Lift the LLC veil

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It is high time to close the loophole that allows people to exceed campaign contribution limits by forming limited liability companies, or LLCs — or at least to make that process more transparent.

Under current law, individuals can contribute a maximum of $150,000 to candidates every year, and the cap for corporations is $5,000. But the LLC loophole renders those limits virtually meaningless. Under state law, limited liability companies are considered individuals, not corporations, so an LLC can make $150,000 in donations per year. And individuals or corporations can create LLCs in order to donate more money.

One of the problems with this system is that LLCs don’t have to reveal their members or officers, so it’s hard to tie the donations to the people or companies they’re coming from. A bill from state Senators Todd Kaminsky and Daniel Squadron would change that, by requiring that all of the contributors to an LLC be identified. Each of their contributions would be public record as well, and count toward their individual $150,000 limit. And any political group that accepted money from an LLC would have to disclose the contribution.

The Supreme Court has ruled that monetary donations to candidates are a form of free speech. And people should be able to give money to candidates they support. But with limitless funds and no oversight, campaign contributions turn into dark, back-room deals. Do people really believe that someone who forms a dozen LLCs so he or she can make a huge contribution to a candidate will expect nothing in return?

New Yorkers have seen too many politicians thrown out of office and into prison on corruption charges to deny that large, mostly untraceable donations often bring special access to elected officials. It’s time for us to stop being naïve and to start cleaning up the pay-to-play culture of Albany.

This proposal is a solid first step. People should know who is making contributions to candidates. No one should be able to hide behind the veil of an LLC.

A version of this editorial originally appeared in our sister publications, the Long Island Herald family of newspapers.

LLC loophole

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