Handout via Reuters

Pastor Jim Garlow Garlow not only intends to break IRS rules for political endorsements by religious organizations, he also plans to spend the next four months recruiting other pastors to do the same.

 Pastor Jim Garlow will stand before congregants at his 2,000-seat Skyline Wesleyan Church in La Mesa, California, on Sunday, October 7, just weeks before the U.S. presidential and congressional elections, and urge his flock to vote for or against particular candidates.

He knows such pulpit pleading could endanger his church's tax-exempt status by violating IRS rules for a 501(c)(3) charitable organization. A charity can take a position on policy issues but cannot act "on behalf of (or in opposition to) any candidate for public office." To cross that line puts the $7 million mega-church's tax break at risk.

Even so, Garlow not only intends to break the rules, he also plans to spend the next four months recruiting other pastors to do the same as part of Pulpit Freedom Sunday. On that day each year since 2008, ministers intentionally try to provoke the IRS. Some even send DVD recordings of their sermons to the agency.

Last year, 539 pastors participated. This year organizers expect far more. Participants want to force the matter to court as a freedom of speech and religion issue.

"I believe we're on the early stages of the next great awakening," Garlow told his congregation last year. "We're going to see it just sweep across this nation."

The situation is fraught with peril for the IRS, which needs to be seen as apolitical. When it cracks down on political activities proscribed by the 501(c)(3) regulations, it is inevitably branded as partisan.

When the target is a church, mosque or synagogue, enforcement puts two fundamental American values at odds: freedom of speech and the separation of church and state. Although the agency has enforced the tax-exemption rules against churches in the past, it has so far ignored the provocations of Freedom Sunday.

The IRS has also been silent about the increasingly aggressive political activity of the U.S. Catholic bishops, who have called for their own Fortnight for Freedom this week. Masses, rallies, and parish bulletins are being mobilized against the Obama administration's healthcare regulations on contraceptives.

The result of agency inaction, according to tax experts and former IRS staffers, will be a lot more electioneering by leaders of the faithful, in local races as well as national, and to the benefit of Democrats as well as Republicans.

"It will get worse unless the IRS takes action, and they seem reluctant," said Nicholas Cafardi, dean emeritus and professor of law at Duquesne University and the longtime lawyer for the Catholic diocese of Pittsburgh.

Cafardi called the current state of affairs "toxic" in its mingling of the two worlds. Many religious leaders do not support the trend toward more political involvement by organized religion and worry it will undercut their moral authority.

The money involved is enormous. Combined, federal tax breaks on donations to churches and exemptions from state and local property taxes likely add up to something on the order of $25 billion in lost revenue each year.

Last year churches received $96 billion in tax-free contributions, according to estimates compiled by the Center on Philanthropy at Indiana University.

Unlike other types of charities, churches do not have to file financial statements with the government. There are only rough estimates of church endowment or investment income, which is also tax-free and believed to be larger than annual contributions.

Using tax data from the U.S. Congress's Joint Committee on Taxation and data on giving to churches from the Indiana Center, a Reuters analysis found that tax breaks on church giving shaved $12 billion or so from total U.S. tax collections in 2011 and approximately $145 billion over the last decade.

The property tax break is probably even bigger. In their 2011 book "Politics, Taxes, and the Pulpit," law professors Nina Crimm and Laurence Winer calculated that houses of worship received $12.7 billion in property tax exemptions on $685 billion of property in 2006, a figure large enough to have played a role in city and state budget deficits of recent years.

In big cities the numbers can be dramatic. New York City's 9,500 churches, synagogues, and mosques, for example, will avoid $626.9 million in property taxes this year thanks to their tax-free status, according to the city's Independent Budget Office.

Like most of California, La Mesa, where Garlow's Skyline Church is located, has suffered a steep drop in property tax collections, forcing municipal staff cuts and a sales tax increase.

