Elections Archives - The National Law Forum

Diagnosing Health Care: Health Policy Update: Impact of the 2024 U.S. Elections [Podcast]

New from the Diagnosing Health Care Podcast: The recent 2024 elections resulted in a new Trump administration and a Republican-controlled House and Senate.

From policymakers to stakeholders across the industry, everyone is wondering what health policy will look like in 2025 and beyond.

On this episode, Epstein Becker Green attorneys Ted Kennedy Jr., Leslie Norwalk, Philo Hall, and Alexis Boaz discuss the results of the 2024 elections and their impact on the health policy space. What will a second Trump administration look like? How might the election results affect the health care policies addressed during Congress’s 2024 lame-duck session?

Post Election – Expect Tax Legislation

I. Introduction

With clear Republican victories in the White House and the Senate, and a very slim majority for either side in the House of Representatives, we can expect tax legislation in the coming year. It is expected that the President elect will likely seek to enact his economic agenda as quickly as possible. While Congress may work for bipartisan support of any such legislation, Congressional Republicans and the Administration have the ability to utilize the filibuster-proof budget reconciliation rules (that eliminate the need for 60 votes in the Senate) to pass such tax legislation. We understand that the advance preparation and work for a 2025 reconciliation bill began in Republican Leadership offices over the summer and will continue through the end of the year.

Key to the current discussions of tax policy are provisions from the 2017 Tax Cuts and Jobs Act (the “TCJA”), a large overhaul of the Internal Revenue Code during President Trump’s first term. The TCJA instituted many significant changes to U.S. tax laws, including cutting the corporate rate, lowering individual income tax rates, and introducing a new deduction for passthrough income. However, due to various reasons, including the arcana of procedural rules of Congress associated with the “reconciliation” procedures, many of these provisions were temporary and scheduled to expire at the end of 2025. Exactly which provisions are to be extended, which to be modified, which to be abandoned and how to budget for each of these provisions, is expected to be a part of the legislative agenda next year. It is important to note that, among certain other items, the reduced corporate tax rate enacted in the TCJA is not scheduled to expire.

The most significant expiring provisions of the TCJA are set forth below.

II. Expiring Provisions

A. Changes to non-corporate tax rates, credits, deductions, exemptions and exclusions

The most significant expiring provisions, at least from a political perspective, are the provisions providing significant adjustments to the various tax rates, credits, deductions and similar provisions mostly applicable to individuals, resulting in a broad-scale reversion to the pre-2017 regime for individual taxpayers. The key changes are the following, generally coming into effect in 2026, if not extended or modified:

The lower individual income tax rates in the TCJA will expire, and the top marginal rate will go from 37% to 39.6%;
The estate and gift tax exclusion amount will be cut in half to $5 million and then adjusted for inflation, so the estate tax exemption will go from approximately $14 million in 2025 to approximately $7 million in 2026;
The standard deduction will revert to pre-TCJA levels (almost half the current standard deduction), although the personal exemption amount (which was set to zero under the TCJA) will return to pre-TCJA levels as well;
The deduction for miscellaneous itemized expenses, including unreimbursed employee expenses and tax preparation fees will return, and taxpayers will be able to deduct miscellaneous itemized expenses above 2% of adjusted gross income (“AGI”);
The phasing-out of itemized deductions for high income taxpayers will return;
The TCJA’s cap on the deductibility of state and local tax will expire, so taxpayers will be able to deduct all state and local income taxes (or sales taxes, if selected by the taxpayer) and property taxes—this may be celebrated by higher-income taxpayers in high tax states, but much of the benefit could be tempered by the return of broader scope of the alternative minimum tax discussed immediately below;
The alternative minimum tax (the “AMT”), which under the TCJA was limited to a small number of taxpayers, will return to its pre-TCJA form (which applied to a much larger group of individual taxpayers);
The deduction limit for cash charitable deductions will revert to 50% of AGI (as compared the current limit of 60% of AGI);
The child tax credit will be cut in half so that the maximum credit is $1,000 per child, the refundable portion of the credit will decline from $1,400 to $1,000, and other various adjustments will apply; and
The broader mortgage interest exemption available under the pre-TCJA regime will return.

B. Employment-related provisions

Certain employment-related provisions will also expire, and many pre-TCJA rules will return, generally in 2026, if not extended or modified. The most significant changes are the following:

The Work Opportunity Tax Credit, which provides a credit to employers who hire members of certain groups, such as veterans, recipients of various federal welfare benefit programs, and residents of empowerment zones, would expire;
Employers who pay wages to employees on family and medical leave are generally eligible currently for a credit for a percentage of 12 weeks of paid leave wages—this credit would expire;
The deductibility of employer-provided meal expenses, currently limited to 50 percent of the meal expense, will be eliminated; and
The suspension of the exclusion for employer reimbursements for moving expenses for persons other than certain members of the armed services, will be lifted, at which point taxpayers will be able once again to exclude from income qualifying moving expense reimbursements received from an employer.

C. Various business provisions

Multiple provisions designed to create tax benefits or tax reductions for certain business operations or activities are also amongst the set of expiring or changing provisions. Among the key provisions that will change, generally in 2026, if not extended or modified are the following:

The TCJA introduced the qualified business income deduction for 20% of qualified passthrough income, excluding specified service trade or business income, and ordinary REIT dividends—this deduction would expire, so passthrough income and ordinary REIT dividends will be taxed at ordinary income rates with no deduction;
The TCJA’s bonus depreciation allowance will continue to decline over the next few years: only a 40% immediate deduction in 2025, 20% in 2026, and no bonus depreciation after 2026 (with some exceptions);
The special “opportunity zone” rules—whereby taxpayers could defer capital gains if the gains are reinvested in such an opportunity zone and exclude capital gains income after a 10-year holding period—will expire. Similarly, the empowerment zone program’s tax benefits and the New Markets Tax Credit will also expire.

