Pa. Bill Could Curb Corporate Political Spending

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If corporations are going to spend money lobbying government and making campaign contributions, Eddie Pashinski wants to make sure they do so with the consent of their shareholders.

Pashinski, a Luzerne County Democrat in the Pennsylvania House, said this week he will soon introduce a bill requiring shareholder approval of corporate political expenses. The bill, based on similar legislation in Maryland, will bring “fairness and transparency to our system of campaign finance,” Pashinski said in a written memo.

His proposal comes at the same time as a “paycheck protection act” works it’s way through the Pennsylvania Legislature. That bill, which appears to have Republican support in both chambers, would make it difficult for public sector unions — unions for workers in local and state government jobs — to use employee dues for politics, by preventing state government from collecting political money on unions’ behalf.

“It protects members from being forced through the union to fund political candidates or causes they don’t support,” the bill’s original sponsor, state Sen. John Eichelberger, a Republican, told Watchdog.org. (It’s expected Gov. Tom Wolf would veto the bill.)

Similarly, the U.S. Supreme Court is also hearing a case that might lead to a ruling that ends the practice of public unions using member fees for political purposes; the practice might violate the First Amendment rights of members who disagree with the union’s political stances. The New York Times reports that lawsuit has led to growing talk about holding corporations to a similar standard.

Which, as it happens, is what Pashinski’s proposal would do.

“The corporation must … fairly represent the preferences of the majority of stockholders,” Pashinski wrote. “If a corporation fails to do so, an affected shareholder may bring a civil action against the directors of the corporation to recover the amount of the election spending in question.”

Read Pashinksi’s full memo below:

Posted: February 2, 2016 04:08 PM
From: Representative Eddie Pashinski
To: All House members
Subject: Legislation Requiring Shareholder Approval for Corporate Election Spending

In the near future, I plan to introduce legislation requiring shareholder approval for corporate campaign contributions and independent expenditures. This legislation will be based on a similar bill being discussed in Maryland.

As you may know, the 2010 Supreme Court decision Citizens United v. Federal Election Commission ruled that corporations can spend unlimited amounts of money on independent expenditures calling for the election or defeat of political candidates. This decision was heavily based on the reasoning that this type of corporate election spending is protected political speech under the First Amendment, on the grounds that a corporation is speaking on behalf of their shareholders. However, these same corporations have no process for assessing what their shareholders actually want or what their political preferences actually are, which calls into question the basis of this ruling.

To correct for this flaw, my legislation will prohibit corporations who are doing business in Pennsylvania from making a campaign contribution or independent expenditure unless the shareholders have been notified of and have been given the opportunity to vote on the proposed election spending. The corporation must then fairly represent the preferences of the majority of stockholders. If a corporation fails to do so, an affected shareholder may bring a civil action against the directors of the corporation to recover the amount of the election spending in question.

Please join me in co-sponsoring this important piece of legislation to bring fairness and transparency to our system of campaign finance.