Israel Matzav

The New York Times discovers a tax exemption

In an article that could only have been intended to complicate Prime Minister Netanyahu's meetings with President Obama, the New York Times publishes a massive article (how often does the Times do a feature that takes six screens on the web during the week?) on US tax exemptions that support 'settlement activity' in Judea and Samaria (Hat Tip: Memeorandum and many others).

A New York Times examination of public records in the United States and Israel identified at least 40 American groups that have collected more than $200 million in tax-deductible gifts for Jewish settlement in the West Bank and East Jerusalem over the last decade. The money goes mostly to schools, synagogues, recreation centers and the like, legitimate expenditures under the tax law. But it has also paid for more legally questionable commodities: housing as well as guard dogs, bulletproof vests, rifle scopes and vehicles to secure outposts deep in occupied areas.

In some ways, American tax law is more lenient than Israel’s. The outposts receiving tax-deductible donations — distinct from established settlements financed by Israel’s government — are illegal under Israeli law. And a decade ago, Israel ended tax breaks for contributions to groups devoted exclusively to settlement-building in the West Bank.

Now controversy over the settlements is sharpening, and the issue is sure to be high on the agenda when President Obama and the Israeli prime minister, Benjamin Netanyahu, meet in Washington on Tuesday.

...

The use of charities to promote a foreign policy goal is neither new nor unique — Americans also take tax breaks in giving to pro-Palestinian groups. But the donations to the settler movement stand out because of the centrality of the settlement issue in the current talks and the fact that Washington has consistently refused to allow Israel to spend American government aid in the settlements. Tax breaks for the donations remain largely unchallenged, and unexamined by the American government. The Internal Revenue Service declined to discuss donations for West Bank settlements. State Department officials would comment only generally, and on condition of anonymity.

“It’s a problem,” a senior State Department official said, adding, “It’s unhelpful to the efforts that we’re trying to make.”

Daniel C. Kurtzer, the United States ambassador to Israel from 2001 to 2005, called the issue politically delicate. “It drove us crazy,” he said. But “it was a thing you didn’t talk about in polite company.”

He added that while the private donations could not sustain the settler enterprise on their own, “a couple of hundred million dollars makes a huge difference,” and if carefully focused, “creates a new reality on the ground.”

It goes on and on in this vein as if the only purpose for which a US taxpayer can receive a tax deduction that is at cross purposes with US policy is 'settlement building.' The Times has a special place in its heart for my friends at Manhigut Yehudit (Jewish Leadership).

One group that at least skates close to the line is Friends of Zo Artzeinu/Manhigut Yehudit, based in Cedarhurst, N.Y., and co-founded by Shmuel Sackett, a former executive director of the banned Israeli political party Kahane Chai. Records from the group say a portion of the $5.2 million it has collected over the last few years has gone to the Israeli “community facilities” of Manhigut Yehudit, a hard-right faction of Mr. Netanyahu’s governing Likud Party, which Mr. Sackett helps run with the politician Moshe Feiglin.

American tax rules prohibit the use of charitable funds for political purposes at home or abroad. Neither man would answer questions about the nature of the “community facilities.” In an e-mail message, Mr. Sackett said the American charity was not devoted to political activity, but to humanitarian projects and “educating the public about the need for authentic Jewish leadership in Israel.”

You have to get all the way to the third screen before there is any indication of some of the violent, terror-supporting organizations that also enjoy tax exemptions.

Of course, groups in the pro-settler camp are not the only ones benefiting from tax breaks. For example, the Free Gaza Movement, which organized the flotilla seeking to break Israel’s blockade of Gaza, says on its Web site that supporters can make tax-deductible donations to it through the American Educational Trust, publisher of an Arab-oriented journal. Israeli civil and human rights groups like Peace Now, which are often accused of having a blatant political agenda, also benefit from tax-deductible donations.

That's it. Then The Times goes right back to the 'pro-settler' organizations.

Here are some of the groups the Times ignores:

ICAHD-US
Friends of Sabeel
Middle East Children's Alliance
AJ Muste (gives to ISM)
Open Society Institute
Deir Yassin Remembered
Grassroots.org
Advocacy Project
Rachel Corrie Foundation
Birthright Unplugged
WESPAC (also gives to Adalah NY)
Groundspring.org (gives to Electronic Intifada)
Center for Constitutional Rights
Friends of Peace and Justice in the Middle East
Vanguard Foundation (passthrough org)
Palestinian Right to Return Coalition
Ford Foundation (gives to many questionable groups)

That's without even considering groups like American Friends of Peace Now, which ought to be required to register as foreign agents in the US because of all the money they receive from European governments. Much more on this later.

By the way, the Times story also comes with a photo spread. At least one of the 'Arab buildings' in Jerusalem's Old City is actually a synagogue that was built in the 19th century and destroyed by the Jordanians in 1948.

posted by Carl in Jerusalem @ 5:50 PM