D. International tax provisions

The TCJA also made some significant revisions to the international and cross-border tax rules, many of which will have changes that will automatically trigger in 2025 or 2026. The most material are:

The “base erosion and anti-abuse tax” (the “BEAT”) minimum tax rate will increase to 12.5% (from 10%) and the calculation of the modified income tax (on which the BEAT minimum tax rate applies) will be adjusted to eliminate the taxpayer’s ability to benefit from certain tax credits;
The deductions applicable to global intangible low-taxed income (“GILTI”) inclusions for corporations will be reduced (resulting in an increase in the amount of tax imposed on such inclusions)—the deductions for most income will drop from 50% to 37.5%;
The deduction on “foreign derived intangible income” (“FDII”) will drop from 37.5% to 21.875%; and
The oft extended “look through” rule (which did not originate in the TCJA) for dividends, interest, rents and royalties received by a controlled foreign corporation from another related controlled foreign corporation is set to expire.

As one can imagine on reading this long list of expiring tax provisions (and not even taking account the many more minor provisions also set to expire or change which are not included above), the likelihood of a new tax bill to address these provisions is high. Given the nature of the Congressional rules around reconciliation and the nature of budget and tax negotiations, attempts to extend many of these provisions would likely involve the addition of new revenue-raising provisions. As such, the prospects of tax reform in 2025 are high. Proskauer closely monitors legislative developments, and additional tax blog posts will be made as specific tax proposals are moved through Congress.

What Happened: Policy and Politics

Baseline: The future of the Inflation Reduction Act (IRA), signed in 2022 to boost US clean energy with new tax incentives, hangs in the balance. President-elect Trump and some Republicans in Congress have threatened to repeal all or part of it because they don’t agree with the policy, and they need the revenue savings to offset their 2017 Tax Cuts and Jobs Act (TCJA) extensions. The processing of a tax bill next year provides a rare opening for taxpayers who are dissatisfied with the IRA or with the Biden administration tax regulations which implement the IRA.

Pulse Check: Much depends on whether Republicans gain control of both chambers of Congress, enabling them to tap into the vaunted congressional budget reconciliation process and easing their path to legislative change.

What to Monitor: Expect IRA supporters to spend time educating administration officials and congressional offices about the valuable economic and other benefits provided by these tax provisions, particularly in GOP-represented congressional districts and states. Meanwhile, industries from biofuels to hydropower are lobbying for new tax credits in the 2025 tax bill, aiming to secure a place in the complex tax landscape that lies ahead.

Voters delivered a sweeping victory to Donald Trump on Tuesday, setting him up to be the 47th President, and the first since Grover Cleveland in 1892 to be elected to a second non-consecutive term. After a surprise electoral college victory in 2016 and a narrow defeat in 2020, Trump won an outright majority of the national popular vote, the first Republican to do so since George W. Bush in 2004. While his victory helped propel a pickup of at least four Senate seats, wresting back control of the chamber from Democrats, the fate of the House remains uncertain pending the counting of outstanding California mail ballots that could drag out for a week or more.

The victory was driven by disproportionate gains among key demographics and subgroups that will become clear as the dust settles, but the overall pattern was unmistakable: Trump made significant gains coast-to-coast, in urban, suburban, and rural areas, and among virtually every cohort of the electorate. His improvement in the key battlegrounds was actually dwarfed by his gains in the nation’s bluest states, with double-digit swings in places like New York, Maryland and California. In addition to avenging his 2020 loss, the President-elect can now credibly claim a popular mandate for his policies, and quite possibly the congressional majorities to pursue them legislatively.

The restoration of President-elect Trump represents a return to 2016-17, with many of the same conditions seen seven years ago: the potential for a unified Republican government, and a clear commitment from the new administration to roll back the regulatory agenda of the previous administration and institute “America-first” policies when it comes to energy, immigration and trade. The key difference is that while the outcome of the 2016 election caught even the Trump apparatus flat-footed, preparations for President-elect Trump’s second term have been underway for the past three years. Expect a second Trump administration to be savvier and more focused in carrying out its goals, installing key personnel, and implementing policy.

The expectation is that strong policy decisions are ready for implementation on Inauguration Day through Executive Orders that will clearly lay out the regulatory and policy framework for rescinding and replacing the Biden administration agenda. Examination of the Inflation Reduction Act and Infrastructure Investment and Jobs Act mechanisms will certainly occur. President-elect Trump has made clear his intentions to leverage American foreign policy through trade and tariffs rather than military means. Particularly in the energy space, President-elect Trump has pledged a return to American energy dominance backed by a foundation and focus on leveraging domestic traditional energy resources. As observed in his first term, separating campaign rhetoric from implanted policy will continue to be a critical exercise. It is a guarantee that President-elect Trump intends to staff up quickly with political loyalists who have experience in navigating the proclivities of both a Trump administration and Washington bureaucracy, one that he has yet again pledged to dismantle.

