Wednesday, January 30, 2008

Proposed Campaign Contribution Limits and Tax Law

Will the proposed campaign contribution limit proposed by J. Michael Schweder work? No. He apparently did not consider the tax law. According to Internal Revenue Service (IRS) Code Section 2503(b) in 2007, an individual can gift $12,000 or less to anyone and no gift tax filings need to be completed. Therefore, in order to circumvent any changes in campaign contribution limits, any individual could gift privately to the candidate any dollar amount $12,000 or less and the candidate could contribute to his or her own campaign. The aforementioned discussion is considered the "gift tax exclusion" regulations. In addition, the gift tax exclusion is adjusted every year for inflation. In 2006 the gift tax exclusion amount was $11,000.


BethlehemDem said...

Schweder's plan would offset the amount of personal contributions to a campaign by increasing the limit on contributions of the opponents. So if someone gave their own committee alot of money, then that person's opponents would have the maximum amount of a contribution raised.

Anyway, the campaign finance laws apply to candidates and candidates committee's. If a candidate took a contribution(or gift) they would be obligated to report it on the candidate's personal expense report, which is separate from the committee's report.

BethlehemDem said...

And I forgot to add that under Schweder's plan, candidates and their committees would be included in the limits.

BethlehemDem said...

I just read what I added earlier, and to make it clearer, it should read that contributions to candidates and their committees would fall under the proposed limits.

So even if someone gave money directly to the candidate, the candidate would still be bound by the proposed limits.

I wonder if someone could give a donation to both the candidate and the candidate's committee.

Bernie O'Hare said...

Young R,

With all due respect, your thinking is flawed. IRS regs have no control over campaign finance laws. If someone wants to give someone $, and it's going to be used in a political campaign, it has to be reported.

If your reasoning were correct, even the state election laws would be a joke. Elmer Gates could give Meg Holland a sum (under the limit) and she could claim it was a gift and not suject to campaign finance laws. That would not fly very long or high.

We need to get a grip on the vast sums of money being spent in local races. if these laws were in effect, they would have actually helped Meg Holland. One of my problems w/ DiGiacinto is he rec'd large contributions from multiple sources in NYC. That could not happen if Bethlehem had a campaign finance law.

I think you're right to question it and explore all the flaws. I commend you for doing so. But a good idea is a good idea, no matter where it comes from.