Skyline's campus, which is assessed at $7.3 million and cost a reported $27 million to build, is almost entirely tax-exempt, according to the county assessor's office.

The IRS has not always been quiet. In 1992 it went after the Church at Pierce Creek in Binghamton, New York, which had bought full-page newspaper ads opposing then-Democratic presidential nominee Bill Clinton.

The church lost its IRS tax-exempt status but continued operating, changing its name to Landmark Church when it moved into central Binghamton several years ago.

Pastor Dan Little said the church never lost its property tax break. At the end of the year, Landmark gives people a record of their giving just like other churches, he said, leaving it up to them and their accountants to decide tax matters. "We just never have made any big issue of it," said Little, who continues to preach about politics and morals.

In 2004 the IRS created a dedicated enforcement program focused on political activity by churches and other nonprofits.

Called the Political Activities Compliance Initiative (PACI), it investigated in the 2004, 2006 and 2008 election cycles 80 instances where church officials were alleged to have endorsed a candidate during services.

According to IRS tallies made public after each election, the majority of the PACI complaints were upheld and settled with a warning that the organization comply with the ban on political activity.

The IRS did not respond to Reuters questions about its enforcement activities in recent years, or explain why they seem to have ended abruptly in 2009.

IRS church audits seem to have halted entirely in January 2009. That was when Living Word Christian Center in Brooklyn Park, Minnesota, successfully appealed an IRS audit. In question were an endorsement of Republican Michele Bachmann for Congress by pastor James Hammond and financial deals that may have benefited him personally, a violation of IRS rules.

IRS audits of churches must comply with strict rules designed to prevent undue governmental pressure. One is that a high-level IRS or Treasury Department official must authorize the audit. In the Living Word case, the U.S. District Court in Minnesota ruled that the IRS staffer who authorized the audit did not qualify.

In July of that year, Minnesota's Warroad Community Church was told by an IRS official that it was closing its 2008 examination of the church "because of a pending issue regarding the procedure used to initiate the inquiry." (Reuters obtained a copy of the letter from the Alliance Defense Fund, which was representing Warroad in the audit.)

Other churches that had been under IRS review received comparable letters, according to their lawyers.

The IRS stopped publishing the results of its PACI initiative. Three years later the IRS has yet to come up with a new set of church audit rules, making it impossible, experts say, for the agency to pursue such examinations.

Former staff insist that being seen as weak on enforcement of the law would be more damaging to the IRS than any allegation of partisanship would be.

Still, tight budget may have made it easy to put off tackling 501(c)(3) disputes. Others argued the agency may worry it could lose a court case over revocation on constitutional grounds, and that by avoiding such a test they may preserve the deterrent power of having the law on the books.

Whatever the reason, IRS inaction has effectively thwarted the evangelicals' efforts to force the matter in court.

At the United States Conference of Catholic Bishops meeting last week in Atlanta, bishops vowed to keep up their criticism of Obama administration policies on employer-provided birth control and other controversies.

"The first principle is that American citizens don't lose their freedom of religion or their freedom of expression when they become bishops," said Cardinal Francis George of Chicago.

As to what is and is not acceptable to say about candidates for office, "the guidelines are broader than some may interpret them," George told Reuters at the conference. In follow-up email correspondence, he declined to say whether he thought the IRS rules constrained free speech or whether he would be willing to forgo the church's tax exemption so clerics could speak out without restriction.

The meeting offered no public discussion of an April sermon by Illinois Bishop Daniel Jenky that has been vigorously debated in the local and the religious press and which many think violated the prohibition against opposing a candidate for office. The sermon has drawn a request for an IRS investigation by a watchdog group.

After asserting that Obama, "with his radical, pro-abortion and extreme secularist agenda" seemed to be on an anti-Catholic path similar to Hitler and Stalin, Jenky exhorted all Catholics to "vote their Catholic consciences" this fall.