President-elect Trump re-assumes the White House with a certain Republican majority in the US Senate and a likely slim majority in the US House of Representatives, providing the ability to implement legislative initiatives while ensuring a full swath of Cabinet-level and senior-level appointees. Legislative action will be necessary for targeting provisions of the Inflation Reduction Act, and while the notion of full repeal exists in rhetoric, it is more likely that Republicans use a more precise approach, preserving legacy provisions that tend to benefit traditional energy sources and targeting those that are more renewable energy focused. However, the slim majorities in each chamber complicate the full breadth of legislation that Republicans can expect to implement. The focus in the early days of Congress will be on the aforementioned Senate confirmation process and resolutions of disapproval under the Congressional Review Act to repeal Biden administration regulations finalized in the last 60 days of the previous Congress, which are both likely to be comfortable party-aligned exercises. The tools of congressional oversight will be trained on assisting the Trump administration in implementing regulatory changes and building a record toward federal agency reforms – such as permitting, federal workforce, and agency re-organization.

Office Politics: The Basics for Private Employers

In case you haven’t noticed the yard signs popping up like mushrooms, the constant barrage of television and radio advertisements, or the unsolicited text messages from unknown numbers, we are in the homestretch of election season. For those employers with questions on how to handle political speech in the workplace, especially during the last few days before (and hopefully not much beyond) Election Day, here is a refresher on the basics for private employers.

The First Amendment to the U.S. Constitution prevents the government from enacting laws to prohibit the free exercise of speech and assembly, among other liberties. It does not apply to private employers. Where there is no state action involved, there is no unfettered right to free speech in a private place of employment. Quite simply, a private employer can enact rules to keep political expression from its workplace. Some employers prohibit political speech in the workplace to avoid potential disruptions to business operations, customer relations, or employee morale.

If an employer adopts a policy concerning political expression and messaging, it must do so fairly and consistently, and it should be inclusive and consistent to avoid the perception of favoritism or discrimination. In other words, if an employer requires Meghan to remove her Kamala button, it should also direct Dennis not to wear his Trump t-shirt. Remote workers are still “in the workplace” when they participate in virtual meetings, so there are no separate rules for them.

When enacting rules about political expression and messaging in the workplace, private employers should of course remain aware of the National Labor Relations Act (NLRA), which applies to both union and non-union settings, and among other things protects employees’ ability to engage in concerted activity or to discuss the terms and conditions of their employment. Therefore, private employers must be mindful of a potential nexus or overlap between employees’ political speech and discussion of working conditions. Under the NLRA, for instance, employees may distribute information during non-working time about a candidate’s stance on a particular issue that may also constitute a complaint about the employees’ working conditions.

It’s Election Time: Time Off to Vote, Political Activities, and Political Speech in the Workplace

With Election Day quickly approaching, it is the right time for employers to refresh themselves on the various protections that may exist for their employees when it comes to voting and other political activities. Below is an overview of employees’ rights related to voting and other political activities leave, as well as protections for political speech and activity both in and outside the workplace.

Voting Leave Laws

Approximately thirty states require that employers provide their employees with some form of time off to vote. Twenty-one of these states require that the leave be paid. The exact contours of these laws – such as the amount of leave, notice requirements, and whether there is an exception when the employee has sufficient time outside of working hours to vote – vary by state. For example:

In New York, employers must provide leave to employees who do not have sufficient time outside of working hours to vote. An employee is deemed to have sufficient time to vote if the polls are open for four consecutive hours before or after the employee’s shift. Employees who do not have such a four-hour window are eligible to take the amount of leave that will – when added to their voting time outside working hours – enable them to vote, up to two hours of which must be without loss of pay. Employees may take time off for voting only at the beginning or end of their shift, as designated by the employer, unless otherwise mutually agreed to between the employee and employer. Employees are required to notify their employer that working time off to vote is needed between two and ten working days before the election.
Similarly, in California, employees are entitled to sufficient time off to vote, up to two hours of which must be paid. Unless the employer and employee agree otherwise, the employee must take the leave at the beginning or end of the employee’s shift, whichever allows the most time to vote and the least time off from work. Employees are required to provide notice that time off to vote is needed at least two working days before the election.
In the Washington, D.C., employees are entitled to up to two hours of paid leave to vote in either an election held in D.C. if the employee is eligible to vote in D.C., or in an election held in the jurisdiction in which the employee is eligible to vote. Employees must submit requests for leave a reasonable time in advance of the election date. Employers may specify the hours during which employees may take leave to vote, including requiring employees to vote during the early voting period or vote at the beginning or end of their shift during early voting or election day.
In Illinois, employers must provide two hours of paid voting leave to employees whose shifts begin less than two hours after the opening of the polls and end less than two hours before the closing of the polls. Employees must provide notice of the need for leave before the day of the election.
In Maryland, employees are entitled to up to two hours of paid voting leave, unless the employee has at least two non-working hours to vote while the polls are open. Employees must furnish proof to their employers that they either voted or attempted to vote, which can be in the form of a receipt issued by the State Board of Elections.

Certain states, includingNew York, California, and Washington, D.C., require that employers post a notice of an employee’s right to take leave in a conspicuous location before the election. Sample notices have been published by the New York State Board of Elections, the California Secretary of State, and D.C. Board of Elections.

Other Political Leave Laws

Some states require that employers provide leave for political-related reasons beyond just voting. For example:

Alabama, Delaware, Illinois, Kentucky, Nebraska, Ohio, Virginia, and Wisconsin require that certain employers provide unpaid leave for employees to serve as election judges or officials on Election Day. In Minnesota, employees are entitled to paid leave for this reason; however, employers may reduce an employee’s salary or wages by the amount the employee receives as compensation for their service as an election judge.
Minnesota and Texas require that certain employers provide employees with unpaid leave to attend party conventions and/or party committee meetings.
Connecticut, Iowa, Maine, Nevada, Oregon, South Dakota, and Vermont require that certain employers provide employees with an unpaid leave of absence to serve as elected members of state government. In Iowa, employees are also entitled to leave to serve in a municipal, county, or federal office.
In Vermont, employees may take unpaid leave to vote in annual town hall meetings.

