Why Corporations Need to be Treated Differently

Why Corporations Need to be Treated Differently

Four reasons why corporations need to be treated differently, and the ban on direct corporate contributions to candidates in Massachusetts should stay.

Sign our statment in support of keeping the direct corporate contribution ban in Massachusetts!

This week, the Arizona-based Goldwater Institute filed a lawsuit on behalf of two Massachusetts businesses against the state Office of Campaign and Political Finance (OCPF). In it, they allege that our campaign finance law unfairly discriminates against corporations by banning their direct contributions to political candidates, while OCPF rules allow unions to donate up to $15,000 or 10% of their general funds. Their lawsuit thus seeks to overturn the corporate contribution ban. This is a fallacious comparison to make, however.

We agree at Common Cause that unions should have to play by the same rules and limits as other groups do in Massachusetts. To that end, their direct donations should be capped at $1000 a year, which is the same limit faced by any individual or association of individuals under current law. We do not agree, however, that this union issue means the corporate ban is unfair or should be lifted. Corporations are entirely different entities than unions or other groups and associations, and need to be treated as such.

There are good reasons 20 states and the federal government ban direct corporate contributions, some of which we detail in our full statement on the lawsuit. And here are four separate reasons for why direct corporate and union contributions should not be looked at the same way:

1) Corporations exist and are formed for the purpose of making money. Profit is their bottom line. Unions are organized to benefit their members, and have diverse goals based on their members’ interests. While a CEO may have personal political beliefs, their corporation itself is only a fiscal entity. Corporate interests are therefore about return on investments, whereas union interests reflect those of the individuals that comprise them.

2) Unions have democratic procedures that both request input on politics from members and also allow members to opt-out of having their dues used in political contributions. Corporations may have shareholders, but those shareholders, by contrast, have few opportunities to be informed of, and participate in, corporate decision making, including on political expenditures. Corporate contributions are thus not extensions of broad constituent interests the same way unions are.

3) Corporations have state-conferred privileges such as limited liability, which means the individuals running a corporation are not fully responsible for its failings or mistakes. Unincorporated groups do not have the same protections for their members. As a result, it is much harder to hold the people behind corporate political spending accountable for misdeeds.

4) Contributions limits work for unions and associations, but are ineffective for corporations. Corporations can subdivide endlessly, which would allow companies to skirt contribution limits by spinning off new shell subsidiaries that haven’t yet maxed out their donations. Unions do not have this ability. They can establish new locals, but these must go through elaborate organizing processes that take a long time and are highly regulated. A total ban on corporate contributions is thus the only effective way to regulate corporate influence in politics even while limits work for other kinds of organizations and individuals.

Common Cause Massachusetts will intervene in the Goldwater case when it is possible to do so, and will support the current ban on corporate contributions.  However, we will also side with the Goldwater Institute in its claim that the union exemption to the $1000 contribution limit is unfair.  All groups, whether unions, the NRA, or the Sierra Club, should be subject to the same $1000 limit. We know there is already too much money in our political system. We don’t need more!

If you agree, sign on to our statement here!

See More: Money & Influence