Changing the Rules: Independent Expenditures and Public Policy in the US States

• In Event: What Do Rich People Want?

Abstract

Prior to 2010, twenty-three U.S. states had bans on independent political expenditures by corporations. The Supreme Court’s 2010 Citizens United decision forced these states to drop these spending restrictions. We utilize this exogenous shock to assess the impact that outside campaign spending has on state tax policies. Lacking parallel trends pre-treatment, we rely on a generalized synthetic control method (as proposed by Xu 2017) to impute counterfactuals for each treated state using control group information to estimate the effect of the policy change. We find that after Citizen’s United, states that had previously banned outside spending cut corporate tax rates significantly more than those without a prior ban. We also find that the impact of the decision was similar in states with low and high levels of electoral competition but that the largest impact was found in states with weak Democratic majorities prior to Citizen’s United. In order to test whether the effect of Citizen’s United is a pro-corporate or, more broadly, a pro-conservative shift in policy, we perform a series of placebo tests on changes in state policies regarding free speech and abortion rights, and find no such effect. These results suggest that eliminating the ban on corporate campaign expenditures has moved state policy in a more pro-corporate direction.

Authors

• Martin Gilens, UCLA Department of Public Policy

• Shawn Thomas Patterson

• Pavielle Haines, University of Denver