Some of these laws only apply to larger employers. For example, in Nevada, employers with at least fifty employees are required to provide leave for employees to serve as members of the state legislature. State laws also vary with respect to the amount of notice that employees must provide to their employers in order to be eligible for leave.

Political Speech in the Workplace

In our current political climate, many employers are concerned with what steps they can take regarding political speech and activity in the workplace. When these discussions or activities occur during working hours, they have the potential to negatively impact performance, productivity, or even possibly cross the line into bullying or unlawful harassment.

When employees publicly attend political rallies or support causes on social media, they may also (intentionally or not) create an actual, or perceived, conflict of interest with their employer. The complicated question of what exactly employers can do around employee political speech and activity is governed by various sources of law, some of which is discussed below.

Additionally, for employers with designated tax statuses, certain political speech can give pose risk to an organization’s tax-exempt status. Many tax exempt-organizations are subject to significant restrictions on lobbying and political activities. For example, 501I(3) organizations risk losing their tax-exempt status if they engage in political campaign activities or if a substantial part of its activities involves lobbying. Speech by an employee that constitutes political campaign or lobbying activity risks being attributed to an organization if an employee’s speech is seen as representative of the organization and being ratified by the organization. For example, if an employee urges their social media followers to contact their state representative about proposed legislation, this risks carrying the inference that the employee was speaking on behalf of the organization.

Employee “Free Speech”

There is no general right to “free speech” in a private sector workplace. Because the U.S. Constitution is primarily concerned with state actors, the First Amendment does not prevent private employers from prohibiting or restricting political speech in the workplace. Therefore, subject to certain exceptions discussed below, private sector employers are generally able to enact prohibitions around discussing politics at work and discipline employees for violating such policies.

However, as noted, an employer’s ability to restrain political speech in the workplace comes with some restrictions. At the federal level, Section 7 of the National Labor Relations Act (“NLRA”), which applies to both unionized and non-union employees, protects certain “concerted activities” of employees for the purposes of “mutual aid or protection.” Political speech or activity that is unrelated to employment, such as an employee distributing pamphlets generally encouraging co-workers to vote for a candidate or support a political party, would not likely be covered or protected by the NLRA. The NLRA therefore does not universally prevent employers from prohibiting political discussions or activities in the workplace.

However, political speech may be protected by the NLRA when it relates to the terms or conditions of employment, such as communicating about wages, hours, workplace safety, company culture, leaves, and working conditions. Therefore, an employee encouraging co-workers to vote for a candidate because the candidate supports an increase in the minimum wage might claim to come under the protection of the NLRA.

State laws may also place certain limitations on employer attempts to restrict employee political speech. For example, Connecticut law prohibits employers from taking adverse action against employees for exercising their First Amendment rights, provided that such activity does not interfere with the employee’s job performance or the employment relationship.

Lawful Outside Activity/Off-Duty Conduct

Many states have laws that prohibit adverse action against employees based on lawful activities outside the workplace, which may include political activities. For example:

In approximately a dozen states, employers are prohibited from preventing employees from participating in politics or becoming candidates for public office. New York Labor Law § 201-d prohibits employers from discharging or otherwise discriminating against employees because of their “political activities outside of working hours, off of the employer’s premises and without use of the employer’s equipment or other property, if such activities are legal.” Political activities include (1) running for public office, (2) campaigning for a candidate for public office, or (3) participating in fund-raising activities for the benefit of a candidate, political party, or political advocacy group. Similar laws exist in California, Louisiana, and Minnesota, among other states.
Other states – including Delaware, Florida, Massachusetts, and New Jersey– prohibit employers from attempting to influence an employee’s vote in an election. In Florida, “[i]t is unlawful for any person … to discharge or threaten to discharge any employee … for voting or not voting in any election, state, county, or municipal, for any candidate or measure submitted to a vote of the people.” A dozen or so states approach this issue in a more limited fashion by prohibiting employers from attaching political messages to pay envelopes.
At least two states, Illinois and Michigan, prohibit employers from keeping a record of employee’s associations, political activities, publications, or communications without written consent.
Washington, D.C. prohibits discrimination in employment on the basis of political affiliation. Despite its seemingly broad scope, this statute has been interpreted to only protect political party membership and not (1) membership in a political group, or (2) other political activities, such as signing a petition.

These laws vary considerably from state to state, so it is important for employers to consult the laws when considering policies or rules around employee political activity.

* * *

As the election approaches and early voting takes place, employers should review the applicable laws for each jurisdiction in which they operate and ensure that their policies and practices are compliant. Employers should also ensure that managers are well versed in the employer’s policies around voting and political speech and activities so that they can properly respond as situations arise.

Selection of Gov. Walz as VP Candidate Implicates SEC Pay-To-Play Rule

Kamala Harris’ selection of Tim Walz as running mate for her presidential campaign has implications under the Securities and Exchange Commission’s (SEC) Rule 206(4)-5 under the Investment Advisers Act (SEC Pay-to-Play Rule). In particular, certain political contributions to vice presidential candidate Tim Walz, who serves as Chair of the Minnesota State Board of Investment (SBI), and other actions by investment advisers and certain of their personnel could trigger a two-year “time-out” that would prevent an investment adviser from collecting fees from any of the statewide retirement systems or other investment programs or state cash accounts managed by the SBI. As a result, all investment advisers should consider reviewing their existing policies and procedures relating to pay-to-play and political contributions, and they should remind employees of these policies in connection with the 2024 election cycle.

