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Closing the Credit Card Loopholes 

Generally speaking, we believe that more disclosure is better than less disclosure in politics.  This applies both to how politicians behave in office and the money they raise to run for office. 

We support full disclosure of those groups and individuals who can spend enough money to truly influence elections. According to Politico, the top two donors in the country (Tom Steyer and Michael Bloomberg) contributed more than $100 million in the 2014 elections alone. In fact that top 100 donors gave $323 million, almost as much as the $356 million given by the 4,750,000 small donors.

If an individual or group is giving that kind of money we believe all efforts should be made to let the voters know who is behind the campaigns being run. The citizens are then best equipped to determine if they believe a particular donor stands to benefit from a particular candidate winning. Even giving every donor the benefit of the doubt that they are motived by their ideology, this gives each citizen the ability to determine if they agree or disagree with that philosophy and vote accordingly.

However, while there are great benefits to disclosure of large donors, some small donors may be uneasy getting involved by giving a few hundred dollars for the first time for fear of perceived reprisals or loss of privacy.

The current $200 limit above which a campaign must disclose its contributors has not kept pace with inflation.  Such a low limit may discourage political contributions from the fear that a person’s political contributions may become public.  Just as voting is secret, so small contributions should be secret to avoid the potential of retaliation by employers, unions, or others for political contributions.  And a low limit increases the compliance burdens on candidates’ campaigns, which discourages new candidates from running for election.  We suggest raising the limit for campaigns for Federal office to $500 to reflect the original intention of those who enacted this rule that small contributions from ordinary Americans be exempt from public disclosure.

http://www.politico.com/story/2014/12/top-political-donors-113833.html

Our Constitution guarantees the right to vote to all qualified citizens of the United States – but voting, and direct participation in our political process, should be open only to those who are citizens of the United States.  We must be careful lest our political system be seen by foreign interests as a carnival in which all can participate and get the results they seek, even if those results weaken American interests, our national unity, and our national security. In an era when money is fungible, it becomes tempting - and too easy - for foreign interests to influence our elections unless we remain vigilant against these threats.

While we welcome foreign investment in the United States to bring jobs and innovation, we are concerned about the potential – and past – influence of foreign money on our political process.   It is against Federal law for foreign governments, foreign nationals, or companies controlled by foreign nationals to give money to political campaigns in the United States. 

We encourage common-sense steps to ensure that this law is followed and that only money contributed by U.S. citizens or legal permanent residents may be used in political campaigns in this country. 

  • First, campaigns themselves must be vigilant that they do not accept this money and take appropriate steps to maintain the security of campaign websites, including websites that accept contributions.  This requires appropriate due diligence and, on occasion, may require asking difficult questions of donors or potential donors and reporting of suspected or actual violations.  That may be challenging, as campaigns do not want to risk alienating donors, but it is necessary to comply with the law. 
  • Second, the rise of 501(c)(4) tax-exempt organizations and groups that are not required to disclose their donors present opportunities for abuse and for the infiltration of foreign or foreign-controlled money into our campaign finance system.  Worse, because these organizations do not have to disclose the ultimate origin of their funding, the opportunity exists for foreign money to seep into our system undetected. The danger is even worse given that so many of the advertisements run by these organizations are negative “attack” ads.  Is it possible that some attack ads may be run because a candidate or public official has taken a position in favor of American interests rather than those of a foreign government or corporation?  We simply cannot take that risk.
  • Third, under current law, American subsidiaries of foreign companies may legally form Political Action Committees and contribute money to U.S political campaigns.  These PACs had raised $14.1 million by October 2014 for the mid-term elections.[1]  While we support the rights of all Americans to become involved in the political process, we believe it is time for a debate about whether these PACs are simply too connected to foreign interests to be legitimate contributors, as PACs, in the political process. 
  • Fourth, because it can be so difficult to enforce the prohibition on foreign or foreign-controlled money being contributed to American campaigns, we believe prosecutors should treat any violations seriously, encouraging self-reporting of honest mistakes by campaigns but treating willful violations of the law with great importance and aggressive prosecution.

Finally, we note that the tremendous influence of money in politics and the need to raise ever-increasing amounts of money can take lawmakers and public officials away from their duties – even when those duties involve national security.  The incident last fall of a United States Senator skipping a classified briefing by the Director of National Intelligence on important national security threats to attend a political fundraiser is shocking.  And it was very likely not the first such incident.  Reducing the role of money in politics will enable lawmakers to focus on their duties for the good of the country and our national security rather than the never-ending quest for cash.

We need to take back our campaign finance system to ensure that foreign interests do not influence it through otherwise illegal donations. Our government and our national security is weaker when our system is vulnerable to foreign influence when those of other countries are not.


[1] www.opensecrets.org/pacs/foreign.php

We believe in expanding citizens’ participation in our democracy and in robust, enthusiastic, honest political debate. Norman Rockwell’s famous painting “Freedom of Speech” depicts a lone citizen in opposition to a proposal at a Vermont town meeting.  Likewise, we believe in respecting the rights of those who disagree with our perspective and giving them the same opportunities to speak as we enjoy.  We want more speech, not less speech; more debate, not less debate.  And when the debate or the election is over, we believe in uniting as Americans and as friends.

