HELENA – If corporations want to be “people” – with the free speech rights to influence elections – they ought to be taxed like regular people, a Democratic state representative said here Friday.
Lawmakers should “close some of the tax loopholes,” said Rep. Kendall Van Dyk, D-Billings.
Van Dyk’s comments came as part of a panel discussion sponsored by the Montana Conservation Voters about a new legal challenge to the state’s century-old ban on corporate spending in state and local political races.
The law, which was passed with almost three-quarters of the vote in a 1912 citizens initiative, had never been challenged, said Montana state solicitor Anthony Johnstone, who was also on the panel.
Then, on Jan. 21, the U.S. Supreme Court ruled that a federal ban on corporate expenditures violated the free speech rights of corporations, a ruling that put in jeopardy many similar state bans.
And on Monday, Western Tradition Partnerships, a conservative political group, and a Bozeman painting company, sued the state over Montana’s prohibition. The case is pending before Helena District Judge Jeffrey Sherlock.
Johnstone said the law was passed during an era when mining company spending in Montana’s political races “suffocated the public sphere,” and in which company money was found in races at almost every level, particularly at the legislative level.
In the 1894 election over whether to make Helena or Anaconda the permanent seat of state government, mining companies spent the equivalent of $50 million in today’s money, he said.
Now, said Denise Roth Barber, of the National Institute on Money in State Politics, a Helena-based nonpartisan and nonprofit group that amasses a database of political spending in all 50 states, about 76 percent of all the money Montana candidates raise comes from individuals, not corporations.
“That’s one of the highest (rates) the country,” she said. “It’s pretty impressive.”
Montana law allows businesses to spend without limit on ballot initiatives. In those campaigns, Roth-Barber said, corporate money makes up about 84 percent of money spent.
Montana law does not forbid corporations from spending money, Johnstone said. But they must form a political action committee (PAC) and spend money that they raise voluntarily from employees for the purposes of influencing an election. They cannot spend money they raise in the marketplace from consumers.
Montana law also limits the amount of money individuals may donate to $160 on legislative races. Consequently, Roth Barber said, the state has some of the least expensive campaigns in the nation.
The Western Tradition Partnership suit charges that Montana’s law violates the First Amendment rights of corporations, and treats corporations differently from individuals, unincorporated businesses, unions or the media.
Van Dyk implied that corporations and individuals are already treated differently under the law. Namely, individuals pay a much greater share of their income in taxes than corporations do.
He also said there may be other ways of putting boundaries around the power of corporations to spend. For example, at the federal level, the law might be changed to require a majority of shareholders to approve corporate spending or to require the CEO of a company to be identified at the end of a television ad, the way federal candidates are now required to do.
As a lawmaker, Van Dyk said he worried about the power corporations would wield over legislators if they could spend unlimited amounts on legislative races.
“Montana is still a democracy,” he said.
Donny Ferguson, a spokesman for Western Tradition Partnership, could not be reached for comment for this story. However, in a March 8 press release announcing the lawsuit, Ferguson compared the free speech rights of people who form corporations to the freedom of religion rights of people congregate at church.
“You do not lose your right to political expression when you assemble with others under a corporation,” he said.