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LLC loophole closed in campaign finance bill

April 9, 2013

The Maryland General Assembly did an amazing thing last night: they passed a campaign finance reform measure that progressives and good government people actually like. “It was a difficult vote because it was in many ways against their own interest,” says Jennifer Bevan-Dangel, a lobbyist for the non-profit Common Cause.I’ve been a lobbyist for eight years–this is the first time I saw a bill get stronger instead of weaker.”

For example, a part of the bill that would have indexed the maximum allowable donation to inflation—so it could increase automatically—was amended out of the bill.

The major news from the bill is the closure of the “LLC loophole,” whereby the owners of many limited liability companies (mostly these are developers) could give the maximum amount to each candidate through each company. So instead of being limited to $4,000, they could give $4,000 times as many companies as they owned.

Corporations are people, see?

Under the new law, an LLC is only an independent entity (and thus eligible to give the new maximums, $6,000 to a candidate, $24,000 to all candidates during an election cycle) if no one person owns more than 80 percent of it.

Policing this will be problematic, of course, as LLCs are routinely registered using PO boxes and without disclosing the percentage of beneficial ownership of various stockholders. But it’s something. At least now the state has as policy the proposition that there is something wrong with the old way.

“This is just the beginning,” Bevan-Dangel says. “We’ve been working on this bill for I don’t even know how many years.”

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