I’m not a tax accountant, but I believe that the tax on such entities applies not to the gross advertising revenue, but to net income before taxes (that is, after deducting qualified expenses, which covers nearly all operating costs). There is no tax on ad revenue as such, for non-profits or for-profit enterprises.

Non-profits do not pay taxes on business activities that are relevant to the purposes for which they are incorporated. For example, museum gift shops are largely exempt from income taxation, as long as their merchandise can be shown to further the museum’s educational mission. But if an art museum started selling motorcycles, that would be considered an unrelated enterprise and be taxable.

So the trick here would to get news-gathering, publication and distribution in any form, not just newspapers, defined as being a public good for which a non-profit entity can be formed, and to explicitly define all news publishing activities as exempt. That might get more support and make more sense.

The text of the bill does this with respect to newspapers by specifying that the sale of advertising is not an “unrelated trade of business” for a qualifying non-profit newspaper corporation. But again, the tax would be on the bottom line, not the ad revenue.

But, notice the fine print in Cardin’s announcement: “Under this arrangement, newspapers would not be allowed to make political endorsements…” Aha! A way for Congress to get those pesky editors off their backs once and for all!

And there’s another piece of fine print in the bill: advertising sales would not be considered unrelated activity “to the extent that the space allotted to all such advertisements in such newspaper does not exceed the space allotted to fulfilling the educational purpose of such
qualified newspaper corporation.” So in other words, Congress would mandate that the newshole exceed 50 percent of the paper.

before you put a dime into subsidizing “newspapers” through anything, let alone tax subsidies, look at the numbers. how much was milked out of the system over the last 10, 20, 100 years? give that money to anyone but the newspapers.

the industry does not need to be saved. it needs to be put out of its misery, buried and mourned. just like vaudeville.

in a slower paced world it had a place. no more.