horton 18:49
Yeah, well, that’s good. At least. That doesn’t usually happen. But occasionally you get a judge who recognizes that. Hey, I got a lifetime appointment here. really long with anybody, Jesse trying to do got a great judge out there in Utah? There’s a couple like that. But
Grant F. Smith 19:08
yeah, I think usually I think, you know, you’re supposed to believe that. Well, I mean, nobody does anymore, but that all judges are sort of, you know, starry decisis following precedent, you know, just look at the truth. And that’s, of course, it’s not true. Anyone who’s gone to jury duty and been admonished that they’re participating in any sort of fair and transparent system. I mean, these days has to frankly laugh, given what’s been going on for so many decades. But, yeah, so a judge, you know, this doesn’t mean we won the case. It’s right. I guess the thing that makes it unique is that we haven’t lost quickly and that a judge is actually being responsive and taking interest in the topic at hand. So we’ll see
Scott Horton 20:00
what happens after the IRS comes back and says, well, geez, we tried judge and couldn’t find nothing. So don’t make us look again.
Grant F. Smith 20:07
And maybe a leaker will put some stuff out becoming aware of this and say, Yeah, no, actually, we do all sorts of terrible things here, some of them. And, you know, the last thing the IRS should be doing is telling the State Department or the Treasury Department, employees who phoned them from Jerusalem saying, you know, we have all these settlements sprouting up and all these warlike activities happening. So what is it about these organizations that merits they’re having IRS tax exempt status? Shouldn’t you be revoking that? And the IRS said well call our call our hotline? What this is an agency that agency referral, you know, it’s just, and Douglas Shulman again, his response, his specious response, his evasive response to being called out on national Public Radio saying, what are you going to do about settlement financing? What’s your policy? It got to the extent that other callers were phoning into the show saying you didn’t answer the question, what’s You know? And Susan page of USA Today who’s still around was also on Schulman saying, what is the policy? You’re here to explain policy and all he would do is shuffle around saying, how the IRS reaches deep into organizations and looks at what they’re actually doing and blah, blah, blah. None of it’s true. It’s, uh, you know, it’s I think it’s one of the biggest frauds right now at the IRS. Yeah.
Scott Horton 21:37
Well, I wouldn’t doubt if they, if they do a deep dive on your map and the libertarian Institute. Same thing is,
Grant F. Smith 21:46
yeah, no, they should. Yeah, definitely expend hundreds of thousands of taxpayer dollars looking looking at that. I think. I think that would be so stupid. It could almost happen. Yeah.
Scott Horton 21:58
All right. Well, So, how long do they have before they have to respond to this?
Grant F. Smith 22:04
Yeah, they’ve got till June. And, again, they’re gonna have to be detailed in their response to the court, they’re gonna have to say, look, you know, and if they have major omissions, like if they didn’t look in the office of the commissioner, where this sort of policy would have been set, then they didn’t really respond to the FOIA. And we’ve had this time after time where, you know, no, Freedom of Information Act response even really starts until you’ve sued somebody and then typically they can delay for up to a year, while all sorts of perfunctory motions are filed, but now, I think, an effort that began for us in 2005, under this particular case, in spring of last year, as far as this particular foil, it’s gonna start, that’s my My impression, because I frankly don’t think they looked for anything. That would be standard operating procedure agency does not bother looking until a judge says Why don’t you start looking? Yeah, no.
Scott Horton 23:13
All right. So before I let you go here, can you give us any updates on the aftermath of the publication of your last book in the Israel lobby enters state government? I mean, talk about scandalous this whole thing with vibe here, what’s been the reaction so far?
