Vermont Associations Win Lobbying Tax Case.

Vermont associations again have the right to lobby legislators tax free. A state law that even the current secretary of state wasn't fond of has been found unconstitutional by the state's Supreme Court.

The Vermont Supreme Court affirmed that the state's tax on lobbying was unconstitutional. The defeat of a lobbying tax was seen as a victory for free speech.

The state legislature in 1997 had put into place a campaign finance reform law that put a tax-exempt ceiling at $2,500 annually for lobbying. After that amount lobbying incurred a 5 percent tax per year. Those funds would have been used to pay for the public financing of campaigns.

The Vermont Society of Association Executives and six other organizations had won their case, VSAE v Milne in late 1999 at the Washington County Superior Court, arguing the lobby tax was a special tax singling out and burdening core speech. The state appealed but the Vermont Supreme Court concurred in early June of this year.

Wrote the justices, "Taken to its logical conclusion, refusing to subject a tax on political speech to heightened scrutiny unless it disfavored particular viewpoints would allow the state to impose a tax so great that it could effectively destroy the right to petition one's government, as long as the tax burdened all viewpoints equally. That is not the law."

Kevin Dorn, past president of the VSAE, said the decision could have ramifications for other states as well. "I think it will have a significant impact on those who might be meandering through their tax codes looking for novel ways to tax people. I'd hope that when folks consider the notion of taxing speech, that this case will give them great pause."

Deborah Markowitz, Vermont's secretary of state, said the state would not appeal the case - and didn't sound too brokenhearted about the verdict. "In its ruling the court recognized that lobbying activity was one of those essential political expressions that our constitution was designed to preserve," she said. "I think it's an important ruling."

Dorn said the case cost the plaintiffs around $60,000, which will be covered partially by the Washington, D.C.-based American Society of Association Executives. Jim Clarke, ASAE's senior vice president for public policy, said the organization wanted to tackle this issue at the state level before the practice gathered any further momentum. "We're aware of how other states raise revenue," he said. "We did not want this to become a model."

Markowitz actually seemed relieved about the state's loss, which would have caused a veritable nightmare to more closely define what exactly is lobbying in Vermont, where currently a visit by a legislator could be considered an attempt to influence, and thus lobbying. "The law was problematic to implement," said the successor to James Milne, against whom the case was originally filed.