Fact check: the Local Journalism Sustainability Act and the local news tax credit

The payroll tax credit that originated in the Local Journalism Sustainability Act was included in the House’s latest version of Build Back Better. The Local Journalism Sustainability Act has boasted 24 Republican cosponsors in the two sessions it’s been introduced. Yet, despite its broad bipartisan support, the provision has been criticized in conservative media and even by President Donald Trump himself. Here are responses to those critiques:

MYTH: This is a subsidy for the national media (i.e. the New York Times , MSNBC, CNN, Washington Post etc.).

Many of the attacks strongly imply that this subsidy will go to national news media. President Trump attacked the “payoff to the fake news media” — and pointed at the national reporters covering him at the rally. Earlier, a piece in the Christian Broadcasting News network described it as a “bailout of the American news media.” A polling question from Rasmussan asked whether respondents supported or opposed a tax credit for “print and online journalists.”

All of these leave out a rather important word: “local.”  The “ Local Journalism Sustainability Act” only helps local reporting and local news. The bill would not provide a penny to the New York Times, CNN or MSNBC. The Times is excluded by the provision excluding news organizations with more than 750 employees. MSNBC and CNN are excluded because the bill focuses on local news, and may be used only to help support local reporters.

On the other hand, newsrooms that could benefit, at least in the Senate version, include local TV stations owned by Fox and Sinclair Broadcasting. Local NPR stations that air classical music and “All Things Considered” feeds — but have no local reporting — would not get the tax credit.

MYTH: The bill funnels money especially to liberal outfits

Trump told the crowd in Iowa that the money would go to “media outlets all across the country, meaning liberal media outlets.” Adam Guillette of Accuracy in Media, explained, “Think of it as a way to turn every news outlet in America into a version of NPR.” An article by Americans for Tax Reform declared that “Likely beneficiaries include The Malibu Times , Aspen Times and the Vineyard Gazette serving the progressive playground of Martha’s Vineyard.” It’s hard to think of a more disingenuous way of selecting examples. But just to state the obvious, the bill would also benefit the The Punxsutawney Spirit in Jefferson County, Pennsylvania (where nearly 78% of voters favored Trump), the Randolph County Herald Tribune in Randolph County, Illinois (where Trump won with 70% of the vote) and the 640 other newspapers in the districts of Republican leaders. (Yes, we counted them.)

The collapse of local news is a party-blind plague.  For instance, of the 90 local newspapers that closed during the coronavirus pandemic, 60 percent were in counties that voted for Trump in 2020. Most of the counties now considered news deserts are red.

That’s why the bill is co-authored by a Republican, Dan Newhouse. In the last two sessions, the House version has been co-sponsored by 20 House Republicans, including several in senior leadership positions (the lead Republican on the House Homeland Security Committee, the House Administration Committee, and Elise Stefanik, who is in the Republican leadership all cosponsored the bill in either the 117th or 116th Congress .)

Newhouse explains why the bill is so bipartisan, especially for those representing rural areas: “Local journalism, no matter what form it’s in, truly does contribute to the fabric of a community — keeps people informed about what’s going on … I don’t always like to read what reporters write about me or say about me. But I think having that kind of transparency is just part of our system — it’s really an important part of keeping our communities vibrant and strong.”

Republicans should want this as much as Democrats: most news deserts are in Republican areas, and if you’re skeptical about government, you should want more accountability not less.

Finally, our coalition has recommended that the bill exclude news organizations run by political advocacy organizations from the left or the right ( 501c4 and 527 organizations). This will make it more likely that the news organizations that benefit will be those who seriously want to help cover their communities in a fair-minded way.

MYTH: The tax benefit goes right to journalists, and would give them checks of up to $50,000 per person

A video ad from Americans for Tax Reform says the bill provides “$50,000 subsidies for journalists.” Accuracy in Media reported (inaccurately) that the bill would provide “up to $50,000 per journalist annually.” Trump pointed to the national reporters and said, “They’re all going out right now to buy a new car, a nice one too.”

Nope. The tax credit goes to publishers, not reporters. There is no requirement that any of the money go to increase pay for reporters, though the credit is supposed to be used to partly subsidize their salaries so they can avoid layoffs.

The credit is for up to $25,000 in the first year and $15,000 over the next four years, for an annual average maximum benefit of $17,000 (not $50,000). What’s more, the benefit is calculated as a proportion of local journalists’ salaries on salaries up to $50,000. So, if a local journalist is making $48,000 annually, their employer will receive a $24,000 credit in the first year and $14,400 each of the following four years of the bill. But if a journalist is making more than $50,000 a year, say $60,000, the credit applied to their salary is still calculated based on a $50,000 salary.