Do the people in congregations follow such instructions? Only 18 percent of those polled by the Pew Research Center in January said the endorsement of a candidate by their minister, priest or rabbi would sway their vote. Seventy percent said it would make no difference.

A second Pew study this spring found that most parishioners would prefer their religious leaders steer clear of electioneering, with Catholics among the most adamant.

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You’ve filed your tax return. Now comes the happy anticipation of wondering how quickly your refund will show up – and grousing when it isn’t in your bank account quickly.

The IRS has for years faced intense pressure to make the painful process of paying taxes more palatable by at least providing a zippy tax refund. But such service may be coming at a price as the Internal Revenue Service faces a surge of identity theft tax fraud, as well as the usual tax cheats.

Some victims complain that much of the fraud could have been avoided if the Internal Revenue Service had more carefully screened the fake return in the first place.

“From a publicity point of view you’re trying to be the nice bad guy,” said Roberton Williams, senior fellow with the Tax Policy Center.

That is a tough balance, he pointed out.

"(They are) supposed to process returns very quickly and worry about the fraud aspect, and at the same time Congress is saying, 'Do it with less money,'" Williams said.

The IRS has struggled with its image for decades, wrangling with a dual role of helping taxpayers file their returns and enforcing against tax cheats.

The agency, once known as the Bureau of Internal Revenue, changed its name to the Internal Revenue Service in 1953 in an early effort to appear more customer-centric, said Joseph Thorndike, director of the Tax History Project for Tax Analysts.

But hatred is not too strong a word to express how some people feel about the agency. In 2010 a tax protester crashed his plane into an IRS office in Austin, Texas, killing himself and an agency employee. At the time a Treasury official said there were more than 1,000 threats a year against IRS employees, a figure that had been climbing.

The IRS also struggles with funding. Last year President Barack Obama sought to boost the agency's $12.1 billion budget by more than $1 billion, so it could hire more workers. Instead Republicans led a successful effort to trim the budget to $11.8 billion. 

Pressure to speed the refunds can be be intense in a soft economy, when individuals – and the economy in general – could use that money.

The IRS processed about 145 million returns last year, and three-fourths of those taxpayers got refunds. The average refund was about $3,000.

But the IRS has stepped up screening efforts to try to stop fraud. Spokesman Terry Lemons said IRS officials have identified about 2 million individual returns for review so far this tax season, out of about 84 million that have been received. That’s about the same number of returns that it reviewed in all of last year.

When the IRS does flag a return for such a fraud screen, Lemons said the delay in sending out a refund will vary widely depending on what agents find.

The IRS also has gradually increased the number of returns that get audited over the past decade or so, following a drop-off in 1998, when the IRS went through a major overhaul to focus more on customer service. It currently audits about 1 percent of all returns, Lemons said.

He concedes it’s tricky.

“On the one hand you have millions and millions of taxpayers who have worked hard and are entitled to refunds, and they should be able to get that as quickly as possible,” Lemons said. On the other hand, he said, the IRS has an obligation to taxpayers to make sure returns are checked thoroughly for potential fraud.

In testimony to a Congressional subcommittee last month, Nina Olson, the taxpayer advocate, said that although taxpayers who are victims of fraud need to be protected, so do the majority of legitimate taxpayers who rely on their refund checks.

“With the introduction of e-filing, combined with the increasing number of refundable credits run through the tax code, our tax system has shifted, for better or worse, to one of instant gratification,” Olson said in the written testimony.

Still, she noted, “The benefit of enjoying such a tax system is somewhat offset by the increased ability of perpetrators to defraud the government.”

Over the years, he said, the IRS has seemed to sway back and forth depending on the political mood and other factors, said Thorndike, the tax historian. Now is one of those times when Thorndike thinks sympathies are more with helping the taxpayer.

“This is the age of the Tea Party, at least sort of, still, and that makes people even more unsympathetic to the federal tax collector,” Thorndike said. “So it’s not a great time for the IRS to be doing anything other than emphasizing customer service.”

