A National Tax on Campaign Contributions and Lobbying
If we can’t stop these democracy-defying practices, tax them instead
The Supreme Court declaring spending limits on political donations to be unconstitutional does nothing to prevent the U.S. government from taxing transactions involving money voluntarily spent…which campaign contributions and lobbying expenditures most assuredly are.
If we can’t eliminate money in politics, TAX IT INSTEAD!!
Tax revenue could be distributed proportionally to states for election-related expenditures.
~ States could develop a system of public financing for elections.
~ Others could implement ranked choice voting, make voter registration easier or more secure, and/or update voting equipment.
~ Another wants to expand training and pay for poll workers? Great!
The chart below demonstrates how a progressive tax on campaign contributions and lobbying expenditures would work:
These taxes would be cumulative, meaning the amount taxed would be for all lobbying expenditures in a year; for the total amount of donations made to all campaigns, political parties, PACs or independent groups engaging in electioneering activities.
No more amassing millions in dark money with zero transparency or accountability!
They would also be progressive, so a wealthier citizen who donates $10,000 a year wouldn’t pay 10% on that total amount, just the portion between $5,001 and $10,000. His/her actual interest rate would end up being 6.25% (or $625), which is roughly equivalent to the sales tax in many states.
By contrast, the 98.2% of American adults who donate less than $200 in an election cycle would be completely unaffected.
The following chart shows the progressive nature of the tax, and makes clear it is the political donor class and deep-pocketed special interests who are primarily affected…as they should be.
Lobbying is a little trickier, as we must be careful not to inhibit the ability of any (legitimate) non-profit, citizen coalition or issue advocacy group from seeking redress with elected officials.
However, the vast majority of the nearly $3.5 Billion spent annually on lobbying is by wealthy special interests, so a progressive tax mostly affects this tiny, but very influential, group.
Another way to help smaller factions would be to allow each state to issue up to twenty $50,000 waivers each year, lowering the amount subject to the lobbying tax by the same. States could hand these out as they see fit — ideally to groups advancing issues important to that state — providing voters another metric by which to judge their state leadership.
As the chart below demonstrates, any group spending less than $50,000 annually on lobbying would pay no tax, and one spending $200,000 would pay a tax of 7.5% — again, fairly close to the sales tax many Americans already pay. Higher rates would only affect those spending upwards of that.
There is no silver bullet to address all of the problems we have with money in politics, but taxing campaign contributions and lobbying expenditures should slow the rapid growth of political spending, while that which remains would cause far less harm if it were simultaneously allowing cash-strapped states to fund election-related programs, equipment and training.
To maximize this tax’s effectiveness, a second reform is likely necessary:
Closing the ‘primary purpose’ loophole.
Non-profits must be required to separate their core purpose/mission from all electioneering — basically any political activity beyond strict (i.e. no promoting a candidate or issue) voter registration or get-out-the-vote efforts.
The electioneering portion would be split off into its own entity and lose its social welfare status. Donors to this new entity would have no disclosure shield.
This would likely face a court challenge, but government can define what is and isn’t a non-profit. Much of the abuse today stems from its failure to do so.
At worst, the primary purpose threshold for non-profits could move closer to 90–95% than the current 51%.
Of course, big donors and special interests are unlikely to simply embrace these new taxes, which is why an accompanying strategy to force elected officials to do the right thing is essential. I will be unveiling that strategy in the weeks to come…most likely after the inauguration.
Until then, you can help by making people aware of this new approach for tackling the scourge of special interest money in politics. Please share this article on social media and/or discuss the idea with friends & family.
Join the fight for a national tax on campaign contributions and lobbying expenditures!
Originally published at https://www.equalityofopportunity.com.
