Paul L. Caron
Dean


Friday, December 10, 2010

Aprill & Hasen: Lobbypalooza

Ellen Aprill & Rick Hasen (both of Loyola-L.A.) have published Lobbypaloooza for The American Interest magazine (Jan.-Feb. 2011):

he Federal government’s first efforts to regulate and limit lobbying came in the form of two sets of tax rules. One set, dating from 1918, just a few years after ratification in 1913 of the 16th Amendment allowing an income tax, denies a business deduction for the costs of lobbying. The other set, dating from 1919, limits the amount of lobbying allowed for organizations exempt under section 501(c)(3), which entitles them to accept tax-deductible charitable contributions (the organizations we typically refer to as “charities”). By denying or limiting the deduction for funds used to lobby, these rules in effect made lobbying more expensive. A series of court cases have found no constitutional barriers to either set of rules, but neither set appears to have limited the steady growth of lobbying activities. The elasticity of demand for lobbying thus appears to be quite small: Clients have been more than willing to pay increased costs for benefits that they judge to be indispensable. ...

With charities as with businesses, the government over time has, with some exceptions, worked to tighten or at least clarify the limits on deducting amounts spent on lobbying. Such efforts, however, seem to have had little impact on the amount of lobbying undertaken by larger and well-advised organizations, although many argue that the uncertain reach of the “no substantial part” test deters smaller, local or less wealthy 501(c)(3) organizations from engaging in any lobbying. As a result, the law as currently written and understood mutes the voice of the poorer non-profits, just as higher costs for business lobbying disadvantages smaller, less well-capitalized businesses. ...

Over the past hundred years, attempts to limit lobbying through tax limitations and disclosure provisions have proved inadequate. Recent efforts focused on limiting interactions between government officials and lobbyists may work better, but after Citizens United they may not survive judicial scrutiny. We need to come up with new arguments for regulating lobbyists—arguments that this Supreme Court will accept in spite of its expansive view of the First Amendment. If they don’t, moneyed interests will have increased power not just over who gets elected, but what they do in office. If that scenario comes to pass, Madison’s smaller factions will have carried the day.

https://taxprof.typepad.com/taxprof_blog/2010/12/aprill-hasen-.html

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