Report:

Executive Summary

The presence of corporate money in California politics is one of the biggest challenges facing our democracy. The federal government has long realized that corporations, as fundamentally economic institutions, have no place in the political process. Corporate contributions to federal candidates were banned in 1907. Since then, 21 states (Alaska, Arizona, Connecticut, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Montana, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, West Virginia, Wisconsin, and Wyoming) have joined the federal government in this judgment. Unfortunately, California has not yet done so, and continues to allow direct corporate contributions to candidates and parties.

Examining the legislative races in the 2000 election cycle reveals how significant the problem of corporate influence has become in California politics. It is related to another problem that plagues our electoral system: the presence of big money. Candidates are raising more money than ever before, but from smaller segments of the population.

The rationale for a ban on corporate contributions is clear: corporations were neither designed nor intended to be political organizations. Rather, their purpose is explicitly economic. The government charters for-profit corporations to carry out specific economic functions. Accordingly, the government grants these corporations rights and privileges to aid in these functions, not the least of which is the right and ability to amass vast sums of capital. It was never intended for corporations to use their tremendous economic power to influence the political system. When corporations use their treasuries to influence the political process, it is an abuse of the powers and privileges they have as economic entities