We deserve a democracy where each of us is represented and has a voice — and a government that works for every American, not just the wealthy few. Limiting the amount and source of campaign contributions is one of the most common tactics for regulating money in politics. Common Cause New York advocates to limit the influence of dark money campaign contributions and end government spending that takes place in the shadows by closing the LLC loophole, requiring campaign contributors to disclose their employers, requiring disclosures of all lump-sum appropriation funds, and enacting much stronger restrictions on personal use of campaign funds.
Closing New York’s LLC Loophole
New York State law treats limited liability companies (LLCs) as individuals, as opposed to corporations, subject to the much higher contribution limit. This “loophole” allows companies to wield outsize influence, drowning out the voice of average voters.
An individual or an LLC can give:
- $60,800 to a statewide campaign per election cycle
- $16,800 to a State Senate candidate per election cycle
- $8,200 to an Assembly candidate per election cycle
In contrast, corporations can only contribute $5,000 overall to political candidates and committees in a calendar year. As a result, special interests can donate hundreds of thousands of dollars to individual candidates, in some cases over $1,000,000 annually to an individual gubernatorial candidate. The LLC loophole was a central issue in the corruption cases against Dean Skelos and Sheldon Silver who both accepted hundreds of thousands of dollars from New York City based Glenwood Management, in return for preferential treatment.
A 2016 Common Cause/NY analysis found that from 2005 through 2014, Glenwood Management contributed over $12.8 million to New York State candidates and committees. But, direct contributions made by the company itself, or through individuals such as CEO Leonard Litwin, made up only 10% of the spending overall. The contributions made by at least fifty (50) coordinated LLCs steadily increased from $1.1 million in 2008 to over $2.5 million in 2014. In 2014, direct contributions made by Glenwood Management and affiliated individuals accounted for less than 2% of Glenwood’s $2.6 million total giving.
This consistent increase over the past 10 years in LLC giving, with a concomitant diminution in direct giving, clearly illustrates how industries like real estate continue to consolidate power and buy influence in the Legislature. Policy agendas for important issues like the 421a tax abatement and New York City rent laws are being controlled by the industry they’re designed to regulate through publicly elected leaders dependent on its largesse.
The LLC Loophole figured in the corruption trial of former aide to Governor Cuomo, Joe Percoco as well.
These loopholes present a serious opportunity for corruption, further entrench a pay-to-play atmosphere, and must be restrained. We’re committed to keeping these practical contribution limits in place to ensure the voice of everyday New Yorkers aren’t drowned out by unlimited money in our elections.