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?