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True or False: Money Is the Root Of Everything That’s Wrong In Politics

Thursday, September 23, 2010

On the Brian Lehrer Show, Friday September 24th, there was a discussion of the LLC loophole, and producer Jody Avirgan established an LLC live, on-air! Listen:

When you have millionaires at war with fundraisers in an election season, with just a little scratching, money starts to come out of the woodwork. WNYC's been covering a gaping loophole in New York's campaign finance regulations--Limited Liability Companies, or LLCs.

In brief, unlike in most states, LLCs in New York are considered "individuals," and are thereby allowed to make campaign contributions up to the individual's limit.

It just so happens, New York has the HIGHEST individual campaign contribution limit of any state that imposes limits: $150,000.

What's funny is that the federal government closed the LLC loophole for campaigns for federal office--it considers LLCs corporations now--just like the IRS does. But New York never changed its law to reflect that decision.

Corporations in New York are only allowed to contribute up to $5,000 to candidates running for state office. So basically, the easiest and quickest way to funnel a ton of money into a New York candidate's campaign is to set up a string of LLCs and have them all make $150,000 contributions.

It just so happens, it's REALLY EASY to establish a LLC in New York.

It's A Free Country's Jody Avirgan sets up an LLC while talking with Brian Lehrer, Bob Hennelly, and The Brennan Center's Ciara Torres-Spelliscy.

You just need to provide $200 and four simple pieces of information: the name of the person filing the LLC, a mailing address, the county in which the LLC will be located, and a catchy name for your new company. Here's what the form looks like. And if that's too hard, you can apply online and have your LLC established within two hours:

Regardless of the LLC loophole, each state in the union has different limitations on the amount of money corporations and individuals can contribute to state political campaigns. It's all over the map. A few examples culled from the National Conference of State Legislatures report on state limits on contributions to candidates:

  • In Alabama, individuals can contribute an unlimited amount to candidates, but corporations can only give up to $500 per candidate per election (primary and general are considered different elections).
  • In Wisconsin, individuals can contribute up to $10,000 to a statewide candidate, $1,000 to a Senate candidate, and $500 to a House candidate...but corporations can give NOTHING to candidates.
  • In Florida, individuals can contribute $500 per candidate per election (primary and general are considered different elections), and corporations have the same limitation.
  • In Oregon, Missouri, Utah and Virginia there are no limitations on individual or corporate contributing--it's UNLIMITED.
  • In New York, maximum contributions by individuals are limited to $150,000 in aggregate, but corporations can only contribute up to $5,000 in aggregate.

Campaign finance laws are different for federal races. But this year's Citizens United ruling removing restrictions on the amount of money corporations and unions can spend on political ads changes the scenario...and widens the money river's mouth.

Does this matter? How does money change elections? Write your comments below.

Guests:

Jody Avirgan

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Comments [14]

Steve from NYC

@Mark from Mount Vernon Good point about George Soros but unlike the Koch brothers, Soros has a lot more transparency in his donations and foundations from what I understand.

Sep. 24 2010 12:24 PM
Mark from Mount Vernon

I just tuned and have only heard you talk about Conservatives. Did you tell listeners the names of groups George Soros has funded?

Sep. 24 2010 11:58 AM
Vicki Richman from Sugar Hill, Harlem

The historic principle of free speech -- not necessarily modern law -- protects anonymous, unattributed, or pseudonymous speech, as well as the words and content.

Sep. 24 2010 11:49 AM
Matt

I think the show could almost be called "do corn, oil & health care" determine politics, since those seem to be the dominant lobbies.

But that aside, I think money determines politics in so far as it can stay under the radar. Once a line is crossed, like say, when the whole economy collapses because of bad mortgages, and big bank bonuses and what not, anger & backlash start becoming more of a force.

Sep. 24 2010 11:48 AM

why does the law journal get more money than the state does??

Sep. 24 2010 11:37 AM
Billy Gray from Greenpoint

I don't want to hear why it's hard for them to make this reform, I want to know who in the legislature stands opposed.

Sep. 24 2010 11:32 AM
andrew from PA

in PA you spend $125 and no need to publish ads to establish LLC

Sep. 24 2010 11:28 AM
Cory

Set up your LLC in a small rural county in New York and the advertisements will cost practically nothing.

Sep. 24 2010 11:28 AM
Ben from nyc

I thought it was pretty expensive to publish in ny county (ad rates)...

Sep. 24 2010 11:25 AM
donna from brooklyn

i think bob is incorrect about the tax implications. yes, you can save $200 if you set up your llc in nevada but if you live in ny you will still pay ny income taxes on the llc's income

2. the information about who controls the llc may not be available online but you can get copies of the llc certif filed to create the llc from the secretary of state

Sep. 24 2010 11:23 AM
Darrell from Manhattan

Under Article 14 of the New York State Election law the $150,000 is a yearly limit to all candidates!!! Each office has its own limit, for example State Assembly maximum is $3800. The LLC problem is real, but you are not accurately stating the law. You can't give $150,000 to one candidate.

Sep. 24 2010 11:22 AM
Henry from NYC

Don't forget that your NY LLC won't have protection until you pay to publish it in two newspapers.

According to the publication requirement the clerk of the court of the county tells you in which newspapers you have to publish your notice and you must pay to publish that notice then you have to register proof of publication with the state.

http://www.ehow.com/list_6805132_llc-publication-requirements.html

Sep. 24 2010 11:21 AM
Stephen from manhattan

I was under the impression that to establish an LLC in NY, you have to publish an ad with your intent to do business in NY. Is that true?

Sep. 24 2010 11:16 AM
Liam from East Elmhurst

What about a landlord who makes his/her property an LLC when they know they will be in-debt upon transfer of the property to them?

Sep. 24 2010 11:11 AM

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