Candidates, acting on their own and in conjunction with their “super PACs” filed reports with the Federal Election Commission (FEC) indicating that through the end of January, they had collectively raised $915.7 million to support their presidential campaigns. With the races heating up, it’s not unlikely that the total raised for the 2016 presidential election will reach $1 billion by the end of this month.
With all of that money being tossed around from campaigns and private donors, you may wonder why we even have this option on a tax return:
Yes, that’s the mysterious Presidential Election Campaign checkbox.
The checkbox has nothing to do with your actual tax payable. If you check “you” or “spouse” at the checkbox, $3 (or $6 if you check both) of your tax dollars will be directed to the Presidential Election Campaign Fund. It doesn’t change your actual tax due (or refund, if applicable). It simply allows you a say in where your tax dollars go – something that you don’t often have the luxury of doing at the federal level.
The fund has been around since the 1970s (well, technically since the 1966 but Congress quickly put the kibosh on it). At the time, contributions were just $1 – not $3 – and nearly 30% of taxpayers opted in. In 1993, the amount of the contribution was bumped to $3 and fewer taxpayers checked the box. In 2007, less than 10% of taxpayers checked the box and in 2013, only about 6% of taxpayers checked the box.
Perhaps one of the reasons the number of taxpayers electing to check the box is shrinking is that few taxpayers know where those tax dollars go. The money actually goes into a fund and every four years, it’s distributed to qualified candidates and national party committees for use in Presidential elections – well sort of. Money used to be paid out for three specific purposes:

  1. Party nominating conventions;
  2. Matching funds for presidential primary candidates during their campaigns of up to $250 per individual (more on that in a minute); and
  3. Funds for presidential general election nominees.

In 2014, taxpayer funding for presidential nominating conventions was eliminated when President Obama signed Public Law 113–94 into law (downloads as pdf). Initially called the Gabriella Miller Kids First Research Act, the law was introduced by Rep. Gregg Harper (R-MS) in the House and directs that money previously set aside for party nominating conventions (about $126 million) will instead be used to “supplement, not supplant” pediatric medical research at the National Institutes of Health.
The amount of money budgeted typically accounted for 23% of convention funding with the remainder coming from sponsors. Without it, convention funding is up to the individual parties. The first time the new law will affect the parties will be this year: the 2016 conventions will not receive public money.
Despite the confusing switch in use of a portion of funds, the Presidential Election Campaign Fund is still used to help fund presidential elections. The fund, which is not a separate account but rather a part of the U.S. Treasury, was created by Congress in an effort to convince candidates to reduce their dependence on large contributions from individuals and groups. The idea behind the fund was to put party nominees on an equal financial footing.  Because of our political system, the money tends to go to the major parties, meaning Democrats and Republicans. Other parties, such as the Green Party, may qualify for funds only if they can get at least 5% of the vote (which typically doesn’t happen).
Of course, the Presidential Election Fund doesn’t exactly work as planned. In fact, candidates may now refuse to accept public funds for their candidacy, as both President Obama and GOP presidential nominee Mitt Romney did in 2012 (the first time that the two major party nominees opted out for both the primary and general elections). It sounds noble at first until you realize that it’s because they don’t meet – or don’t wish to meet – the rules established by Congress.
Matching funds are available to Presidential primary candidates who can demonstrate broad-based public support. To establish support, the candidate must have raised more than $5,000 in each of at least 20 states (to make sure that candidates don’t cheat on the numbers, only $250 per individual donor is counted for this purpose). Funds raised from political committees are not eligible for a match.
Candidates also must agree to limit campaign spending for all primary elections to $10 million (the national spending limit) plus a cost-of-living adjustment. To put that into perspective, former Florida Gov. Jeb Bush and Sen. Rand Paul spent more than that (not including Super PAC money) before exiting the race. According to the NY Times, the only remaining presidential candidate who has not spent at least $10 million to date (again, not including Super PAC money) is Ohio Governor John Kasich.
Additional requirements include that campaign spending in each state must be limited to $200,000 (plus COLA), or to a specified amount based on the number of eligible voters in the state (plus COLA), whichever is greater, and that spending from personal funds is capped at $50,000.
But don’t weep for candidates who aren’t the frontrunners: even if they no longer campaign actively in primary elections, candidates may continue to request public funds to pay off campaign debts until late February or early March of the year following an election.
Once a candidate receives the final nod from his or her party, additional public funding of up to $20 million (plus COLA) will become available. There are strings this time, too: spending is limited to the amount of the public funds paid out and the candidate may not accept private contributions for the campaign. And as with the primary, personal spending is capped at $50,000.
(Certain fundraising expenses, including certain legal and accounting expenses, do not count against spending limits during the primary or general election.)
Candidates who say no to public funds are usually doing just fine. In addition to private funds, they may still benefit from public funds, just not directly. Political parties who receive public funds can spend public money on behalf of candidates.
Candidates who do accept public funds aren’t done when the polls close: at the end of the election cycle, the Federal Election Commission (FEC) will audit candidates who accept public funds. Any money that isn’t used for campaign expenses must be returned to the U.S. Treasury. According to the FEC, just $8.7 million has been returned since 1976.
Since the law took effect, eleven primary candidates have received more than $10 million in any single year: Ronald Reagan (1984), Pat Robertson (1988), George Bush (1994), Bill Clinton (1994), Patrick Buchanan (1996), Bill Clinton (1996), Bob Dole (1996), Bill Bradley (2000), Al Gore (2000), John McCain (2000) and John Edwards (2008).
With respect to party conventions, in most years, funds were split between the GOP and the Democrats (remember that won’t happen in 2016). However, the Reform Party qualified for funds in 2000, the only time that a party received money for convention expenses (downloads as a pdf).
Overall, the most public money used in a presidential campaign (without regard to inflation) was $239,541,516 – the eventual winner of that election was President Bush. In comparison, with both President Obama and GOP candidate Mitt Romney opting out of public money, just $37,852,708 was paid out in 2012. I wouldn’t be surprised to see that number stay low for 2016.

Print Friendly, PDF & Email

Kelly Erb is a tax attorney, tax writer and podcaster.

Write A Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.