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August 17, 2015
Possible White House Candidate Blasts Temporary Tax Incentives
by Paul C. Barton

Full Text Published by Tax Analysts®

This article first appeared in the August 17, 2015 edition of Tax Notes.

Lawrence Lessig, another possible Democratic candidate in the 2016 presidential race, says the year-to-year drama in Congress over the fate of the tax extenders, especially the research credit, explains much about what's wrong with American government and politics.

The Harvard law professor, who says he will decide on his candidacy by September 7, has given his analysis in numerous articles and in nationwide speaking appearances as well as in his book, Republic, Lost: How Money Corrupts Congress and a Plan to Stop It.

Lessig says in his book and speeches that never making popular tax incentives permanent, no matter how well they work, illustrates the irrationality that has overtaken the legislative branch -- keeping it from addressing many national needs -- because of the campaign finance system. The continual Kabuki dance surrounding the threatened extinction of temporary tax provisions gives lawmakers a cause they can cite when they go to "funders" and ask for money to help their reelection, a practice that exacerbates the irrationality by consuming 30 percent to 70 percent of their time, Lessig said. And the funders, he says, are a tiny percentage of the top 1 percent. This dance, he adds, also ensures jobs for another element of Washington's dysfunctionality -- lobbyists who often help members raise campaign cash. The lawmakers, lobbyists, and funders participate in a kind of "corruption" that Lessig says is not a hard and fast quid pro quo but more of a "dependence corruption."

In a July article for The Daily Beast, Lessig wrote: "Think about the R&D tax credit, which has been a 'temporary' provision in the tax code since 1981. Each time the credit is about to expire, Congress rallies support to renew the tax break from those who benefit from it. 'Support' means campaign contributions."

In his book, he says that the tax code is full of "all sorts of special exceptions" that cause members to phone potential contributors and say, "Your exception is about to expire; here's a good reason for you to help us fight to get it extended."

Ironically, in a press release announcing his possible candidacy, Lessig points to comments from a member of the funder class, billionaire and GOP presidential candidate Donald Trump, as an example of how Washington works. Trump said in the August 6 Republican debate: "I will tell you that our system is broken. I give to many people. I give to everybody. When they call, I give, and you know what? When I need something from them, two years, three years later, I call, they are there for me."


What Lessig Would Do

Lessig, on his campaign website, says he will officially enter the presidential race if he can raise $1 million by Labor Day, September 7, and if none of the other Democratic candidates "make citizen equality the first priority of their administration." As of August 13, his website showed he has raised $176,000.

To fix the system and give the average American more of a say, Lessig proposes his candidacy serve as a type of referendum. If elected, he contends, Congress would see it as an undeniable sign that it must pass his "Citizen Equality Act," a plan to make voter registration easier, revise campaign finance to make small-dollar contributions more important, and end the gerrymandering of House seats, filling the lower chamber with representatives from more compact, multimember districts that make it harder for a single political philosophy to dominate. House elections would involve "ranked choice voting" that allows individual voters to rank candidates in order of preference. Advocates, especially the Center for Voting and Democracy, said the system has proven itself in states and localities.

But a quirk to Lessig's potential candidacy is that he doesn't want to serve a full term if elected. Once he gets his reform program through Congress, he plans to leave office and turn the White House over to his vice president.

Lessig's blaming of the campaign finance system for much of what ails Washington has prompted applause from good government groups such as Common Cause. "It's a big part of the reason Congress is stymied on a lot of problems," Common Cause spokesman Dale Eisman told Tax Analysts.


Lessig Critic Speaks Out

But law professor Brad Smith of Capital City University and the Center for Competitive Politics said in an interview that Lessig has gone off the deep end. "This is not a serious proposal; this is not a serious person," Smith said of Lessig's platform. Laughing, he added, "I would call him clinically insane." Smith, also a former member of the Federal Election Commission, has been a debate opponent of Lessig's.

"What if a war starts while he is president?" Smith asked. "Will he just walk away and say, 'That's not my issue?'"

While saying money is important in politics, Smith said, Lessig's focus on that alone oversimplifies the array of factors that influence lawmakers' decisions. It's not campaign contributions that make the National Rifle Association so intimidating to members of Congress; it's the group's ability to stir voters, the former FEC member said.

As for the tax code, Smith said, it's grown more convoluted since the tax reform of 1986 because members of Congress have championed proposals they thought would win them support at the polls. "It's not the money; it's the votes," he said.

Smith called Lessig "the Donald Trump of the left," adding, "The exception is Donald can talk about lots of things in a simplified fashion. Larry can only talk about one thing in a simplified fashion."

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