Is the IRS striking the right balance? Tell us on our Facebook page.

Whether or not you’ve paid Uncle Sam yet, you might be curious to know where your tax dollars are going.

The White House has come up with a handy calculator.

The tool lets you enter your tax payments, or choose one of the pre-made estimates. Even if you don't enter any numbers at all, the percentage breakdown of each category is pretty fascinating. Check it out below, and let us know if you think your tax dollars are going to the right items on our Facebook page.

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Average income tax refund so far: About $3,000

Procrastinators rejoice: Tax deadline extended to April 17

After Meghan Bach learned last year that her husband’s identity had been stolen to collect a fake tax refund, she spent perhaps 200 hours working to resolve the issue with the IRS and other agencies.

She thought she had been successful until the family returned home from a vacation this month to find that her husband’s identity had been stolen again.

 “It’s just appalling,” she said.

The IRS has acknowledged that identity theft tax fraud –- stealing someone’s Social Security number to file a fake tax return and collect a bogus refund –- is one of the most complex issues it deals with. Victims describe hours of phone calls, piles of correspondence and long periods of silence in which they aren’t sure whether their problems are being resolved or not.

The tedious process has left some victims worried about what will happen when they file this year’s tax returns.

“Of course I’m nervous,” said Dr. Vera Rosado, 33, who found out last year she was a victim and still has not been able to get it resolved with the IRS.

Rosado, a physician studying infectious diseases in Indianapolis, was recently told to file her fraud affidavit for a second time and her 2010 return for a third time after previous filings was lost. She said the IRS has told her it could take another few months to get the new paperwork processed.

She is waiting to get an approximately $3,000 refund check from last year’s return, which she plans to use toward medical board exams.

The IRS estimates 404,000 people were victims of identity theft tax fraud from mid-2009 to the end of 2011, and officials say the problem is growing.

The agency recently set up a specialized unit to just to deal with identity theft tax fraud, and it is expanding its screening process aimed at flagging this type of fraud. The issue also has attracted the attention of the some U.S. Senators. On Tuesday, a finance subcommittee held a hearing on the matter.

The IRS said it could not comment on specific cases such as Rosado’s and Bach’s because of privacy laws.

Experts say the IRS is working hard to root out identity theft tax fraud in the approximately 140 million tax returns that come in each year. But some believe the problem will get worse before it gets better because it will take time to train staff members to root out and deal with such issues.

“For the next four to five years it’s going to be a learning curve for everybody across the country,” said Jay Foley, a partner with ID Theft Info Source.

Foley said one issue is that IRS employees who aren’t part of the identity theft unit may not know how to handle such complaints. That’s why they might audit tax forms instead of use them in an investigation, for example, or not file paperwork correctly.

He recommends that anyone who is a victim of such fraud work directly with the identity theft unit and also contact the Taxpayer Advocate, an independent agency charged with assistant taxpayers who are having problems.

Foley said the bad news is that there is little people can do to shield themselves from such fraud attempts.

“There’s absolutely nothing that can be done at this point in time that’s going to give you a guarantee of safety,” he said.

Bach, a real estate agent who lives in San Diego, found out her husband had been a victim of identity theft tax fraud in March 2011, when she tried to file their taxes and learned that someone had already filed a return using her husband’s name and Social Security number.

Over the next year, she said she spent several hours each week working with the IRS and other government agencies to get the fraud resolved on behalf of her husband, a military doctor.

At one point, she sent the IRS summaries of her past 10 years of tax returns in order to prove that she and her husband were the true taxpayers. Instead, she said, the IRS audited one of those returns and presented her with a bill for nearly $900.

She paid that bill, then successfully contested a later IRS attempt to audit another past return she had provided to prove her family’s identity.