Too often today in our country, though, there is little tolerance for dissent from official or popular views.   Too often debate is shut down and opposing voices either lost or unheard amid the clamor of those who can afford to pay more or who control the airwaves.  This is unhealthy for our democracy and for our survival as one united people.

And this trend can combine with a loss of privacy, driven by the explosion of information easily available over the Internet and the immediacy with which that information can be spread – whether or not that information is accurate.

Generally, we believe in greater transparency in politics and in political contributions.  We believe equally strongly, however, that no one should be punished for their political views. Our goal is to expand the ability of individual citizens to participate in politics, including through giving money to the candidates of their choice.  It is important to ensure that no one is punished for making those choices or those contributions.

The secret ballot is an important part of our democracy.  We do not believe in equal secrecy for political money, but we do believe in protections for average citizens who wish to contribute to politics.  In an era in which social media postings are used by employers to screen job candidates, we want to avoid situations in which someone is punished by losing a job or in other ways for expressing political views.  This is why we believe in raising the amount that can be contributed to a Federal campaign without public disclosure, so that citizens are not discouraged from making contributions to political campaigns by the possibility of retaliation from employers, unions, or others.  In a world with too little personal privacy, small contributions to our political system deserve privacy.

We will be a strong voice condemning retaliation for political views when it happens.  Our republic is strongest when everyone can participate freely.

Excessive political contributions from those expecting to get something in return for their contribution distorts the political landscape from those who give (often much smaller) contributions due to ideological beliefs. This reduces the influence that ordinary citizens have in our electoral systems and makes those in public office often more responsive to those who give money rather than the broad electorate.  At the same time, the ever-rising cost of campaigns puts more pressure on elected officials and candidates to spend most of their time talking to groups and individuals who can write large checks – regardless of if they are in the district – rather than constituents the Founding Fathers wanted them to represent.

Part of the problem comes from the proliferation of groups organized under Section 501(c)(4) of the Internal Revenue Code, who have the ability to pour vast sums of money into election-related activity without any connection to the actual candidate, without limits on spending, and without having to reveal their donors.  Again, this distorts the political process, often shifting the focus of the debate from the actual race run by the candidate to the negative attacks from special interests flooding the airwaves and mailboxes.  Voters become less well-informed and more cynical about politics and our electoral system by this recent feature of our political life.

It doesn’t have to be this way.  Even after the Supreme Court’s decision in Citizens United,[1] which permitted unlimited independent political expenditures by a non-profit corporation (while still banning direct contributions from corporations and unions to political campaigns), we can take steps to ensure that our elections become more competitive and that the voices of ordinary citizens are fully heard.

  • We’ve put forth ideas such as making certain small political contributions tax-deductible.  This will strengthen the voice of ordinary citizens.
  • We will be a voice for those who want to shift the terms of the debate on campaign finance reform, offering fresh ideas and new perspectives.  We will call on elected officials to think about this issue from the perspective of finding ways to strengthen the voices of ordinary citizens and restoring the public’s trust in our elections and elected officials.
  • We believe in strengthening the political parties.  The political parties are a mediating force for good which should regain some of the power they have lost through the rise of independent political expenditures.  We want stronger parties rather than stronger special interests.
  • The wrong way to strengthen the parties, however, is by encouraging excessive contributions to them.  The recently passed omnibus budget,[2] for instance, permits contributions to the political parties of up to $800,000 per cycle per individual ($1,600,000 per couple) for administrative costs.  This provision, enacted literally in the middle of the night with no debate, is simply the re-legalization of “soft money” through other means.  It will give disproportionate influence in the national parties to those who can afford to give the most.  It does not solve the problem of excessive money in politics simply to shift excessive money from independent Super PACs to the parties themselves.
  • We need to discuss better approaches.  The parties do need money for their administrative needs, and we support re-examining the question of whether to restore the 40-year tradition of Federal funding for the major national party conventions, as a way to reduce the influence of excessive political contributions.

We will be looking at other ideas as well.  If nothing is done, the influence of special interest money in politics will continue to grow, damaging our democracy and the public’s trust in our system and those who serve in public office. 

 


[1] 558 U.S. 310 (2010)

[2] See also http://www.washingtonpost.com/blogs/post-politics/wp/2014/12/09/spending-deal-would-allow-wealthy-donors-to-dramatically-increase-giving-to-national-parties/

Wouldn’t you like to direct more of your tax dollars and be able to use them to help elect candidates for public office who would well … be better stewards of your tax dollars?  We believe that you should be able to take a tax credit for small contributions to candidates for Federal (and state) office.  This would encourage more people to become involved in the political process and at the same time remind candidates that the source of their power is the people. 

