Tax on Out-of-State Political Money Could Outflank Citizens United

By Rob Hager

In southern Minnesota (Paul Wellstone country), a new revolt against money in politics has started.  Should this revolt spread, it would provide a far quicker and more effective grassroots strategy to get big and corporate money out of more elections than the popular but misguided campaign to pass municipal resolutions in favor of a constitutional amendment against corporate personhood.

100 Percent Tax

On February 7, eight Minnesota precinct caucuses adopted one version or another of a resolution that calls for a 100 percent tax on all money  used to influence an election that comes from outside the state, and, with varied options, for a $0-500 deductible from outside any local electoral district, too.

One proponent of the resolution reported that at her caucus: “I read the tax contribution resolution … and it got a hearty laugh, but then people were really taken with its simplicity and effectiveness at solving the current problem. The resolution passed as it was read by a 14-0 vote.”

In its 2010 Citizens United decision, and other cases, the Supreme Court of the United States  authorized a flood of corrupting corporate money into politics, claiming that the First Amendment right of all voters to get information from any source money can buy is more important than the obvious corrupting effect of special interest money on politicians and policy. The court either naively or disingenuously denied what everyone else knows, that money seeking profits in politics has a corrupting influence that undermines the public interest.

What Are the Supremes Thinking?

Unchastened by the extreme unpopularity and criticism of Citizens United, labeled the worst decision since Dred Scott, the court then, in its 2011 Arizona Free Market Club decision, blocked the most effective remedy, a public funding scheme which Arizona voters had approved by referendum. The court again claimed that money does not corrupt politicians, but asserted it might intimidate their use of free speech to force them to compete on an equal footing with publicly funded candidates. Four dissenters compared this reasoning by the Roberts 5 to a “world gone topsy-turvy,” a judicious way of describing how downright looney the court majority’s excuses have become in defending the right of plutocrats to freely buy politicians and elections.

Congress has failed to take any effective action to check this deliberate disenfranchisement of the many by the money, though any time it chooses to do so, it has the power under Article III, Section 2, Clause 2 (often called the “exceptions clause”) to stop the court from making such ignorant or deliberately undemocratic decisions about elections. According to a letter from the campaign manager for the King of Campaign Contributions himself, “the President favors action – by constitutional amendment, if necessary – to place reasonable limits on all such spending.” As a former constitutional law professor, President Obama knows an amendment is not necessary. Yet neither he nor his party has done anything about the money-in-politics that is Obama’s forte. Mentioning an amendment allows him to defer any solution to money in politics into the remote if not fantasyland future, when politicians comprising 2/3 of Congress and 38 state legislatures will decide to outlaw their lucrative business plan of selling policy for profit. Congress could not even pass the feeble Democracy Is Strengthened by Casting Light on Elections (DISCLOSE) Act last year.

States Control Elections

Under the Constitution’s Article I, Sec 4, the states, not the Supreme Court, are given the frontline  authority to guaranty the integrity of elections unless Congress acts to supervene that authority. The court is given no role either in regulating the manner of holding elections or in judging them. The Constitution’s Article I, Section 5 makes Congress “the Judge” of its elections, and Article IV, Section 4 makes it the guarantor of “republican” elections in the States. Until 1976, the court was excluded from this area of law (with the significant exception of enforcing the one-person, one-vote principle against entrenched minorities who refused to fairly redistrict) because it was considered a political question under exclusive control of the legislature. If Congress will not act, states must be made to take whatever action they can within, or maybe even not within, the rulings of the Supreme Court to prevent the overthrow of republican governance by corruption.

If a Supreme Court majority has stepped outside the scope of its own authority – and has gotten away with it due to a complacent and corrupt Congress which has the power to rein it in, but will not use it – there is, at least, a strong constitutional argument to be made that the court’s unconstitutional election law edicts are not binding on the states under the supremacy clause of the Constitution unless and until Congress says they are. The landmark Luther v. Borden decision made clear that it is up to Congress, not the court, to tell the states if their election laws are unconstitutional.