A few key takeaways in this regard

The SEC Pay-to-Play Rule prohibits investment advisers, including exempt advisers and exempt reporting advisers,¹ from receiving compensation for providing advisory services to a government entity client for two years after the investment adviser or certain personnel, including executive officers and employees soliciting government entities,² has made a contribution to an “official”³ of the government entity.
- Governor Walz is an “official” of the SBI under the SEC Pay-to-Play Rule because he serves on the board of the SBI.
- An investment adviser was recently fined by the SEC for violations of the SEC Pay-to-Play Rule following a contribution by a covered associate to a candidate who served as a member of the SBI.⁴
As a result of Governor Walz’s role with regard to the SBI, any contributions by a covered adviser (or any PAC controlled by the adviser) or any contributions by its covered associates above the de minimis amount of US$350⁵ to the Harris/Walz campaign will trigger a two-year “time-out.” This may have implications for investment advisers that are not currently seeking to do business with the SBI but may in the future, as the “time out” period applies for the entirety of the two-year period, even if Governor Walz ceases to be an “official” of the SBI after the election.
Contributions by family members of covered associates and contributions to super PACs or multicandidate PACs (so long as contributions are not earmarked for the benefit of the Harris/Walz campaign) generally are not restricted under the SEC Pay-to-Play Rule, if not done in a manner designed to circumvent the rule.
In addition to the SEC Pay-to-Play Rule, financial services firms should be mindful of other restrictions under Municipal Securities Rule Making Board Rule G-37, Commodity Futures Trading Commission Regulation 23.451, Financial Industry Regulatory Authority Rule 2030, and SEC Rule 15Fh-6.
Similar concerns were implicated when then-Governor Mike Pence of Indiana was the Republican vice presidential nominee in 2016⁶; however, former President Donald Trump and current U.S. Senator J.D. Vance (R-OH) are not “officials” for purposes of the SEC Pay-to-Play Rule or other applicable pay-to-play rules, and contributions to the Trump/Vance campaign will not be restricted under these rules.

In addition to the SEC Pay-to-Play Rule and other federal pay-to-play rules noted above, many states and localities have also adopted pay-to-play rules that are applicable to persons who contract with their governmental agencies. Campaign contributions to other candidates may trigger disclosure obligations or certain restrictions under such rules. As political contributions can lead to unintended violations of the SEC Pay-to-Play Rule or other applicable pay-to-play rules, advisers should assess whether any of these rules present a business risk in the 2024 election cycle and take appropriate steps to protect themselves.

From a compliance standpoint, some investment advisers have implemented pre-clearance procedures for all employees, which can permit an investment adviser’s compliance team to confirm that political contributions by employees will not lead to unintended consequences. Compliance teams may also consider periodic checks of publicly available campaign contribution data to confirm contributions by employees are being disclosed pursuant to applicable internal policies.

Should you have any questions regarding the content of this alert, please do not hesitate to contact one of the authors or our other lawyers.

Footnotes

¹The rule applies to “covered advisers,” a term that includes investment advisers registered or required to be registered with the SEC, “foreign private advisers” not registered in reliance on Section 203(b)(3) of the Investment Advisers Act, and “exempt reporting advisers.”

²The rule applies to “covered associates,” which are defined for this purpose as: (i) any general partner, managing member, executive officer, or other individual with a similar status or function; (ii) any employee who solicits a government entity for the investment adviser and any person who supervises, directly or indirectly, such employee; and (iii) any political action committee (PAC) controlled by the investment adviser or by any person described in parts (i) or (ii).

³An “official” means any individual (including any election committee of the individual) who was, at the time of a contribution, a candidate (whether or not successful) for elective office or holds the office of a government entity, if the office (i) is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity; or (ii) has authority to appoint any person who is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity.

⁴Wayzata Investment Partners LLC, Investment Advisers Act Release No. 6590 (Apr. 15, 2024).

⁵Under the SEC Pay-to-Play Rule, covered associates (but not covered advisers) are permitted to make a de minimis contribution up to a US$350 amount in an election in which they are able to vote without triggering the two-year “time-out.”

⁶Clifford J. Alexander, Ruth E. Delaney & Sonia R. Gioseffi, Impact of Pay-to-Play Rules in the 2016 Election Cycle, K&L GATES (Aug. 18, 2016), https://www.klgates.com/Impact-of-Pay-to-Play-Rules-in-the-2016-Election-Cycle-08-18-2016.

Washington Shake-Up: Vice President Harris to Lead Democratic Nomination for 2024 Presidency

Following President Biden’s withdrawal from the 2024 presidential race on Sunday, the nation’s capital has experienced another political shock, leading to swift mobilization within the Democratic Party. President Biden quickly endorsed Vice President (VP) Kamala Harris as the Democratic nominee, triggering a rapid wave of support from Congressional leaders, governors, stakeholders, and party donors including former Speaker Nancy Pelosi (D-CA), Senate Majority Leader Chuck Schumer (D-NY), House Democratic Leader Hakeem Jeffries (D-NY), all 24 Democratic governors, EMILYs List, and the United Auto Workers.

VP Harris has secured enough backing from Democratic delegates to clinch her party’s nomination to challenge former president Donald Trump in November. With the election a little over 100 days away, we have highlighted VP Harris’ stance on key issues during her tenure in Congress and her 2020 Presidential bid.

Technology

VP Harris is very familiar with the tech industry due to her roots in Silicon Valley as San Francisco’s district attorney, and her subsequent roles as Attorney General and US Senator from California. Although she hasn’t called for the breakup of big tech like some of her former colleagues in the Senate, she has criticized tech CEOs for the data privacy practices and targeted advertising tactics that their companies deploy, and voiced support for general regulation of big tech firms. In the White House, she serves as President Biden’s lead on AI initiatives and has actively promoted policies aimed at mitigating AI risks such as algorithmic bias, disinformation, and privacy concerns, while maximizing its benefits for Americans.