Eleven months later, the family finally got its refund for the 2010 return and she figured the issue had been resolved. But a few weeks ago, they returned from a Disneyland vacation to find letters from the IRS that had been addressed to her husband had instead been sent to an address down the street that had recently been used as a rental. The mail had been returned to the post office and redelivered to Bach.

One letter, sent to the other address, was informing the family that they had once again been victims of tax fraud for the 2011 tax year. The second letter said that a refund of more than $10,000 was being applied to an existing balance of more than $12,000 that the letter said the family owed the IRS.

Bach said the family had not yet filed their 2011 taxes and was not scheduled to receive a $10,000 refund for the year. They also did not owe the IRS any money – in fact, after their fraud had been resolved, she said the IRS had sent them a refund for 2010 with interest.

Bach surmises that the fraud might have occurred at the address where the IRS correspondence was sent. She doesn’t know if the IRS sent any other correspondence to that address.

Bach and her husband immediately went to the local IRS office to get the address issue corrected. In addition, she said she has left multiple messages with the IRS identity theft case manager she has been working with but has not heard back. She plans to file her real 2011 tax return this week.

Bailey Yahraus, 30, found out four years ago that her husband and young children’s Social Security numbers had been used to file a fraudulent return. The couple got it resolved, and for the next couple years they used a tax filing service to file their returns with no problems.

This year, Yahraus decided to file her return herself using an online tax service. That’s when she found out that her children’s Social Security numbers had already been used by someone else claiming them as dependents.

Yahraus, who lives in Montpelier, Ohio, has been trying to figure out how she can keep the Social Security numbers from being used fraudulently again. She’s worried about what effect the ID theft might have on her kids when they become adults.

But after a rough few years in which both she and her husband lost their jobs and got new ones, she hopes to shield them for now.

“They’re 8- and 9-year-old boys,” she said. “They’re worried about baseball, basketball (and) football.”

Related:

IRS faces surge in identity theft tax fraud 

The Internal Revenue Service is grappling with a surge in identity theft-based tax fraud as crooks take advantage of web-based resources including electronic filing.

Identity theft cases, in which criminals obtain living or deceased people’s names and Social Security numbers to defraud the government, ranked No. 1 on an annual “Dirty Dozen” list of tax scams the agency released Thursday. The IRS called ID theft one of the most complex threats it handles.

The IRS estimates 404,000 people were victimized by identity theft tax fraud from mid-2009 to the end of 2011. 

“We are seeing growth in this area. There’s no way around it,” said Terry Lemons, IRS director of communications. “But I also think that we’ve gotten better at detecting it.”

The IRS said it stopped nearly 262,000 fake returns based on identity theft from being processed in 2011, preventing nearly $1.5 billion in refunds from going to criminals. That is more than a fivefold increase from 2010, when the agency stopped about 49,000 fake returns seeking $247 million in fraudulent refunds.

The IRS said it has no way of knowing how much in fraudulent refunds made it through the system undetected.

Experts say this type of fraud has increased thanks in part to the Internet. The Web has made it easier for honest people to file their tax returns -- and for crooks to file fake returns electronically. The IRS has been on a major push to encourage people to file electronically.

“That was probably one of the biggest boons for the bad guys,” said Jay Foley, a partner with ID Theft Info Source and an identity theft expert.

With more than 100 million income tax refunds to process each year, the IRS concedes it will never be able to quell such tax fraud completely.

“The IRS cannot stop all identity theft. However, we are committed to continuing to improve our programs,” Steven T. Miller, the deputy commissioner for services and enforcement at the IRS, said in written congressional testimony in November.

The agency has added new filters to screen for potential identity theft tax fraud and is working harder to help victims get their rightful refunds.

In late January, the IRS and Justice Department announced a nationwide sweep of arrests, indictments and other actions against 105 suspected perpetrators of the crime in 23 states.

In its testimony to Congress, the IRS said it had initiated 276 investigations into identify theft tax fraud in fiscal 2011, up from 224 the previous year.

