Tax Subsidies for Journalism Are Only for Rich People: Perry Bacon Edition

January 28, 2024

Perry Bacon’s columns in the Washington Post are generally interesting, and his piece on the future of journalism was no exception. However, after laying out the basic problem, it was almost as though he had a mental block in thinking of solutions.  

After noting that for-profit news outlets are going down fast and that the enlightened billionaire model doesn’t seem to work either, Bacon calls on people to donate more money. While it is great that millions of middle-income people are willing to kick in money to support the reporting they like, we are not about to see a massive flood of contributions in response to Bacon’s column.

However, we can hope to change the current structures in place to support journalism. Most importantly, we can look to alter a tax structure where your average billionaire can count on the government to pick up 40 cents of every dollar they choose to donate to the non-profit news outlet of their choice, but the vast majority of ordinary people get zero.

I’m referring to the tax deduction for charitable contributions. To high-income people, this allows them to reduce their taxes by roughly 40 cents for every dollar they donate. Most middle-income people are in the 10 or 12 percent tax bracket, which would mean that they could,d in principle,e get back 10 or 12 cents on every dollar they contributed, but this would only be the case if they itemized their deductions. More than 90 percent of taxpayers take the standard deduction, meaning they get back zero.

This structure is not a law of nature. We change the tax code all the time. Instead of having lavish subsidies for the tastes of the rich, we could have credits that allow ordinary people to decide which news outlets they want to support. For example, we can give every adult citizen $100 a year to support the journalistic outlet of their choosing.

This could be modeled on the current charitable contribution tax deduction. The major difference would be that it is a credit, with the same sum available to everyone, rather than a deduction that almost exclusively benefits the rich.

There would also be another condition. The supported work must be freely available to everyone. That means no paywalls and no copyright monopolies. Copyright monopolies are one way the government has used to support journalism and other creative work for centuries (read Article 1, Section 8 of the Constitution). The logic here is that the government gives you one subsidy, not two. If you want to support your journalism through the tax credit system, you can’t also ask the government to arrest people for reading it without paying you.

A change like this at the national level would require an act of Congress. With the current crew, that seems pretty far-fetched. But we don’t have to rely on Congress to make progress. Measures can be implemented at the state and local levels.

At the moment, there are already two efforts along these lines. One is in Washington, DC, and the other is in Seattle, Washington. Each involves giving city residents a voucher, which can only be used to support local journalism. They are still in their early phases and will undoubtedly have to be extensively debated and restructured before being implemented. These two cities together have less than one percent of the country’s population.

However, if these measures are implemented, they would be important first steps in setting up an alternative mechanism for supporting journalism. People who think journalism is important should be getting on the bandwagon to push these proposals and others like them elsewhere.

Handwringing over the death of journalism might be fun, but it will not solve the problem. Initiatives along these lines have real potential.


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