Climate Change

VP Harris has a long history of challenging the oil industry for its role in pollution and is likely to take it a step further than President Biden in tackling climate change. In the 2020 Presidential race, Harris proposed a $10 trillion climate plan aimed at achieving a carbon-neutral US economy by 2045, featuring initiatives such as a climate pollution fee and the elimination of fossil fuel subsidies.

In the Senate, Harris authored legislation that would have authorized grants to fund projects that address the specific climate-related challenges faced by vulnerable communities and invest in critical upgrades to the nation’s water infrastructure.

As California’s attorney general, VP Harris brought lawsuits against major oil companies, including British Petroleum (BP) for failing to stop underground storage tanks from leaking gasoline at 800 sites across the state, and also filed an investigation into ExxonMobil over its climate change disclosures.

Health Care

Maternal health was at the forefront of Harris’ health care priorities during her tenure in the Senate and has continued in her current role as Vice President. She sponsored landmark legislation such as the Black Maternal Health Momnibus Act, aimed at tackling the crisis facing Black maternal health care. This legislation enhances data collection, expands access to prenatal, postpartum, and doula care in underserved communities, promotes implicit bias training for health care professionals, and funds research and innovation to improve health outcomes and reduce disparities for Black women. Although the bill was not enacted, it remained a priority in both chambers of Congress after Harris’ departure from the Senate. It is also the centerpiece bill of the Congressional Black Maternal Health Caucus. Harris also championed legislation aimed at addressing the impact of uterine fibroids on women’s health through initiatives such as research funding, patient support tactics, and health care provider training. Additionally, she supported legislation to establish a loan repayment program for mental health professionals working in areas with critical workforce shortages.

In her 2020 presidential campaign, Harris introduced a health care plan that proposed a gradual transition toward Medicare-for-All over a decade. Her plan allowed individuals and employers to initially buy into Medicare while maintaining strict regulations for private insurance options. She also consistently opposed efforts to restrict access to reproductive health care services.

Tax

With numerous tax provisions under former President Trump’s Tax Cuts and Jobs Act set to expire in 2025, all eyes are on VP Harris’ anticipated tax policy proposals. During her tenure in Congress, she championed a significant tax reform bill that would have introduced the LIFT credit—a refundable tax credit of $3,000 for single filers and $6,000 for married couples—benefiting a large portion of middle- and working-class Americans. Unlike the Earned Income Tax Credit (EITC), this credit’s amount would not depend on the number of children reported on a taxpayer’s return but would phase out as income increased. Harris emphasized that this credit aimed to boost families’ after-tax income to help them cope with rising living costs.

Additionally, she sponsored legislation in Congress aimed at protecting workers from harassment and discrimination, funding earthquake mitigation efforts, and providing housing assistance to low-income families. During her 2020 presidential campaign, Harris advocated strongly for repealing Trump’s tax law. She proposed implementing a financial transaction tax to expand Medicare coverage and advocated for taxing capital gains as part of her broader economic platform.

A Look Ahead

With midterm elections looming in the House and 33 Senate seats up for election, the impact of VP Harris’ nomination on Congressional races will be watched closely. As the first woman of color and the highest-ranking woman in US history to hold the office of Vice President, Harris’ nomination marks a pivotal moment in American politics. It may influence voter behavior, candidate strategies across the aisle, and the broader political landscape leading up to the November elections.

The Democratic National Convention (DNC) is scheduled to be held in Chicago, Illinois, from August 19 to August 22. However, due to upcoming state ballot deadlines which precede the convention date, a virtual roll call where delegates formally select Kamala Harris as the nominee will conclude by August 7. Harris is expected to choose her running mate in the coming days, as her campaign team has sent vetting materials to Arizona Sen. Mark Kelly, Michigan Gov. Gretchen Whitmer, Minnesota Gov. Tim Walz, North Carolina Gov. Roy Cooper, and Pennsylvania Gov. Josh Shapiro.

Navigating Politics in the Workplace

In this election year, employees inevitably will engage in discussions of the impactful and divisive political issues that are at the forefront of our national discourse. Employers must be aware of the ways in which political discussions in the workplace have intensified and be prepared to navigate the legal and other challenges posed by these interactions. This checklist provides employers with an overview of key topics to consider when addressing issues related to political speech in the workplace.

1. First Amendment Protection. The First Amendment protects freedom of speech, but it generally applies only to governmental action. Private employers generally have latitude to restrict political speech in the workplace unless it implicates other legal protections.

2. National Labor Relations Act (NLRA). Section 7 of the NLRA protects non-supervisory employees in the private sector, regardless of whether they are members of a union. Employers generally cannot restrict covered employees’ discussions related to the terms and conditions of their employment, i.e., “protected concerted activity.” Political speech that also falls under NLRA protection must be considered carefully.

3. Anti-Discrimination and Anti-Harassment Policies. Political speech may implicate discrimination or harassment concerns when it includes topics related to protected categories or characteristics, e.g., race, gender, religion. Employers should have robust anti-discrimination and anti-harassment policies that cover these issues.

4. State Laws Protecting Political Speech. State laws may protect employees’ political activity, expression or affiliation. These laws include prohibitions against initimdation, threats, or adverse actions based on employee voting, political activities, or candidate endorsements. Employers must assess their policies and practices in each state where they have employees because the scope of these laws varies by jurisdiction.