The IRS is under tremendous pressure to get taxpayers their refunds as quickly as possible while also accurately screening for fakes. That’s complex because people's lives are complicated. Many of the things that might flag a return as fraudulent -- such as a change in job, mailing address or name -- are legitimate.

The new IRS filters mean that more people’s tax refunds will get extra screening before they go out, Lemons said.

“I think for the vast majority of taxpayers, they’re not going to see any difference,” he said. “There will be some people who end up having some delays.”

ID theft tax fraud tends to occur early in the tax season as criminals try to file before legitimate taxpayers. (For tips on how to prevent and identify identity-based tax fraud, check the guide posted on the IRS website.)

Despite the agency's efforts, Foley, the identity theft expert, expects the problem to get worse before it gets better. That’s because criminals keep finding new ways to evade IRS systems.

Still, he thinks the IRS is doing the best it can given its limitations. People want their legitimate tax refunds as fast as possible, but if the IRS doesn’t catch the fraud before the refund goes out, the agency may not even realize fraud has occurred until long after, when the real taxpayer goes to file a return.

“You can’t fix something until you know something is broke,” he said.

The crime appears to have surged in popularity rapidly.

In Florida, NBC television affiliate WFLA and The Tampa Tribune reported identity theft tax fraud had became so widespread that some people were offering classes in how to commit the crime.

The station's investigation said the criminals dubbed the process “TurboTax” after the popular online software for filing returns.

Julie Miller, a spokeswoman for TurboTax’s parent company, Intuit, said in an email that the company had amped up its own fraud prevention efforts over the past year. She declined to give details for fear of tipping off criminals.

In many cases, the fraud begins when a criminal steals someone's name and Social Security number, and then uses them as a basis to create fake a return that ensures a hefty refund. The refund is sent to an address specified by the fraudster.

Another method involves getting the names, addresses and Social Security numbers of recently deceased people from websites such as Ancestry.com, which are meant to help people find their long-lost relatives.

A spokeswoman for Ancestry.com, Heather Erickson, said the company didn’t notice anything unusual. But around December, after being alerted to the problem, the website stopped showing Social Security numbers for anyone who had died in the past 10 years.

Related:

Cheat on taxes? Never! Or, as much as possible

See more coverage of this issue from Tampa Bay Online

IRS: Taxpayer guide to identity theft

President Obama and congressional Republicans remain mired in the preliminary scrimmaging over how to extend the Social Security payroll tax cut for another year.

The congressional leadership of both parties have committed themselves to passing the extension, so it seems likely to happen. But it’s not clear how it will happen, nor is it clear whether the loss of revenue would be offset by spending cuts or higher taxes on some people – or perhaps not offset at all.

Democrats say this push to extend and expand the payroll tax cut – to 3.1 percent on workers, instead of the normal 6.2 percent – is all about helping the middle class.

Rep. Steve Israel, D-N.Y, the chairman of the Democratic Congressional Campaign Committee said, “House Republicans are willing to leave for the holidays and force a $1,000 payroll tax increase on 160 million middle income Americans.”

But since the Social Security payroll tax is a flat 6.2 percent tax on earnings up to $106,800 (and up to $110,100 in 2012), Congress can’t give middle-class Americans a tax cut without also giving many upper-income or relatively wealthy earners a tax cut, too.

Of course “middle class” is a subjective term – a person earning $110,000 might consider himself middle class, although in some states Tennessee, for example, a $110,000 salary would be far more than twice the average annual salary for that area.

The national average for all salaries and wages paid in 2009 was $68,110, according to Internal Revenue Service data for the most recent year available, 2009.

Factoring in some wage growth in 2010 and 2011, what that means is that many people with above-average incomes have received this year’s payroll tax cut (and would continue to get one if Congress extends the payroll tax cut for another year).

In 2009, according to the IRS data, there were 10.3 million income tax returns with salaries and wages between $75,000 and $100,000; if you go up to the taxable maximum for the payroll tax, that would add tens of thousands more high earners who are getting a tax cut.

