Economic research

New economic research study sees no fiscal policy impact of 2010 ‘Citizens United’ ruling

A new study released by the National Bureau of Economic Research (NBER) finds that the Supreme Court’s 2010 Citizens United decision did not, contrary to repeated claims by Democrats and progressive activists, allow companies to buy favorable tax policies.

“Across all results, we find no statistically or economically significant effect of independent political contributions on tax outcomes. For most tax rates, we find that we are able to reject increases and decreases in taxes greater than 10-20%,” the study authors said.

“We situate this estimate in the context of the major tax changes that have taken place in general during the period studied; we are able to reject effects on tax changes that are larger than the average tax change implemented by states during the status quo,” the authors wrote.

“We also find no statistically significant effect of the Citizens United decision on the frequency or magnitude of discretionary tax breaks or other company-specific tax incentives. Finally, we find no statistically significant effect of increasing political contributions on overall tax revenue,” the authors said.

The authors of the analysis published earlier this month by the NBER include University of California, Berkeley economist Cailan Slattery, assistant professor of economics Alisa Tazhitdinova of the University of California, Santa Barbara, and economics doctoral candidate Sarah Robinson, also from the University of California, Santa Barbara. All three authors are NBER Fellows.

The study focused primarily on what happened to state-level tax policies in the wake of the Citizens United decision and the massive injection of corporate spending into campaign contributions to individual candidates. and in publicity for and against candidates and proposals. Half of the nation’s 50 states limited corporate campaign contributions when the Supreme Court’s decision was announced.

The authors cautioned, however, that “we cannot conclude that corporate political influence has no effect on state tax policy. While we do our best to account for various tax outcomes, we are unable to observe all tax-related changes occurring at all levels of government. Thus, companies may benefit from small discretionary tax reductions or other special tax provisions. Our results, however, suggest that these tax reliefs are of a relatively small magnitude, as we do not observe significant reductions in tax revenue.

In addition, the authors point out that “there are many ways for companies to support their favorite candidates and champion their preferred policies, from individual CEO and employee contributions to charitable contributions to charities preferred by politicians or lobbyists (see, for example, Fremeth et al., 2013; Bertrand et al., 2020; Kang, 2016).

“Therefore, another explanation for our results is that tax policy did not change after Citizens United, not because money has no effect, but because freelance contribution bans didn’t limit that corporate influence in the first place.

Daniel Mitchell, a libertarian economist and president of the Center for Freedom and Prosperity, agreed, telling The Epoch Times Aug. 22 that “you can read the results to say campaign contributions don’t matter. And I’m sure there’s some truth in that. But I suspect the results also reflect the fact that the companies have competing interests.

“Some want lower tax rates, some want special tax exemptions and some want real subsidies. Given the non-cohesive interests of the wider business community, I’m not surprised that removing the limits had no significant impact.

The NBER study follows the High Court’s decision in Dobbs v. Jackson Women’s Health Organization, in which judges ruled 6-3 that the 1973 Roe v Wade decision that legalized abortion with certain nationwide limitations was ill-decided and that the issue should instead be decided by voters acting through elected state legislatures.

In the wake of the Dobbs decision, constitutional law experts expect many additional social and economic issues now regulated at the federal level to be successfully challenged in federal courts by proponents of limited government who cite the 10th Amendment to the Constitution, which provides that “powers not delegated to United States by the Constitution, nor prohibited by it to the States, are respectively reserved to the States or to the people”.

Democrats and liberal activists have since 2010 spent hundreds of millions of dollars seeking a repeal of the ruling, either through legislation or through litigation in federal court.

Among the most notable such efforts in the current Congress is the “Democracy for All Amendment,” a constitutional amendment that would repeal the ruling by making it legal for states and local governments to ban corporate campaign spending. .

“Citizens United’s decision was a major mistake and a departure from the founding truth of our democracy, which is that political power must flow from the people,” said Rep. Jamie Raskin (D-Md), one original co-sponsors. a statement at the start of the 117th Congress in 2021.

“We have seen the damage it has wrought in the hundreds of millions of dollars of dark money poured wantonly into our political system by corporations without the consent or even knowledge of their shareholders. We need to reclaim our democracy for the people and this amendment puts us on the right track,” he added.

Similarly, Robert Weissman, president of Public Citizen, the progressive activist group founded by consumer advocate Ralph Nader, said in the same statement released by Raskin that the proposed amendment “units the American people: they are furious with a rigged political system that caters to the whims of Big Money rather than the needs and wants of ordinary people. The American people know that Citizens United embodies, perpetuates and locks down this rigged system. That is why, in overwhelming numbers, they are in favor of a constitutional amendment to overturn Citizens United and related rulings that create an outclass of a wealthy few and confine the rest of us to political serfdom.

At last count, the proposed constitutional amendment to repeal Citizens United’s decision has 174 House co-sponsors, including one Republican, incumbent Rep. John Katko of New York.

Scott Walter, president of the Capital Research Center (CRC), a conservative think tank specializing in tracking liberal and progressive “dark money” spending and activism, told The Epoch Times that “the left likes to assert that Citizens United profoundly changed American politics, but that is a lie. First, the total money involved is insignificant, a rounding error compared to regular political spending by parties and Political Action Committees (PAC ).

“The left-leaning OpenSecrets website calculated that in the 2020 election cycle, $1 billion in ‘dark money’ was involved versus $14.4 billion in regular political spending. Moreover, the left spends far more “black money” than the conservatives; for example, Biden’s campaign year was boosted by more than six times as much “dark money” as the Trump campaign.

“Yet the left is still crying wolf over Citizens United, even devoting entire groups to hysteria, such as End Citizens United PAC. And if you doubt that this rhetorical smokescreen masks raw partisanship, note that End Citizens United PAC spends every penny in the election supporting the Democratic Party,” Walter said.

Congress Correspondent

Follow

Congressional Correspondent for The Epoch Times.