Income Disclosure—Why It Matters

 

THIS ISN’T JUST A THEORETICAL DEBATE

With the launch of SCPC’s Project Conflict Watch – and now with the release by Senator Vincent Sheheen of his tax returns and challenge to Gov. Nikki Haley to do the same – the issue of income disclosure is gaining some well-deserved attention. The principle behind it is a simple one: Politicians work for taxpayers, and taxpayers have a right to know who’s paying and therefore influencing their elected officials, and whether those officials’ decisions have more to do with financial gain than the public good.

But these are generalities, and likely don’t give one a full sense of just how serious the corruption resulting from a lack of disclosure requirements can be.  The danger isn’t simply that elected officials will be unduly influenced by some nebulous entity called “special interests”; the danger is that real politicians will cast real votes and write real legislation that enhances their financial interests and heaps the costs onto the taxpayer.

This can happen in essentially three  ways.

The first way is the routine kind of conflict of interest. Lawmakers can introduce, co-sponsor, and vote on legislation that affords direct financial benefits for them. State law forbids them to do it only if they are the sole beneficiaries. But if the policy change in question benefits everyone in a certain field, however theoretically, the law allows it.

So, for instance, a state lawmaker can be paid as a “consultant” by the South Carolina Association of Realtors, then sponsor and vocally promote legislation that the Realtors favor. At least on the face of it, this looks bad. Even if it isn’t what it appears to be, however, voters have a right to know the facts of the case and decide for themselves. Or, to take another example, a lawmaker can spend his time in Columbia doing little more than finding ways to benefit the state’s pharmacy industry, but because all or most pharmacists would benefit (again, at least theoretically), this is perfectly legal. Or again: Legislators who happen to be funeral directors or morticians are legally permitted to push legislation that benefits current practitioners in the industry by making it more difficult for competitors to enter the field.

Second, members of the General Assembly can use their influence to engage in lucrative business with the state. It’s well known that lawyer-lawmakers have in the past made millions from workers compensation cases, and they ran no danger of ethical sanction by actively blocking reform to workers comp laws. Similarly, a lawmaker can use his power as a member of the Budget and Control Board to secure state contracts worth more than $30 million over twenty years for his concrete company.

Third – and most egregiously – the most powerful lawmakers can use their influence to determine highly consequential state policies in ways that bring enormous financial benefits to themselves. A lawmaker could, for example, own a business that takes in tens of thousands of dollars in Medicaid money, then co-sponsor a bill that would draw down the Affordable Care Act’s expanded Medicaid funds. Another could use his influence in the State Transportation and Infrastructure Bank and the Department of Transportation to determine the coordinates of a new major highway in such a way that it runs near his businesses or through land he owns.

The need for income disclosure is more than a matter of “good government,” and its value is not merely theoretical. Many state politicians view public office as little more than a vehicle for profit-making, and knowing how our elected officials make their money is one of the only ways citizens can stand in the way of outright corruption.

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