Reactions to Proposition 13, Initiative and Referendum PART THREE
|January 8, 2005||Posted by Staff under Archive, Progress Report, The Progress Report|
Initiative and Referendum
Reactions to Proposition 13
Twenty years ago, on June 6, 1978, Proposition 13 passed in California. The measure not only limited taxes for land speculators and homeowners, but also touched off nationwide debate on citizen initiatives. As The Texas Observer put it, “in certain quarters, the measure’s blunderbuss attack on the property tax system is seen as a sure sign that the initiative procedure lends itself to abuse by a distempered electorate.”
This is the third of three articles in a row where The Progress Report prints reactions to Proposition 13, each written just days after its original passage.
Corporations sense the danger
By John S. Shockley
Grassroots citizens’ groups aren’t the only ones who have figured out that they can use the initiative process to pry popular measures out of the dusty pigeonholes to which legislators and lobbyists consign them: corporations have sensed the danger, and they’re spending unprecedented sums to defeat measures they consider to be anti-business. In 1976, for example, nuclear safety laws were on the ballot in six states. Proponents were able to spend a combined total of roughly $1.75 million; corporations broke all-time spending records to oppose the initiatives, shelling out $11 million to defeat all six proposals.
Citizens’ organizations also placed on four 1976 state ballots propositions that would have banned no-deposit, no-return bottles and cans. Backers of these conservation measures managed to spend just over $200,000, but beverage and canning manufacturers amassed a war chest of over $3 million to defeat them. The corporations succeeded in two of the four states.
These ten nuclear safety and returnable bottle bills amounted to less than one-fourth of all initiatives voted on in 1976, yet business interests spent almost $15 million opposing them. If you recall that Gerald Ford and Jimmy Carter had only $20 million apiece to spend on their fall campaigns, you’ll have some sense of the massive proportions corporate anti-initiative spending reached.
To counter the corrosive impact of this deluge of business dollars on the initiative process, a number of states passed laws limiting or prohibiting the use of corporate funds in initiative campaigns. But on April 26 of this year, the Supreme Court overturned these laws in First National Book of Boston v. Bellotti. Massachusetts had tried merely to prevent corporations from contributing to initiative campaigns in which they were not “materially affected;” however, a five-man majority on the court struck even this measure down, ruling that states could not restrict the right of corporations to spend as much as they please on whatever initiatives they want to support or oppose. (Corporations, however, are still prohibited from giving directly to candidates.)
The majority relied on the hoary notion that corporations, although they are state-sanctioned creatures of legal artifice, nonetheless have the constitutional status of “persons” entitled to express their political preferences by spending money for or against initiative measures. In other words, Justice Lewis Powell ruled that corporations have a First Amendment right of free speech-that is, their money is free to talk. Justice Byron White and others dissented in vain that “The State need not permit its own creation [the modern corporation] to consume it.”
Corporations are likely to be even more active in the initiative process now that the Supreme Court has given a constitutional imprimatur to their campaign spending. There’s not much ordinary people can do about it, but a move is underway in Congress to eliminate one particularly offensive feature of this sorry situation. It turns out, you see, that taxpayers have been footing the bill for all these record-breaking corporate political expenditures. Nearly all corporations have been claiming them as business expenses, even though the law clearly says that money spent on grassroots corporate lobbying (which is what political campaigning on initiatives by corporations is all about) is not deductible. The Internal Revenue Service supposedly enforces the tax code, but the IRS has been delaying and obfuscating on the matter, telling congressional investigators that corporate tax returns are “confidential.” However, Rep. Ben Rosenthal’s government operations subcommittee, which oversees the IRS, has assembled evidence that corporations and the taxmen have together been violating this provision of the Internal Revenue Code.
The IRS may eventually be compelled to enforce its own laws, so that ordinary citizens won’t have to support all this business politicking with their tax dollars. But corporations will still have plenty to spend, when initiatives address important questions that politicians are avoiding, to make sure that their viewpoint triumphs. To cite another 1976 example, what better investment could American Metals Corporation (AMAX) have made than to spend nearly $250,000 to defeat a Colorado tax initiative that would have cost them several million a year in increased taxes?
Voters should, therefore, think twice before they decide the initiative process is the best method of challenging the powerful and the privileged in our society, or the best way to break up legislative logjams. Corporations are ready, willing and able–and for the time being, constitutionally entitled–to spend whatever it takes to insure that the initiative process does not become a tool for reforming the corporate state.
What’s your opinion on citizen initiatives? Tell The Progress Report what you think!