5. Respectful Workplace and Other Policies. Employers should consider adopting policies that promote respectful behavior and prevent political discussions from escalating into conflicts. Employers also should consider dress code and other workplace policies concerning political attire or messages, and ensure consistent, content-neutral enforcement of those policies. When reports of potential policy violations are made, employers should respond promptly.

6. Train Employees. Employees should receive regular training on company policies and their rights, including the boundaries of political speech in the workplace.

Employers should tailor their policies to address political speech while respecting employees’ rights and maintaining a positive work environment. Each workplace is unique, however, and issues often require context and fact-specific solutions with the assistance of counsel.

Staying on Course: Navigating Election Year Issues for Exempt Organizations

With the 2024 election cycle underway, it is important for exempt organizations to understand and comply with relevant restrictions on political campaign activities to safeguard their tax-exempt status and avoid triggering excise tax penalties. This alert provides an overview of the political campaign rules applicable to exempt organizations and specifically highlights the restrictions on political campaign activities applicable to Section 501(c)(3), 501(c)(4), and 501(c)(6) organizations.

Restrictions on Political Activities

Exempt organizations are subject to certain restrictions regarding their participation in political campaign activities, and the amount of permissible participation is a key distinction between Section 501(c)(3), 501(c)(4), and 501(c)(6) organizations. To comply with these restrictions, an exempt organization must (1) know their specific tax-exempt status and the restrictions that apply to them, (2) understand what activities constitute political campaign activities, (3) avoid activities that violate the applicable restrictions, and (4) mitigate the risk that activities conducted by employees in their individual capacities are attributed to the organization.

Prohibited Political Campaign Intervention for Section 501(c)(3) Organizations

Section 501(c)(3) organizations are subject to an absolute prohibition on participation or intervention in political campaign activities. Organizations that violate this ban are subject to the revocation of their tax-exempt status and the imposition of excise tax penalties on both the organization itself and organization managers who approve expenditures used for impermissible political purposes. Therefore, Section 501(c)(3) organizations must avoid activities that violate the prohibition on political campaign intervention.

Prohibited political campaign intervention occurs when an exempt organization “participates in, or intervenes in” a “candidate’s” campaign for “public office” (Section 501(c)(3)).

The term “candidate” refers to any person who has declared an intent to run for national, state, or local office and likely includes incumbents until they announce an intention not to run. A candidate also includes individuals who have yet to declare an intention to run for public office, but whose potential candidacy generates significant public speculation. The term “public office” broadly refers to any national, state, or local elective office, as well as any elected position in a political party.

An organization is considered to “participate in, or intervene in” political campaign activity by making contributions to political campaign accounts or making public statements on behalf of the organization in favor of or in opposition to a candidate for public office. Specifically, the Internal Revenue Service (IRS) regulations define participation in a political campaign as “publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to . . . a candidate” (Treas. Reg. § 1.501(c)(3)-1(c)(3)(iii)). The IRS regulations also note that political campaign intervention is not limited to these specified activities.

The IRS has interpreted prohibited political campaign intervention to include even some nonpartisan educational activities. For example, the IRS has ruled that an organization that was formed to promote public education violated the prohibition on political campaign activities when it announced the names of the school board candidates it considered most qualified following an objective review of the candidates’ qualifications (Rev. Rul. 67-71, 1967-1 C.B. 125).

These restrictions on political campaign activities do not extend to the officers, directors, or employees of a 501(c)(3) organization, provided they are acting in their individual capacities. It is particularly important, however, to mitigate the risk that any personal political activities conducted by officers, directors, or employees will be attributed to the organization. An exempt organization should ensure their employees do not use institutional resources to engage in personal political campaign activities or act in a manner that suggests they are speaking on behalf of the organization when engaged in campaign advocacy. Exempt organizations should adopt clear policies regarding political activities and institutional resources and communicate the importance of such policies to employees during an election year.

Permissible Political Activities

Some educational activities that are election-related are permissible, however, and will not be considered prohibited campaign intervention. In order to be considered “educational,” the activities must present “a sufficiently full and fair exposition of the pertinent facts” (Treas. Reg. § 1.501(c)(3)-1(d)(3)). The information presented must “permit an individual or the public to form an independent opinion or conclusion” and not be biased. Activities that satisfy this definition may be considered permissible educational activities rather than prohibited or restricted political activities.

The following types of educational activities, although election-related, are generally permissible:

Voter Registration: Voter registration drives are not considered political campaign activities if they are conducted in a nonpartisan and fair manner. An organization conducting the voter registration drive should not expressly advocate for or against any candidates or political parties as part of the voter registration. They also generally should not name candidates or provide their party affiliations. If any candidates are named, all candidates should be named. All persons interested in registering must also be permitted to register, regardless of their political preference or party affiliation.
Voter Education: Certain forms of voter education, such as the distribution of voter guides and voting records, may qualify as an educational activity provided the organization avoids editorial commentary and ensures the materials cover a broad range of issues. Organizations must not demonstrate a preference toward a certain candidate or only cover a narrow range of issues when engaging in voter education activities.
Candidate Debates and Forums: Providing a fair, neutral forum for candidate debates may qualify as an educational activity so long as the debate provides equal time to all qualified candidates. Organizations should be particularly careful to include all qualified candidates, cover a broad range of topics, have a nonpartisan group compose the questions, and clarify that the candidates’ views are not the views of the exempt organization. The moderator selected by the organization can ensure the candidates follow the ground rules for the debate, but they should not ask questions or comment on the candidate’s statement in a way the indicates support or opposition to the candidate or their positions.