MYTH: This will undercut the independence of the press

This is the one criticism we take very seriously. We believe that some types of government support for the media can indeed be quite damaging. That’s why we — and most  professional publishing organizations — supported this particular bill.

The Local Journalism Sustainability Act includes a tax credit to consumers to buy subscriptions or make donations to the local news organizations of their choosing — a tax credit to small businesses to advertise with the newsrooms of their choosing.

Unfortunately, those provisions did not make it into reconciliation — but the one that did survive is also carefully constructed.  It is a tax credit to any local news organization that meets some basic criteria. They have to cover local communities and need to employ at least one local reporter. Our coalition has also urged that the bill require that the local news organizations carry media liability insurance and disclose their ownership. There are no criteria related to quality, ideology or type of content (other than local-ness).

The content-neutral, universal nature makes it the spiritual ancestor of the Postal Subsidy that the Founding Fathers instituted, which provided low cost mailing to Federalist and Jeffersonian papers alike. So if a conservative publisher sets up a local news site to cover the town, they too would be eligible for the credit — as long as they do local reporting.

The bigger point is that having a “free” press isn’t worth much if there is no actual reporting happening. The spread of news deserts has meant more polarization, more misinformation, more corruption and probably even higher local taxes. There are now thousands of communities that have no local news and several thousand more that have barely any.

MYTH: No taxpayer should have to subsidize the work of media organizations with which they disagree

“The idea that Americans should be forced to financially support news outlets they don’t like is immoral, obnoxious, and a threat to both free markets and free speech,” wrote Gilette .

First, each American taxpayer subsidizes all sorts of things with which they disagree. Pacifists pay for the defense budget; conservatives pay for gun law enforcement.

Heck, through the charitable deduction, liberal taxpayers “subsidize” donations to … Adam Gilette’s group, Accuracy in Media!
By the way, Jefferson put up with giving the postal subsidy to the loathsome Federalist papers, and Hamilton accepted that scurrilous Jeffersonian papers should get help too. They just figured it was good for everyone to have a strong, free press.

It does matter what kind of support the government gives. We would not support legislation that would give government officials the ability to parcel out grants to news organizations they preferred. The Local Journalism Sustainability Act offers broad, universal criteria. If a publication or broadcast station meets those requirements, they qualify, with a minimum of government consideration of the content produced by that organization.

That will, indeed, lead to local news organizations that you might not like getting a subsidy. It’s inevitable. Just as conservatives would bristle at supporting the Aspen Times, liberals will dislike the idea that Sinclair and Fox local stations may benefit. But Americans should embrace this, as the Founders did, because the result is a strong, free press that helps communities.

MYTH: We should just allow the free market to deal with the collapse of local news

“Why should we save newspapers when there have been countless industries swept into the dustbin of history?” asked The Capitolist. “When Netflix came along, was anyone begging Congress to bailout Blockbuster video? What about the encyclopedia industry? Landline phone makers? Travel agents?”

Because democracy was not severely threatened by the loss of Blockbuster. And in all of those cases, there was clear evidence that new models had replaced Blockbuster and then some. There was no market failure, the way there is with local news.

The Wall Street Journal Editorial Board asked, “why journalists deserve a subsidy more than, say, nurses or teachers? Both of those professions make contributions to the public good, and we wouldn’t want to do without either one.”

The subsidy is going to publishers, not journalists.  So the correct analogy would be “Why does the health care industry or public schools deserve taxpayer support?” Of course, they already have massive government support.

“Local papers in the mold of left-leaning National Public Radio stations wouldn’t serve a politically diverse public. Most Americans already mistrust the press, and making journalists more dependent on the government will compound the suspicion of bias.”

We do worry about this. Of course, one of the most important drivers of whether this bill leads Americans to be more mistrusting of local news is whether national conservative commentators, and former President Trump, tell them it is reason to mistrust them.

MYTH: The bill helps the “fake news”

Trump now routinely equates “independent news” and “fake news.” It’s hard to understate how damaging that is to democracy.  Suffice it to say, the bill would not help fake enterprises — they are the local newspapers, TV stations and websites that have been covering their communities, often for many years, sometimes for centuries.

So yes, the bill does attempt to save an independent local press. If one disagrees with the very concept of local journalism, then one won’t want to support the Local Journalism Sustainability Act. If one thinks having local news — at all, in many cases — is important to democracy, or just to the health of a community, then one might want to support this approach.