Campaign Finance Reform and Corporate Law
I just returned from the ALI’s Annual Meeting, and I wanted to post about an interesting hypothetical that was raised in the course of the discussions.
Suppose Delaware passed a statute providing that no company incorporated there could give money to political campaigns. (A more modest version of this statute would be that any new corporate charters would contain such a limit.) Would this be unconstitutional under Citizens United?
1. Yes, because a state can ban corporations entirely or impose all sorts of other regulatory limits, but not a rule that restricts corporate speech.
2. No, because a firm can choose to incorporate in another state that would not impose such a limit. In other words, federalism gives states broad authority over the corporate form, and the burden on free speech is incidental if you have to incorporate in, say, Ohio, instead of Delaware. So long as some states (or even one state) permitted unrestricted campaign contributions by its corporations, then there is no First Amendment problem.
Which is the better answer?