Legislative Options After Citizens United v. FEC: Constitutional and Legal Issues
nonetheless, be argued that a more rigorous analysis should apply when, as here, the tax is related to the exercise of a constitutional right. Any analysis of whether Congress could enact an excise tax on corporate political expenditures is severely limited by the fact that it does not appear there is case law analyzing the constitutionality of a similar tax. Even so, it appears an excise tax could potentially raise significant constitutional concerns since, depending on the particulars of a specific proposal, it could be characterized as a penalty on protected speech. 153
The Supreme Court has upheld provisions that provide disfavorable tax treatment to a taxpayer’s campaign activities under the rationale that there is no requirement for the federal government to subsidize the constitutional rights of taxpayers. In Cammarano v. United States,154 the Court upheld the validity of a tax regulation that disallowed a business deduction for lobbying expenditures. The taxpayers had been denied a deduction for amounts paid to a professional organization to lobby against a state initiative that would have had dire consequences for their business. They argued the disallowance violated the First Amendment, relying on a previous case, Speiser v. Randall.155 In Speiser, the Court had struck down a state property tax exemption that required taxpayers take a loyalty oath on the grounds that the state’s tax administration procedures did not afford adequate due process. In striking down the provision that was clearly “aimed at the suppression of dangerous ideas,” the Court emphasized its chilling effect on the proscribed speech and equated it to a fine for engaging in that type of speech. 156
In Cammarano, the Court rejected the claim that Speiser was controlling, reasoning that the nondiscriminatory disallowance of a deduction for lobbying expenditures was different because, unlike the provision in Speiser, it was not intended to suppress dangerous ideas.157 Instead, the Court explained, the taxpayers “are not being denied a tax deduction because they engage in constitutionally protected activities, but are simply being required to pay for those activities entirely out of their own pockets, as everyone else engaging in similar activities is required to do under” the tax laws.158 The Court further explained that the disallowance “express[ed] a determination by Congress that since purchased publicity can influence the fate of legislation which will affect, directly or indirectly, all in the community, everyone in the community should stand on the same footing as regards its purchase so far as the Treasury of the United States is
In a subsequent case, Regan v. Taxation With Representation of Washington,160
addressed a similar issue in upholding the federal law that limits the lobbying of § 501(c)(3) organizations to “no substantial part” of their activities. The Court rejected the argument that the
153 See, e.g., Grosjean v. American Press Co., 297 U.S. 233, 250-51 (1936) (striking down a state tax that applied only to large newspapers, because “in the light of its history and of its present setting, it is seen to be a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guaranties” and has “the plain purpose of penalizing the publishers and curtailing the circulation of a selected group of newspapers”).
358 U.S. 498 (1959).
357 U.S. 513 (1958).
156 Id. at 519 (internal quotations omitted).
See id. at 513.
461 U.S. 540 (1983).
Congressional Research Service