The ability to direct up to $100 of your paid taxes to elect political leaders would encourage voters to learn the voting history of the candidates, pay attention to issues being discussed that will affect their lives, and encourage engagement as political leaders interact with everyday citizens in order to court their support and understand their issues instead of just those of special interests with PAC accounts.

Currently, 63% of political contributions in races for the U.S. House come from people who give more than $200.[1]

There are many ideas for how such a proposal could work.  Some favor a voucher; we prefer a tax credit to reduce the possibilities for fraud or voter manipulation.  Some also propose tax deductions in addition to or instead of tax credits.  (A tax credit is an amount a taxpayer can claim against income, reducing the total amount of income that is subject to Federal or state tax; a tax deduction is an amount a taxpayer can claim to reduce the amount of tax owed to the government.)

This is an old idea but one that should be revived.  Federal law permitted deductions for small political contributions from 1972 to 1986.  Now, restoring this deduction and possibly adding a tax credit would expand the donor base for candidates for Federal office and reduce their reliance on special interest-driven political action committees (PACs). 

At the Federal level, in November 2013, Rep. Thomas Petri (WI) introduced the Citizens Involvement in Campaigns (CIVIC) Act.[2]  That bill proposes tax credits up to $200 for individual political contributions and a tax deduction for contributions up to $600.  His interesting bill provides a good basis for discussion in the new Congress of finding some way of making tax-advantaged small political contributions.  We strongly encourage the new Congress to have a good debate on this issue and the relative merits of different systems of finding tax advantages for small political contributions from citizens.

Some states already have similar systems.  Virginia currently has a small credit ($25 for individual taxpayers or $50 for a joint return) for candidates in a primary, special, or general election for state or local office.[3]  In 2011, taxpayers were able to keep $821,000 of their own money under this law by donating it to candidates who they thought would be the best stewards of the $79.1 billion the Commonwealth and local governments spent that year.[4]  And it encouraged more people to donate to local races, for which it can be harder to raise money.  Oregon has a more generous system ($50 for individual filers; $100 for joint filers); Oregon’s system also permits taxpayers to take the credit for donations to candidates for Federal office and to political action committees and to take tax deductions for larger contributions.[5]  Arkansas, Ohio, and Minnesota also permit deductions or credits for small political contributions.

These credits, however, are often not well-known, and few taxpayers take the credits available to them.  Expanding the system to the Federal level and better publicity of the availability of the credit in states where it is permitted would raise the number of taxpayers who take advantage of the credits.

We believe that expanding these systems at the state level and restoring it at the Federal level would sharply increase ordinary citizens’ direct participation in the political process through donating small contributions to the candidates of their choice.



[1] Center for Responsive Politics

[2] https://www.congress.gov/bill/113th-congress/house-bill/3586/text?q=%7B%22search%22%3A%5B%22Citizens+Involvement+in+Campaigns%22%5D%7D

[3] http://www.tax.virginia.gov/site.cfm?alias=TaxCredit#Political_Contribution_Credit

[4] http://ballotpedia.org/Virginia_state_budget_(2010-2011)

[5] http://www.oregon.gov/dor/PERTAX/personal-income-tax-overview/pages/credits.aspx#Political_contributions_ORS_316.102

One common misconception is that campaign finance reform would hurt wealthy Americans and help those in lower income brackets. In fact, the current system hurts most Americans in EVERY tax bracket.

This is one of the themes of a book to be published later in 2015 by Professor Richard Painter, who is a board member of Take Back.

Professor Painter notes that even most of the top 1% of earners don’t really make significant campaign contributions.  Only 30% of millionaires gave to a political party or candidate, according to a recent study by PNC Bank.  Only 30% of these – so a total of 9% -- gave over $1000 in total.  In the current system, charities appeal more as a way to use money as an immediate force for good.

As Painter’s draft states, “the current system does substantial harm to everyone, including the richest Americans.  The system is not an oligopoly of the top 1% or even the top .01%; it is far worse than that.”

For one thing, the system is strongly biased in favor of contributions by the financial industry while investors are dispersed and less able to protect their interests in the government process.

To the degree that money in politics represents actual corruption, as Painter writes, “A corrupt government likely destroys wealth.”  We see this in higher costs for government (which means higher taxes), misallocation of government resources, and government putting its hand on the scale to favor certain companies or industries.

So, for instance, investors must see the companies in which they invest make higher political “investments” rather than using corporate funds for business purposes.  This hurts shareholders.

“Crony capitalism” waste government money and hurts all taxpayers, but because the wealthy pay a disproportionate share of total income taxes, they are hurt more.

Even if a few wealthy people benefit from a particular government action, the majority of the wealthy do not, and the system as a whole is weakened.

In short, there is a collective action problem in our system.  For instance, as Professor Painter notes, concern for environmental protection has traditionally been strong among the wealthy (who may have more time to enjoy the outdoors or own more land).  But what happens when the system is influenced to favor contributors rather than the people as a whole?  Would a polluting company have a disproportionate influence over decisions, hurting everyone?