Taxpayer financing of campaigns

North Carolina has a public (i.e., taxpayer) campaign financing system for appellate court judges and for three Council of State positions: Auditor, Commissioner of Insurance, and Superintendent of Public Instruction. Not only does this campaign finance system lack public support, but also it is almost certainly unconstitutional.

Under this system, candidates in those races who agree to forego raising money for the general election can receive a large lump-sum payment for their campaigns from the state. The system is set up to equalize funding between candidates. If a traditional candidate (a candidate who has opted not to receive taxpayer funding) spends, for example, $5,000 beyond the threshold amount, the state would automatically award the subsidized candidate $5,000 in additional funds called matching funds.

A subsidized candidate will receive matching funds equal to the sum of the money spent by a traditional candidate opposing him in the race and by any independent groups supporting the traditional candidate. Such a setup creates the potential for absurd results, as illustrated in the graph on the next page.

Taxpayer-financed campaign systems chill free speech. Because of their matching funds, they punish traditional candidates for spending money on their campaigns and cause them to seek to avoid spending. For the same reason, they chill the speech of independent groups who support the traditional candidate: they do not want to harm their candidates by spending money and thereby triggering more money to his opponent.

Citizens should not be forced to pay tax dollars for the private benefit of politicians. It is political welfare, plain and simple. It is also an incumbency protection scheme — the equalization of funds benefits incumbents who have built-in advantages (e.g., name recognition).

It also is unethical to force citizens to support candidates and speech that they oppose.

In Davis v. FEC (2008), the United States Supreme Cour held that punishing a self-financed congressional candidate for spending beyond a threshold amount of money was unconstitutional. The implication of Davis is that taxpayer financing systems are highly likely to be ruled unconstitutional.

Key Facts

Recommendations

  1. Repeal existing taxpayer systems. Taxpayer financing systems are almost certainly unconstitutional. As a matter both of law and of policy, the legislature should repeal the current taxpayer financing systems.
  2. Oppose any expansion of the taxpayer-financed campaign system. Future proposals for new taxpayer financing systems are likely, but they should be strongly opposed.


Analyst: Daren Bakst, J.D., LL.M.
Director of Legal and Regulatory Studies
919-828-3876 • dbakst@johnlocke.org