Transparent Election Initiative
States Can Keep Corporate Money Out of Politics
Each state creates its corporations, and it need not permit its own creations to consume it.
Ever since the Supreme Court's landmark decision in Citizens United v. Federal Election Commission in 2010, America has been told that only the Court or a constitutional amendment could stem corporate and dark money in politics. Not so.
IE Spending
Independent Expenditure
2008 -$143.66 Million
2024 -$4.21 Billion
2,800% Increase
Source: OpenSecrets.org
The Untapped Power of States
Citizens United held that lawmakers cannot regulate a corporation's right to spend independently in elections. But regulations are just one tool in the legislative toolbox. There is another extraordinarily powerful tool: every state's virtually unlimited authority to define the powers it grants its corporations.
Corporations have only the powers that states give them—no more. States stopped being choosy about the powers they granted to their corporations in the mid-1800s. But every single state retained the authority to be as choosy as they like.
State Authority
States can define what powers corporations have
Corporate Limitations
Corporations only have powers granted by states
Legal Foundation
Based on centuries of established law
What Is a Corporation?
Corporations are artificial entities created by law for the purpose of furthering certain economic goals. They're granted special rules relating to limited liability, perpetual life, and the accumulation, distribution, and taxation of assets.
As Chief Justice John Marshall wrote in 1819: "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it."
Artificial Entities
Corporations exist only through legal recognition and have no natural rights
Limited Powers
They possess only the powers granted by the state
State Creation
States determine which powers corporations have and can modify them
Rights vs. Powers: A Critical Distinction
The Supreme Court's corporate-speech jurisprudence has centered on the right of corporations to speak, not on their underlying power to do so. This distinction is crucial.
Humans are born with inherent powers and rights. Corporations are not. They have zero powers until a government grants them some. If a state were to no longer grant corporations the power to spend in politics, the right could no longer attach; there would be nothing to attach it to.
Humans
Born with inherent powers and rights
Corporations
Created with only the powers granted by law
State Authority
Can define and limit corporate powers
Legal Result
Rights can only attach to granted powers
State Corporation Laws
Corporations are creatures of state law. The Supreme Court wrote in 1979: "The first place one must look to determine the powers of corporate directors is in the relevant State's corporation law... it is state law which is the font of corporate directors' powers."
Every state charters corporations by issuing a "general corporate charter" allowing corporations to engage in all lawful acts. But this wasn't always the case - early American corporations had limited charters for specific purposes.
Founding Era
Corporations had specific, limited charters for particular purposes
Mid-1800s
States began adopting "general incorporation" laws with broader powers
Modern Era
Corporations granted broad powers but states retained authority to limit them
Present Opportunity
States can exercise their retained power to redefine corporate abilities
How States Can Act
Between their corporation statutes and constitutions, almost every state's law contains three provisions that provide the tools necessary to keep corporations out of elections:
1
Power to Alter or Revoke
Each state's laws clearly state that the state can alter or revoke its corporation law at any time, for any reason.
2
Universal Application
Every change in a state's corporation law applies to existing corporations as well as new ones.
3
Out-of-State Corporation Provisions
Out-of-State corporations can only exercise the powers granted to each state's corporations in that state.
The Supreme Court has said these provisions mean that every corporation in every state exists subject to the understanding that at any time, the state has the power to rewrite its charter by rewriting the law that underlies it.
Every state, whether via legislators or ballot initiatives, has the authority to amend its laws to no longer grant domestic and out-of-state corporations the power to spend in the state's local, state, and federal politics.
It starts with Montana - 'The Montana Plan'
Legal Questions and Challenges
While this approach would undoubtedly face constitutional challenges, it complies with Supreme Court caselaw. Unlike campaign finance regulations that restrict rights, this approach focuses on not granting powers in the first place.
Federalism
Corporation law is state law, protected by the Tenth Amendment
Separation of Powers
Courts can strike down laws but cannot add powers to corporations
Unconstitutional Conditions
Not applicable as incorporators surrender no rights
Interstate Commerce
Not violated when domestic and foreign corporations are treated equally