First Nat. Bank of Boston v. Bellotti

1978-06-26

Headline: Massachusetts law barring banks and business corporations from spending money to influence ballot referendums is struck down, allowing corporations to speak publicly about policy issues like a proposed income tax amendment.

Holding: The Court held that Massachusetts's law forbidding corporate expenditures to influence referendums violates the First Amendment and reversed the state court, allowing corporations to spend money to communicate views on public issues.

Real World Impact:

Allows corporations to spend money to express views on ballot questions.
Limits state power to bar corporate advertising about tax referendums.
Raises questions about similar state and federal restrictions on corporate spending.

Topics: free speech, corporate political spending, ballot measures, tax referendums

Summary

Background

Two national banks and three business corporations wanted to spend money to publicize their opposition to a proposed constitutional amendment that would allow a graduated personal income tax. Massachusetts law (Mass. Gen. Laws ch. 55, § 8) criminalized corporate contributions or expenditures to influence any ballot question unless it "materially affect[ed]" the corporation's business, and declared questions solely about individual taxation never material. The state court upheld the statute and rejected the corporations' First Amendment claim; the Attorney General had threatened enforcement and the corporations brought suit before the election.

Reasoning

The Supreme Court rejected the idea that a corporation's identity removes its speech from First Amendment protection. The Court held the speech at issue—discussion of a major public policy question—lies at the core of the First Amendment. It found the statute's "materially affecting" limitation and the categorical ban on corporate speech about individual taxation impermissibly restrict who may speak and about what. The State’s asserted interests (preserving voter confidence and protecting dissenting shareholders) did not meet the Court’s demand for a compelling justification closely tailored to the restriction. The Court therefore reversed the state court and invalidated the challenged prohibition.

Real world impact

The decision prevents Massachusetts from criminally forbidding the proposed corporate expenditures in this context and limits a State’s power to bar corporate advertisements on ballot questions. Because many States and federal rules regulate corporate political spending, the opinion signals broader consequences for laws that treat corporate speakers differently.

Dissents or concurrances

Justice White (joined by Brennan and Marshall) would have upheld the law to protect shareholders and prevent corporate domination of politics, while Justice Rehnquist stressed corporate status as a creature of the State and urged deference to legislative judgment.