Article VI of the Constitution says the “Constitution, and the Laws of the United States … and … treaties … shall be the supreme law of the land,” not wacky Supreme Court precedents that violate the Constitution by breaching the separation of powers and exercising the legislative powers of Congress.  Lincoln’s factors for discounting the binding effect of Dred Scott – a divided court, “apparent partisan bias, [not] in accordance with legal public expectation, and with the steady practice of the departments throughout our history, and …  based on assumed historical facts which are not really true” – also apply to Citizens United.

In Western Tradition Partnership v. Attorney General (December 30, 2011), stayed pending writ of certiorari sub nom. American Tradition Partnership, Inc. v. Bullock, (February 17, 2012) the Montana Supreme Court  refused to enforce the Citizens United decision so as to allow corporate money to corrupt its elections, contrary to Montana law. There is a strong argument that Montana does have the constitutional authority to defy the US Supreme Court – unless Congress instructs them otherwise. This is not about re-litigating what was settled in the Civil War, but about the constitutional separation of power as it affects federal relations concerning elections. By insisting that only Congress has the power to override their election laws, the states can force Congress to take a position on whether the Supreme Court has authority to make decisions on political questions, like elections, that are binding on the states. Just because a corrupt Congress has remained supine against the court’s usurpation of its power, does not mean the Constitution requires the states to do likewise.

A Way Out of the Morass?

Minnesota may have found an effective way to resist the Citizens United decision without directly challenging the constitutionality of the Supreme Court’s precedent in the field of elections. One of the few measures not prohibited by Citizens United and its other election cases is a tax on political contributions and influence peddling.

The Boston Tea Party established the principle of no taxation without representation. According to the new Minnesotan corollary to that American fighting faith against tyranny, there should also be no representation without taxation.

Most large amounts of money contributed to politicians directly or indirectly by corporations, organizations and individuals come from outside the state, or outside a candidate’s district. This money purchases access and government policies for private interests, privileging these over the interests of the local electorate, who pay the taxes to support the government and have to live with policies that serve the interests of the “cash constituent” outsiders who pay for them. Money that buys preferential influence and representation should not be exempt from taxes commensurate with the value of the policies they purchase or the harm to actual voters that they cause.

Some studies indicate that the return on investment from corporate political expenditures can be 22,000 percent or higher. Former Florida Democratic Rep. Alan Grayson introduced HR 4431 on January 13, 2010, to impose a 500 percent excise tax on corporate political expenditures. A 100 percent  tax captures only a tiny fraction of the harm done, and the profits extracted from public policies distorted by big money and corporate investments in politicians. But it could be called a good start.

In Bluman v. FEC (January 9, 2012) the Supreme Court affirmed a judgment that allowed the federal government to prohibit  money from foreign campaign contributors. Bluman retreats from the rationale of Citizens United that voters are entitled to be influenced by money in politics from any and all sources. Apparently, the court now thinks that this right of voters does not apply to those investors in political influence whose foreign residence suggests they might have different interests from the voters their money is intended to sway. The same limiting principle should apply to exclude contributors who are foreign to any state or local election district. Implementation of such a principle by a tax law, such as the Minnesota caucus resolutions demand, would go a long way toward preventing the wholesale auctioning of political favors in the corrupt election system established by the Supreme Court.

The power to tax is included in the power to prohibit. The Minnesota approach therefore benefits from two separate grounds for claiming that it is constitutionally valid, which increases the chances of withstanding review. First, a tax on special interest electioneering expenditures has not been prohibited by the court, either expressly or impliedly. Second, imposing the tax only on those not resident in the district is consistent with the court’s Bluman decision endorsing the federal prohibition of  foreign electioneering expenditures.

Voters in other states should start similar campaigns to impose a high tax on all money coming into their elections from outside the state and district where the voters in the election reside. In a time of tight budgets, this form of sin tax could significantly improve the health of the body politic, as well as raise money on the sale of commodities -  elections, politicians and public policies – not currently subject to sales taxes. Φ

Rob Hager and James Marc Leas are lawyers active with Occupy Wall Street in their respective towns. Hager is an experienced public interest litigator while Leas specializes in patent law. This article was originally published by Truthout on Monday, 12 March 2012.