The writer graduated in July from Pompeu Fabra University in Barcelona with a master’s degree in political philosophy.
The injection of vast amounts of money into our electoral system is creating a climate in which the interests of the majority are overshadowed by those of a wealthy minority. Large electoral expenditures by affluent private groups can substantially raise the bar to entry for those with fewer resources. The resulting growth of inequality in political influence threatens the workings of a legitimate democracy that reflects the wishes of all citizens.
There is a simple way to level the playing field.
What if we taxed campaign expenditures? Such an approach could offer a viable alternative to the other campaign finance reform ideas commonly discussed, including contribution limits, public funding schemes such as the one recently passed by voters in Seattle and constitutional amendments.
We already know that taxation can influence activities such as tobacco and alcohol consumption. Why not apply the same incentive-based, corrective strategy to campaign spending? Under such a system, a political action committee or other advocacy organization’s expenditures could be made subject to a “campaign expenditure tax” if the group were partially or solely taking part in efforts to elect or defeat a candidate or ballot initiative.
This tax would be similar to a value-added tax or sales tax and be applicable to nearly all expenses made by politically active organizations, but how it was designed would matter greatly. To tamp down on overall spending, it could be made progressive, with rates set according to each organization’s total election expenses. Campaign spending under $1 million might be taxed at, say, 30 percent, while spending from $1 million to $10 million could be taxed at 60 percent and that over $10 million at 90 percent.
But this approach would not take account the number of donors to an organization, as two organizations spending the same amount would be taxed at the same rate even if one had a handful of donors and the other had several thousand.
A more intriguing method would be to apply the tax based on the number of donors. To foster equal recognition of all, each donor could be associated with tax-free campaign spending of up to $2,700, the maximum an individual may give directly to a candidate under federal election law. That is to say, an organization participating directly in an election could spend $2,700 tax-free for every donor it has, regardless how much he or she donated.
If an organization received donations from 1,000 individuals, it could spend $2.7 million tax-free, but any additional expenses would be taxable. I’d suggest a 100 percent rate for all expenses beyond the donor-based limit. Thus, an organization willing to buy a TV ad for $100,000 after it crossed its tax-free line would have to pay $200,000. To allow for ongoing spending, donor totals could be readjusted every week or so as a campaign progressed, and perhaps an initial $250,000 in expenses could be considered tax-free regardless of the number of donors.
Such a donor-based system would promote political equality among the citizenry by heavily taxing the most affluent organizations promoting the interests of a small set of wealthy people and groups, while incentivizing organizations to broaden their appeal to more sectors of society.