Section 501(c)(4) Organizations

Section 501(c)(4) social welfare organizations have more latitude to engage in political campaign activities than Section 501(c)(3) organizations. Section 501(c)(4) organizations are not subject to an absolute ban on campaign intervention, but instead are permitted to engage in some limited political activities, provided they remain primarily engaged in social welfare activities. The IRS will compare an organization’s political activities and expenditures (plus its non-exempt activities) with its social welfare activities to determine whether the organization remains primarily engaged in promoting social welfare consistent with its tax-exempt status. Accordingly, Section 501(c)(4) organizations should maintain records to ensure they remain primarily engaged in social welfare activities during an election year. If a Section 501(c)(4) organization engages in political activities, it must also provide its members with a notice of how much of their dues were used towards political activities and determine the proxy tax on those expenditures. If member dues are used for political campaign activities, then a portion of the dues may not be a deductible business expense under Section 162.

Section 501(c)(6) Organizations

Business leagues described in Section 501(c)(6) are subject to the same less-stringent rules regarding political campaign activities as Section 501(c)(4) organizations. Section 501(c)(6) organizations may engage in some political activities on a limited basis, provided such political activities are not the organization’s primary activity. If a Section 501(c)(6) organization engages in political activities, it must also provide its members with a notice of how much of their dues were used towards political activities and determine the proxy tax on those expenditures. If member dues are used for political campaign activities, then a portion of the dues may not be a deductible business expense under Section 162.

Related Restrictions

The scope of this alert is limited to restrictions on political campaign activities under federal tax law. Exempt organizations are also subject to campaign finance restrictions and requirements by the Federal Election Commission, as well as rules regarding legislative or lobbying activities imposed by the IRS, the Lobbying Disclosure Act of 1995, and other federal, state, and local laws, which are beyond the scope of this alert.

Supreme Court Upholds State Courts’ Power of Judicial Review Over Election Matters

On June 27, 2023, the United States Supreme Court upheld a decision by North Carolina’s highest court holding that the North Carolina legislature went too far in gerrymandering voting district maps. The Court affirmed the authority of state courts to review the decisions of state legislatures on election matters, rejecting the “independent state legislature theory.” The theory, taken to its extreme, is that no branch of state government can question a state legislature’s decision regarding any federal election. The ruling is an encouraging sign for states like Arizona, Illinois, and Michigan, where independent redistricting commissions have created, or are creating, new maps intended to represent non-partisan, or less partisan, boundary drawing and citizen-driven ballot initiatives to protect voters’ rights.

The plaintiffs in Moore v. Harper, 600 U.S. ___ (2023), were groups and individuals challenging North Carolina’s 2021 congressional districting map, which they viewed as unacceptable gerrymandering, created to favor Republican candidates. The legislative defendants asserted that in creating the new map, they had exercised the authority established by the “Elections Clause” in Article I, Section 4 of the United States Constitution that provides that state legislatures shall prescribe, “the Times, Places and Manner of” federal elections. Although North Carolina judges had found the new map to be “a partisan outlier intentionally and carefully designed to maximize Republican advantage in North Carolina’s Congressional delegation,” the legislative defendants argued the map was beyond the reach of judicial review. The Supreme Court had to decide whether “the Elections Clause insulates state legislatures from review by state courts for compliance with state law.” Moore, slip opinion at p 11.

Writing for the majority, Chief Justice John Roberts began the analysis by citing our country’s long-standing legal tradition of judicial review of the constitutionality of legislative acts. The majority opinion noted the 1787 decision in Bayard v Singleton, where the North Carolina Supreme Court found a law banning British loyalists from challenging property seizures was unconstitutional. The opinion goes on to review many decades of decisions where courts have considered the “interplay between state constitutional provisions and a state legislature’s exercise of authority under the Elections Clause.” Moore, slip opinion at p 15.

Looking at the other side of the case, the Court examined the legislative defendants’ arguments about the impact of the Election Clause. Rejecting Justice Clarence Thomas’s dissent, Roberts addressed the concept known as “independent state legislature theory” which contends that, “because the Federal Constitution gives state legislatures the power to regulate congressional elections, only [the Federal] Constitution can restrain the exercise of that power.” Id at 18. The historical references supporting this theory are debunked in the Moore decision, and many commentators have stated the decision in Moore slams the door on the extreme view that state legislative acts around federal elections are not subject to review by state courts.

The Moore decision, however, refers to a need to balance competing interests: “Although we conclude that the Elections Clause does not exempt state legislatures from the ordinary constraints imposed by state law, state courts do not have free rein.” Moore, slip opinion at p 26. The opinion goes on to note:

We do not adopt these or any other test by which we can measure state court interpretations of state law in cases implicating the Elections Clause… We hold only that state courts may not transgress the ordinary bounds of judicial review such that they arrogate to themselves the power vested in state legislatures to regulate federal elections.

Id. p 28-29. It therefore remains to be seen how difficult it will be to challenge state legislatures in their future attempts at partisan district drawing in state courts. Paying homage to the Supreme Court decision in Bush v Gore, it also leaves open the question of when federal courts may find that a state court has transgressed the “ordinary bounds of judicial review.” And, Moore leaves the Court’s holding in Rucho v Common Cause, 139 S Ct 2484 (2019) that partisan gerrymandering claims brought in federal court are not justiciable because they present a political question beyond their reach.

Nevertheless, taken in the context of other decisions reached this term, such as the Alabama districting case implicating the Voting Rights Act (Allen v Milligan), the recent decision in Moore gives comfort to many traditionalists who have been increasingly fearful of sudden and/or extreme changes to norms in American jurisprudence.

Click Here for More Election Law News at the National Law Review.

Category: Elections

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