In First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978), the Supreme Court ruled that a Massachusetts restriction on political contributions by corporations violated the First Amendment and was thus unconstitutional.

Massachusetts had enacted a statute that prevented business corporations from making contributions or expenditures “for the purposes of influencing or affecting the vote on any question submitted to the voters” except those “materially affecting the property or assets of the corporation.”

The statute defined “materially affecting” to exclude questions that solely concerned the rate of taxation within the state.

Corporations seek to speak

Several plaintiffs, including the First National Bank of Boston, wished to spend money to challenge a proposed constitutional amendment that would have permitted the Massachusetts legislature to change the personal income tax to take a higher percentage of the income of higher wage earners.

When the attorney general of the state threatened to enforce the statute against the plaintiffs, they brought a declaratory action challenging the constitutionality of the provision. Following a decision by a single justice of the Supreme Judicial Court of Massachusetts, the full court reviewed and upheld the statute. The U.S. Supreme Court reversed, 5-4, holding that the Massachusetts law violated the First Amendment.

In the opinion for the majority, Justice Lewis F. Powell Jr. observed that “in cases where corporate speech has been denied the shelter of the First Amendment, there is no suggestion that the reason was because a corporation rather than an individual or association was involved.”

Powell was particularly displeased with the complete ban on corporate speech directed at measures considering the state rate of taxation. Furthermore, he was concerned that the Massachusetts statute treated small and medium-size corporations as equivalent to “great multi-national enterprises.”

Powell finds state interest lacking

Powell noted that a statute imposing such a burdensome restriction on First Amendment speech rights could survive only if supported by a compelling government interest as well as a mechanism narrowly tailored to further that interest. He reviewed the state’s two proffered interests and found them to be wanting.

Observing that it had previously justified significant regulation of the electoral process, the Court responded to the first interest by observing that Massachusetts had offered no finding supporting a link between corporate participation and the denigration of the electoral process. Moreover, voters ultimately rejected the constitutional amendment “even in the absence of the corporate spending.”

In short, on the first proffered interest, the Court found the distinction between candidate support and referendum support sufficiently large to justify differential constitutional treatment.

Statute not narrowly tailored

As for the second interest of protecting shareholders, the Court found the statute could not be narrowly tailored because it was both underinclusive and overinclusive.

Powell believed the statute was underinclusive because it banned corporate support of ballot measures while still allowing corporations and their agents to engage in lobbying activity.

The statute was overinclusive because it precluded corporations from opposing a ballot initiative even when “its shareholders unanimously authorized the contribution or expenditure.”

Chief Justice Warren E. Burger wrote a concurring opinion. Justice Byron R. White wrote a dissenting opinion, joined by Justices William J. Brennan Jr. and Thurgood Marshall. Justice William H. Rehnquist wrote a separate dissent.

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