Roberton Williams, an analyst at the nonpartisan Tax Policy Center in Washington, said that “60 percent of an extended payroll tax cut would go to households making more than $100,000.”

If tax cuts for the middle class are what Congress wants, why not target a tax cut to those who are in the middle and not those at or above $100,000 in income?

Congress, in fact, did just that in the 2009 stimulus bill with a two-year, temporary tax break called Making Work Pay. Taxpayers were able to take a credit of $400 for singles and $800 for married couples filing jointly. The tax break was phased out for singles with incomes above $75,000 and for married couples with incomes above $150,000. So Congress didn’t give money to higher earners, as the payroll tax cut does.

Making Work Pay was modeled on the Earned Income Tax Credit for poor people as a way to offset to the payroll taxes they must pay. “The Making Work Pay tax credit was just an extension of that,” said Jason Fichtner, former chief economist at the Social Security Administration, who is now at the conservative-oriented Mercatus Center at George Mason University.

The payroll tax cut does have the virtue of being “immensely easier to administer” than Making Work Pay was, said Williams. Making Work Pay required filling out an extra line on the income tax return. “The IRS had extra work and the tax filer had extra work.”

But in a blog post, Williams makes a strong case that, instead of extending the payroll tax cut, Congress ought to revive and enlarge Making Work Pay, because it would “focus tax savings on low- and middle-income families, those most likely spend the extra money.”

The payroll tax cut worries some members of Congress in both parties who believe that it won’t be temporary – that Congress, next December and in the years to come, will find it very hard to raise the payroll tax rate back to where it was last year, 6.2 percent.

If Congress extends the tax cut, but cannot agree on offsetting revenue, then it will simply be borrowing money (and adding to future interest costs) to pay for the $187 billion tax break.

Donald Fuerst, a senior pension fellow at the non-partisan American Academy of Actuaries points out that this is the first time that Congress has changed the payroll tax rate in response to economic events.

Even in the recession of 1981-1982, when unemployment exceeded 10 percent for almost a year, Congress did not cut the Social Security tax.

In fact, it allowed an already scheduled Social Security tax increase to take effect, raising the tax rate from 5.08 percent on employees to 5.4 percent. If you include the Medicare part of the payroll tax, the total tax rate went from 6.13 percent to 6.7 percent – a tax increase on the “middle class” in the depths of a recession.

“If this were other than just a temporary change, it would truly be a fundamental change in how the system is financed, Fuerst said. “It’s been financed in the past almost exclusively with payroll taxes, and if this temporary change were extended, then a significant part of the funding would come from general revenues rather than the payroll tax –and that certainly is a fundamental change.”

He added, “We’re tinkering with funding here but not addressing the problems that exist… We’re using this as a tool to manage the economic conditions of today, but we’re not addressing the long-term problems that Social Security has.”

Robert Ray / AP

A pedestrian walks across a bridge along the Chicago River in downtown Chicago past a bridge house with a Bank of America advertising banner. The advertisements installed this month are turning heads and reviving a debate over how governments around the world raise money in tough economic times.

 Seven vinyl banners draped this month along one of Chicago's most iconic bridges, advertisements some have dubbed "a visual crime" and "commercial graffiti," are reviving a debate about how governments raise money in tough economic times.

In the aftermath of the Great Recession, a public school district in Colorado is selling ads on report cards and Utah has a new law allowing ads on school buses. Chicago Mayor Rahm Emanuel's administration, straining to fill a $600 million budget hole, is looking to raise $25 million from ads on city property — including bridges, electrical storage boxes and garbage cans.

The effort kicked off this month with Bank of America ads on the 81-year-old Wabash Avenue Bridge, which crosses the Chicago River and has appeared in movies including "About Last Night" and "The Dark Knight."

