Unconstitutional to Ban Corporate Contributions to Candidates (Even When Independent Expenditures Are Allowed)

So a district court held yesterday in United States v. Danielczyk (E.D. Va.). This is the opposite result from one reached by the Eighth Circuit ten days ago. (The district court discusses the district court decision that the Eighth Circuit affirmed, but not the Eighth Circuit decision itself.)

As I said when I posted about the Eighth Circuit decision, I think the ban on corporate contributions is indeed constitutional, even though I think Citizens United, which upheld corporations’ and unions’ right to engage in independent expenditures, is also right. I don’t think that corporate contributions to candidates by big businesses are likely to be particularly corrupting, among other things because (under Buckley v. Valeo) contributions to candidates by anyone — individual or corporation — can already be limited. Federal law, for instance, limits contributions to $2500 per election. IBM or the Service Employees International Union is not going to be able to materially influence a candidate by contributing $2500. If anything, corporate and union influence is much more likely to come from individual contributions by corporate employees and union members, which can indeed add up to much more money.

Rather, the problem with corporate contributions is that they provide an avenue for evading individual contribution limits; if I want to donate $25,000 to a candidate instead of the $2500 limit, I could set up nine corporations, and then donate myself and also have those corporations make similar donations. Few people would do that, but some people who want to be big political players might. Nor can this easily be dismissed as a supposed “sham” and be thus distinguished from “legitimate” corporate contributions. Say some pro-life or pro-choice advocate, for instance, sets up several advocacy groups, perhaps one per city or one per county; nothing wrong with that. But then the advocate, who may be the dominant force in the groups (as well as a major contributor), might easily be able to give money to all those groups, and then have those groups give money to a candidate. That might well be quite consistent with the groups’ institutional goals, and be hard to clearly identify as a “sham.” But nonetheless the contributor would be able to evade the contribution limits through this means; and given the constitutionality of the contribution limits, the government may reasonably prevent such evasion by banning corporate contributions. (I didn’t see any discussion of this issue in the Danielczyk opinion.)

This rationale does not, however, justify bans on corporate independent expenditures. First, the government is not allowed to limit the size of individual independent expenditures (as Buckley v. Valeo also held), so there’s no “prevent the evasion of individual expenditure limits” justification. And, second, a ban on independent expenditures would dramatically limit speech without leaving open ample alternative channels — a ban on contributions, on the other hand, does leave open the alternative channels of independent expenditures.

For more on why I generally support the constitutionality of contribution-expenditure distinction, see Part III of my my Freedom of Speech and Speech About Political Candidates: The Unintended Consequences of Three Proposals (2000). For more on the Danielczyk decision, see this post by Prof. Rick Hasen (Election Law Blog).