New Economic Research Study Sees No Tax Policy Effect From 2010 ‘Citizens United’ Decision

New Economic Research Study Sees No Tax Policy Effect From 2010 ‘Citizens United’ Decision
Demonstrators march at a rally against the Supreme Court's 2010 decision in favor of Citizens United, in Lafayette Park in Washington, on Jan. 21, 2015. (NICHOLAS KAMM/AFP via Getty Images)
Mark Tapscott
The 2010 Citizens United Supreme Court decision didn’t, contrary to repeated claims by Democrats and progressive activists, enable corporations to buy favorable tax policies, according to a study published by the National Bureau of Economic Research (NBER).

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

“We place this estimate in the context of the large tax changes occurring in general during the studied period; we are able to reject effects on tax changes that are larger in magnitude than the average tax change implemented by states during business as usual.

“We also find no statistically significant effect of the Citizens United ruling on the frequency or magnitude of discretionary tax breaks or other firm-specific tax incentives. Finally, we find no statistically significant effect of the increased political contributions on tax revenues overall.”

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

The study focuses primarily on what happened on tax policies at the state level following the Citizens United decision and the massive infusion of corporate spending on campaign contributions to individual candidates and on advertising for and against candidates and proposals. Half of the nation’s 50 states limited campaign contributions by corporations when the Supreme Court decision was announced.

“We cannot conclude that corporate political influence has no effect on state tax policy,” the authors cautioned. “While we do our best to consider various tax outcomes, we are not able to observe all tax-related changes that occur at all levels of government.

“Thus, corporations may benefit through small discretionary reductions in taxes or other special tax provisions. Our results do suggest, however, that any such tax breaks are relatively small in magnitude, since we do not observe large reductions in tax revenue.”

In addition, the authors point out that “there are many ways for corporations to support their favored candidates and advocate for their favored policies, whether it be CEO and employee individual contributions, charitable contributions to politicians’ favored charities, or lobbying.”

“Therefore, an alternative explanation for our results is that tax policy did not change after Citizens Unitednot because money has no effect, but because the independent contribution bans did not limit such corporate influence in the first place,” they write.
Daniel Mitchell, a libertarian economist and chairman of the Center for Freedom and Prosperity, agreed.

“One can read the results to say that campaign contributions don’t matter,” he told The Epoch Times on Aug. 22. “And I’m sure there’s some truth to that. But I suspect the findings also are a reflection of the fact that companies have divergent interests.

“Some want lower tax rates, some want special tax exemptions, and some want actual handouts. Given the non-cohesive interests of the broader business community, I’m not surprised that removing limits had no meaningful impact.”

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

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

Democrats and liberal activists have since 2010 spent hundreds of millions of dollars seeking repeal of the decision, either by legislative means or through federal court litigation.

Among the most notable of such efforts in the current Congress is “The Democracy for All Amendment,” a constitutional amendment that would repeal the decision by making it legal for states and local governments to ban campaign spending by corporations.
“The Citizens United decision was a major error and a departure from the founding truth of our democracy, that political power must flow from the people,” Rep. Jamie Raskin (D-Md.), one of the original co-sponsors, said in a statement at the outset of the 117th Congress in 2021.

“We have seen the damage it has caused in the hundreds of millions of dollars of dark money pouring unaccountably into our political system from corporations without the consent or even knowledge of their shareholders. We must reclaim our democracy for the people and this amendment puts us on the path.”

Similarly, Robert Weissman, president of Public Citizen, the progressive activist group founded by consumer advocate Ralph Nader, said in the same statement issued by Raskin that the proposed amendment “unites the American people: They are furious about a rigged political system that responds to the whims of Big Money rather than the needs and desires of regular people. The American people know that Citizens United embodies, perpetuates, and locks in that rigged system.

“That’s why, by overwhelming numbers, they favor a constitutional amendment to overturn Citizens United and related decisions that create an overclass of the wealthy few and consign the rest of us to political serfdom.”

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

“The left loves to claim Citizens United profoundly changed American politics, but it’s a lie,” Scott Walter, president of the Capital Research Center, a conservative think tank that specializes in tracking liberal and progressive “dark money” spending and activism, told The Epoch Times. “First, the total money involved is trifling, a rounding error to regular political spending by parties and Political Action Committees (PACs).

“The left-leaning OpenSecrets website calculated that in the 2020 election cycle, $1 billion of ‘dark money’ was involved vs. $14.4 billion of regular political spending. Plus, the left spends far more ‘dark money’ than conservatives; for instance, Biden’s campaign year was boosted by more than six times as much ‘dark money’ as the Trump campaign.
“Yet the left still cries wolf over Citizens United, even devoting entire groups to the hysteria, such as End Citizens United PAC. And if you doubt this rhetorical smokescreen masks raw partisanship, note that End Citizens United PAC spends every penny in elections to support the Democratic Party.”
Mark Tapscott is an award-winning investigative editor and reporter who covers Congress, national politics, and policy for The Epoch Times. Mark was admitted to the National Freedom of Information Act (FOIA) Hall of Fame in 2006 and he was named Journalist of the Year by CPAC in 2008. He was a consulting editor on the Colorado Springs Gazette’s Pulitzer Prize-winning series “Other Than Honorable” in 2014.