Friday, September 24, 2010

State Responses to Citizens United

  • State Responses to Citizens United

  • The following proposals are intended to mitigate the impact of the Citizens United holding that corporations have the same right as citizens to make campaign expenditures (and presumably spend money in other ways that the Court might characterize as "political speech"). They will not eliminate the excessive influence of wealth in our political system. Thus, they are not meant to overturn Buckley v. Valeo or to substitute for effective campaign finance law. Any corporation can simply transfer funds to human beings, who are then free to spend them, even collectively (Clause 3).
    They do, however, mean that the Electioneering/Lobbying Expenditures will come from actual human beings who have made an actual decision to spend their own money -- not corporate money with no clear owner -- to support their own views or interests -- not interests that they believe they are legally or ethically required to promote as fiduciaries for the corporation regardless of their personal views.
    In other words, they effectively reduce the power of corporate money and corporate speech, which is never free speech, without challenging the Buckley v. Valeo claim that money is speech and campaign spending /contributions are protected by the First Amendment. It protects the ability of the rich to use their own money, while protecting corporate fiduciaries from the obligation to promote positions they might not support as citizens or believe are in the national interest or further the public good.
    Possible state statutory solutions to the Citizens United problem include:

    • The Consumer's Protection Opt Out Act
      • Whereas, consumers purchase products and services without intending to support business lobbying efforts to change the rules of the market,
      • No business, whether incorporated or not, shall be authorized to do business in this State or sell any good or service in this State, unless it provides an effective means for in-state customers to opt out of corporate electioneering/lobbying expenditures where ever made, including full disclosure and a system for receiving refunds.
      This would give consumers the means of boycotting politically active corporations and most likely would create some economic pressure on corporations to avoid political activity. However, over time, corporations would probably learn that few citizens are likely to "opt-out" as increased disclosure makes corporate political activity seem more normal.

    • An Act to Prevent Corporate Waste
      • Whereas, corporate assets are entrusted to corporate decisionmakers as fiduciaries for the good of the corporation, and
      • whereas, the purpose of corporations in this state is to pursue lawful activities within the law as determined by the citizenry,
      • whereas, political activity to influence the law or its application to a corporation's business is not in the interests of a business corporation properly understood,
      • whereas, members of the corporation are entitled to assurance that their corporation's assets will not be used to promote political objectives with which they disagree, now therefore
      • Any expenditure for lobbying or electioneering by any business corporations is hereby declared corporate waste, and may be authorized only by unanimous consent of the shareholders.
      This Act would make directors and executives who approve such expenditures personally liable unless the expenditure is approved by unanimous vote of the shareholders.

    • An Act to End Tax Subsidies of Corporate Lobbying and Electioneering
      • The (state or federal) income tax statute is hereby amended to declare that all corporate lobbying and electioneering expenditures shall be deemed expenditures by the human beings who contributed the funds used.
      • To facilitate tax reporting and paying, the corporation shall be required to
        • (1) identify such persons on a quarterly basis, and
        • (2) to disclose to each such person the total expenditures made in their name and the causes for which they made, and
        • (3) to set out the basis on which the corporation allocated the expenditures to that individual.
      • Each individual receiving such imputed income shall be required to report such income for tax purposes and allowed to deduct the associated expenditures to the same extent as if the individual had made them in his or her personal capacity.
      Imputing the income to individuals and requiring them to report it on their income taxes would emphasize the Court's claim that the rights being protected here are individual rights. Moreover, courts are generally quite reluctant to interfere with the state's taxing authority, so framing the statute as an income tax provision would lessen the probability of a successful First Amendment challenge. This is an effective disclosure statute that, presumably, would cause a good deal of unhappiness among those who learn that "their" money was used in this way. For at least a while, shame would inhibit companies from discloseable spending.

    • An Act to Limit Foreign Influence on US Elections
      • No business corporation shall expend any funds to lobby or electioneer using funds that are in any part contributed by a non-citizen investor, employee or customer.
      • In the case of institutional investors, the institution is deemed to have the citizenship of each of its associated participants, looking through all institutions until a human being is reached.
      Every publicly traded corporation has non-citizen investors, so in practical terms this is the same as an outright ban for any publicly traded corporation, but the Court seemed to leave this route open.

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