Author Topic: Citizens United, Political War Chests, and US Taxes  (Read 717 times)

SwordGuy

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Citizens United, Political War Chests, and US Taxes
« on: October 05, 2018, 08:51:53 PM »
I had an idea this evening and am hoping that people with the right expertise happen to (a) be in this community and (b) see this post and (c) supply factual info.

The Citizens United court case, as I understand it, struck down laws that restricted how much money people could contribute to political campaigns.  Money supplied for political purposes was considered "free speech", so laws limiting how much could be given to a candidate were set aside.


I've also read that politicians can (somehow) access money given to political campaigns and keep it for themselves.   I know that there are important limitations on that but have no idea what they are.


It occurred to me that if I became a political candidate, set up a campaign fund, and gave it my own money that it could grow tax free while it was in the fund because if it's free speech, it can't be taxed.    And since I put the money in in the first place, I should be able to take it back out without paying taxes on (at least) what I put in since I've already paid taxes on it.

One could argue that since it is speech, and one can take back one's words, one should be able to withdraw one's money, since that's the equivalent action.


So, for those of you with the relevant expertise, could this be made to work as a Roth IRA near-equivalent that wouldn't actually have upper contribution limits?

beltim

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #1 on: October 06, 2018, 01:17:05 AM »
I had an idea this evening and am hoping that people with the right expertise happen to (a) be in this community and (b) see this post and (c) supply factual info.

The Citizens United court case, as I understand it, struck down laws that restricted how much money people could contribute to political campaigns.  Money supplied for political purposes was considered "free speech", so laws limiting how much could be given to a candidate were set aside.

This is incorrect.  Citizens United struck down laws that regulated third party spending - that is, I can spend all I want on advertising to elect SwordGuy, as long as I don't coordinate with your campaign.  Citizens United did nothing to restrict donations directly to a campaign - those limits are still in effect.

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I've also read that politicians can (somehow) access money given to political campaigns and keep it for themselves.   I know that there are important limitations on that but have no idea what they are.

No, this is illegal.  See Duncan Hunter, a sitting US Congressman who has been indicted for illegal use of campaign funds: https://www.nytimes.com/2018/08/22/us/politics/duncan-hunter-indictment.html

Quote
It occurred to me that if I became a political candidate, set up a campaign fund, and gave it my own money that it could grow tax free while it was in the fund because if it's free speech, it can't be taxed.    And since I put the money in in the first place, I should be able to take it back out without paying taxes on (at least) what I put in since I've already paid taxes on it.

One could argue that since it is speech, and one can take back one's words, one should be able to withdraw one's money, since that's the equivalent action.


So, for those of you with the relevant expertise, could this be made to work as a Roth IRA near-equivalent that wouldn't actually have upper contribution limits?

Why do you think any gains would be tax free?

maizeman

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #2 on: October 06, 2018, 09:09:10 PM »
Campaigns for federal office (and state office in most states) personal use is a complete no go.  However, there are a small number of states where politicians running for state offices are allowed to use any money they raise for their campaigns for personal use. At least a couple of years ago Virginia was one of them.* Perhaps stories like the one below are where you heard about politicians using campaign funds for their regular day to day spending?

* https://www.usnews.com/news/best-states/virginia/articles/2018-01-31/push-to-ban-personal-use-of-campaign-funds-unlikely-to-pass

Michael in ABQ

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #3 on: October 06, 2018, 09:23:44 PM »
New Mexico's Secretary of State almost went to jail for using her campaign funds to fund a gambling habit. She had to resign and pay the money back.

SwordGuy

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #4 on: October 06, 2018, 09:35:51 PM »
Campaigns for federal office (and state office in most states) personal use is a complete no go.  However, there are a small number of states where politicians running for state offices are allowed to use any money they raise for their campaigns for personal use. At least a couple of years ago Virginia was one of them.* Perhaps stories like the one below are where you heard about politicians using campaign funds for their regular day to day spending?

* https://www.usnews.com/news/best-states/virginia/articles/2018-01-31/push-to-ban-personal-use-of-campaign-funds-unlikely-to-pass

I know that folks can go to jail if they don't follow the rules.   That's not in dispute.


But I had read an  occasional news item about a politician converting a campaign war chest to their own money -- with the context that it was legal.



maizeman

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #5 on: October 06, 2018, 09:39:49 PM »
Right, but my guess is that those stories might have been from state level candidates in places like Virginia where it is legal.

Michael in ABQ

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #6 on: October 07, 2018, 05:47:15 AM »
Campaigns for federal office (and state office in most states) personal use is a complete no go.  However, there are a small number of states where politicians running for state offices are allowed to use any money they raise for their campaigns for personal use. At least a couple of years ago Virginia was one of them.* Perhaps stories like the one below are where you heard about politicians using campaign funds for their regular day to day spending?

* https://www.usnews.com/news/best-states/virginia/articles/2018-01-31/push-to-ban-personal-use-of-campaign-funds-unlikely-to-pass

I know that folks can go to jail if they don't follow the rules.   That's not in dispute.


But I had read an  occasional news item about a politician converting a campaign war chest to their own money -- with the context that it was legal.

I believe there is some provision for personal use of remaining funds if a politician isn't running for office anymore. It's not practical to refund the money to each donor as it could repre funds from years earlier. I'm not sure how those remaining funds are disposed of on a state by state basis.

Telecaster

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #7 on: October 08, 2018, 12:00:48 AM »

I know that folks can go to jail if they don't follow the rules.   That's not in dispute.

But I had read an  occasional news item about a politician converting a campaign war chest to their own money -- with the context that it was legal.

Might be possible on a local level, but not Federal.  If a politician decides to retire, or otherwise folds their campaign, they can either return the contributions, or donate the contributions to another candidate, charities, or a PAC.  The PAC could be one that the candidate him/herself forms, and then could in theory draw a salary from the PAC and retain some control of the money that way. 

Another thing is that you are still subject to federal election limits to contributions to your own campaign.  You can loan yourself money.  But I'm sure there are rules about interest and reporting.

Although our government is pretty corrupt, I don't think it is quite corrupt enough for you to get away with what you are proposing.   At the very least you'd need a good lawyer.   

hoping2retire35

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #8 on: October 10, 2018, 06:33:21 AM »
I think you would also be charged with fraud if you didn't spend a sizeable amount of it on an actual campaign, in which case most of your gains would be lost if you did.


You are just musing or I am guessing you have a sizeable chunk of cash in taxable accounts and want them to grow without paying taxes? Why is this a problem?
You are married, right?
https://blog.taxact.com/long-term-capital-gains-tax/
that is $77,000 without paying taxes

SwordGuy

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Re: Citizens United, Political War Chests, and US Taxes
« Reply #9 on: October 10, 2018, 08:14:23 AM »
It was a thought experiment.

And I don't mind sticking it to the man on occasion, either.