"I think it's disgusting," Chicago resident Linda Rosenthal said recently, shaking her head as she surveyed the signs. "The architecture in Chicago is stunning. To see this awful advertisement angers me."

The white ads with blue lettering and Bank of America's logo are posted on limestone bridge tender houses, which hold the equipment used to raise the bridge when tall boats pass beneath. Bank of America paid $4,500 to put seven signs on the bridge for about a month, said city spokeswoman Kathleen Strand.

Strand promised the city's new campaign will have "policies to protect the integrity of Chicago's facade" and likened the initiative to the Chicago Transit Authority bringing in about $20 million annually from abundant ads on buses and elevated trains that don't seem to anger anybody.

"The municipal marketing strategy is really about pursuing innovative opportunities to avoid having to cut city services or increase the tax burden on Chicagoans," Strand said.

Still, some ask where the line will be drawn. Could the city's historic Water Tower be next? Or Grant Park's famed Buckingham Fountain?

The city's two major daily newspapers have faced off with opposing views. Chicago Tribune architecture critic Blair Kamin called the bridge ads "a visual crime" and "a grotesque cheapening of the public realm." A Chicago Sun-Times editorial said the ads, while unappealing, "beat going bust."

Bank of America spokeswoman Diane Wagner said the company said yes when Chicago officials asked if the bank wanted to advertise on the bridge because it's a major employer and philanthropic supporter in the city.

"We agreed to be the first company to display on the bridge because we want to help the city explore new revenue sources and we think this is an innovative way to generate new revenue," Wagner said.

Was it a smart move?
Chicago advertising professionals doubt it was a smart move for either side.

"I have made my living in advertising, but there has to be better ways to raise money," said Tim Terchek, executive creative director of the Drucker Group ad firm. What's more, the bridge ads could backfire if public disgust sticks to the bank, he said.

Leo Burnett Company's chief strategy officer Stephen Hahn-Griffiths overlooks the bridge ads altogether.

"It's like commercial graffiti," Hahn-Griffiths said. "It makes no sense from a marketing perspective and I question the intent of doing this because it does not seem like a smart decision."

Former Milwaukee Mayor John Norquist, president and CEO of the Chicago-based Congress for the New Urbanism, suggested the city could instead rent out spaces like the City Hall lobby or library and cultural center theaters for weddings and other events.

"Placing advertising on a city's architectural assets takes away from the public realm," Norquist said.

Some officials across the country, and the world, disagree.

In Rome, an Italian shoe company founder has pledged to foot $34 million to restore the Colosseum — the ancient arena blackened by pollution — and its founder has said the gesture could launch more private sponsorship for public benefit in Italy. In Venice, Mayor Giorgio Orsoni defended the use of publicity on restoration of such projects as the famed Doges Palace, saying sponsors' contribution allowed the work to be accelerated.

But Venice also has strict rules on the use of advertisements. Only 10 percent of an exposed facade can be covered, and ads for cigarettes, alcohol and those featuring nudity are banned.

Back in the U.S., a suburban Salt Lake City school district plans to be Utah's first to plaster its buses with advertisements in an effort to generate additional revenue without raising taxes. While the ad revenue is expected to supplement the Jordan School District's budget, officials said it won't be enough to make up for the recent budget cuts.

It's a similar story in Golden, Colo., where Jefferson County Public Schools' report cards now feature ads for the CollegeInvest college savings program. The ads raise $30,000 a year.

"Parents understand where we are at with the funding issues and most of the reaction has been positive," said school district spokeswoman Lorie Gillis.

Retiree Jim Phillips, who leads free tours of Chicago's bridges, challenged the city to channel public curiosity about the structures into money-making ventures, such as charging tourists to see the bridge houses' inner workings.

"If it gets to the point advertisements go on more of these historic structures, I don't think there's any way to stop them on others," Phillips said. "What if you put a NASCAR suit on the Picasso? What if you slapped a Google sign on one of the lions at the Art Institute?"