Blog Posts > A State Tax Credit for Democracy: Citizens Unite!
March 4, 2015

A State Tax Credit for Democracy: Citizens Unite!

This evening the State Senate passed a bill that would make significant changes to our state’s campaign election laws by increasing the amount of money people can contribute to political campaigns. Under Senate Bill 541, the cap for campaign individual contributions would increase from $1,000 to $2,700 per election cycle, matching the amount that federal candidates receive in elections. The bill would also require organizations that give over $1,000 in campaign disbursements to be included in an online searchable database run by the Secretary of State’s Office.

While increasing transparency in the campaign election process is a positive step forward to combating the Citizens United decision that has opened up the floodgates for large, wealthy campaign donations, policymakers could also consider other avenues for combating the stranglehold of money on our democracy. One such idea would be to make it easier for everyday people to contribute to campaigns by giving them a state tax credit. This is exactly what Oregon does (and several other states to a lesser extent).

The Oregon Political Tax Credit, enacted in 1969, gives tax filers a non-refundable credit of up to $100 ($50 per person) who donate to a political party, candidate for office, or political action committee at all levels of government. Beginning in 2014, the tax credit is limited to single adults with incomes under $100,000 and joint filers with income under $200,000. According to the Oregon Department of Revenue, approximately 98,000 people claimed the credit in 2010 for a price tag of about $6.3 million, with the average credit being $66 per tax filer.  The share of Oregon taxpayers using the credit has ranged from 3.4 percent to 7.8 percent. 

The goal of the Oregon Political Tax Credit is to increase participation and clout in elections among everyday voters. In 2004, the US Public Interest Research Group (PIRG) put forth a similar proposal for federal tax credit based on Oregon’s Political Tax Credit. In its report, PIRG highlighted that a federal tax credit existed from 1971 to 1986 and received strong bi-partisan support. There has also been a renewed push at the federal level to pass similar legislation to create a $25 refundable My Voice tax credit to help spur small-dollar contributions to candidates for Congressional office. (A recent report by the progressive think tank DEMOS outlines several other proposals, along with the My Voice tax credit, that provide other incentives to bring more small donors into the political process.)

For relatively little money, West Virginia could design a similar My Voice tax credit (perhaps calling it the Citizens United Tax Credit). According to the IRS, in 2012 there were 788,490 tax filers in West Virginia. If we use this number as our base for 2016 and assume that five percent of tax filers use the credit – which would be on the very high end since the credit would be brand new – approximately 39,000 tax filers would use it. At an average credit of $66, this would amount to only about $2.5 million, even less if West Virginia adopted similar income caps as Oregon. West Virginia could also make the tax credit refundable, so more low-income people could participate. To pay for the tax credit, West Virginia could repeal a number of existing ineffective tax credits or just make it a priority by including in the state budget.

While adopting such a credit would not solve all of the problems associated with wealthy donors monopolizing the political process and public policy, it could be a great tool for grassroots campaigns that want to include more people into the political process in the post-Citizens United world. Citizens Unite!


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