Grant F. Smith 24:22
Well, any Virginian who picks up a copy is stunned. I mean, really, because I think the thing that knocks them over is really the fact that Virginia companies are being targeted, essentially, that be replaced by Israeli companies, whether from the fish farming industry or defense contractors and food processors, so they don’t like it. But, you know, as far as the legislature, the book was carried up to the legislature and delivered to a lot of a lot of legislators on lobbying day by a local organization. And they’ve all made arguments. But what’s happening? You know, the inside view is that, well, this is Israel we’re talking about so we can’t really make any headway waves. It doesn’t really matter how much corruption you’ve documented through Freedom of Information acts under the state sunshine laws. We can’t really go after these guys. So there’s a there are a couple of initiatives to get more traction against via web. And I don’t think via has gotten any good press since it came out. But the problem is the Richmond times dispatch at some of the hardcore investigative journalists, they’re just not picking up and running with it. They want to talk about Second Amendment activity, they want to talk about COVID-19 response. This is not a winner for them. So I think it’s growing and the informations out there, and people are starting to trade it and pass it around more. And there’s a lot of interest in holding the organization accountable. So I think it’s had a good impact, but a lot more remains to be done.
Scott Horton 25:28
Yeah, well, best of luck with that. I mean, again, for anybody in Virginia, especially but for all Americans, you really should take a look at this book and it is amazing. You check out my last interview with grant all about her two interviews ago, maybe the Israel lobby interstate government, and it is hair raising and mind blowing. It’s really something else to see the level of, what do you call it? chutzpah that the Israeli government brings into well into service of their interests. Inside the United States, there are short term interests at the expense of their long term ones if he asked me, but I guess I don’t know yet.
Grant F. Smith 26:07
Yeah. Well, the big the big story right now is energetics and Israeli company that has built wind turbines on the occupied Golan Heights. It’s taken Palestinian land to build solar arrays in the West Bank. It’s been listed, as you know, violating all sorts of human rights by various organizations. And it’s trying to build 11 utility scale wind farms across the state right now. And it’s just, you know, they’re trying to pull those Full speed ahead without answering any questions about their illicit activities overseas. And again, it raises another question so Okay, so you raise money with here, Chesapeake, or your Greenville your other solar farms and send it back to Tel Aviv so they can expand again. In this expedition against a friendly nation, whether it’s Syria or the Palestinians, where’s the neutrality act on that? So I think they’re gonna face some big problems as they continue to try to roll out across the states and take some of that solar business away from us and Virginia companies that would rather have those opportunities. So we’ll see, people are starting to get noticed.
Scott Horton 27:23
Yeah, well, and they should take notice. And especially here’s where the rubber meets the road, right. If you’re a solar power company, you might not have an ideology at all, but just notice that you’re being robbed, and forced to pay at gunpoint being forced by your government to pay for your competition.
Grant F. Smith 27:43
Exactly. And in this case, that a city council will prefer this connected foreign entity, which claims to be Virginia and only because it’s set up a bunch of front companies, prefer them accelerate their conditional use permits exempting them from rural zoning laws and Giving them construction permits, they will fast track those guys. Even as your application sits at the bottom of a cardboard box. Is that the way you want it to work in your state? That’s a question that’s being raised in that industry.
Scott Horton 28:12
Yeah, absolutely. And again, everybody, you got to read this book, The Israel lobby enters state government and the rest of them to that guy’s got like 10 books, I don’t know. 810 books about the Israel lobby, and their legal and illegal influence operations in this country.
Grant F. Smith 28:28
Trying to keep ahead of your publication count. I don’t know they’re comin
Scott Horton 28:32
up fast. Well, you know what my next book is going to be like 10 books in one. So we’ll be neck and neck at that point
Grant F. Smith 28:38
I think. I don’t know if I’m gonna let you count in that way. But we’ll cross that bridge when we come to it. All right,
Scott Horton 28:46
an. Well, listen, I don’t know what we do without you, Grant. It’s such great work. such important work as always, so thank you.
Grant F. Smith 28:52
All right. Thanks for having me on
Scott Horton 28:53
All right, you guys the great grant f Smith. He’s at IR map, IR MEP, the Institute for Research Middle Eastern policy ear map.org. And here’s this latest piece at antiwar.com IRS must describe its search for Israeli settlement policies. And again the book is the Israel lobby enters state government Rise of the Virginia Israel advisory board. The Scott Horton show, Antiwar Radio can be heard on kpfk 90.7 FM in LA, APSradio.com antiwar.com ScottHorton.org and libertarianinstitute.org
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