One way to encourage the small individual contributions that almost everyone wants to see more of in campaigns is to give taxpayers a tax credit for them. Current law does that: you can take up to 50 percent of contributions totaling $100, or a maximium of $50, as a credit against your federal income tax. No one claims this provision has reformed campaign finance, but it provides a useful incentive for small contributions.
Now this mild provision is in jeopardy. The House Ways and Means Committee, in its quest for revenue to make up for lower tax rates, voted to eliminate the campaign contribution tax credit from the tax bill; this would net some $1.5 billion over the next five years. And in the wee hours of the morning, the committee also rejected a Democratic Study Group proposal for a somewhat different, less expensive tax credit for contributions.
Today the DSG is asking the Democratic Caucus to request a rule that would make this one of the very few issues in the tax bill to come to a floor vote.
The arguments for the DSG bill are strong. It would allow a 100 percent tax credit on contributions totalling $100 for any taxpayer, beginning in 1987 -- this for contributions to candidates for Congress in the taxpayer's home state. Those restrictions, which would keep the cost of the proposal low, seem arbitrary. Why not also allow credits for contributions to presidential candidates, state campaigns, political parties or, for that matter, PACs? Still, the DSG proposal is better than no credit at all. It preserves the principle of a credit, increases the amount roughly in line with inflation, and provides an incentive for politicians to seek and citizens to make the relatively small contributions that should be the mainstay of campaign finance.
The arguments against the DSG proposal come from both sides: from those who see no need for reducing the candidates' current dependence on organized financial interests and from those who fear this admittedly modest measure destroys any small chance of achieving more comprehensive reform.
Our preference is to go one measured step at a time. Any comprehensive reform raises difficult issues and requires a balancing of competing values. The DSG measure, as compared to Ways and Means' total repeal of the tax credit, does nothing to impair disclosure, tends to increase the funds needed for effective political expression and seems likely to have few if any ancillary bad effects. It would be good if the Democrats would give the whole House a chance to vote on it.