Despite the fact that most Supreme Court cases referred to the scope of federal campaign finance laws, there were also important disputes over the scope of state campaign regulations, which raised the problem of money as a form of expression, as well as donations made by corporations. Both of these issues occurred in Austin v. Michigan Chamber of Commerce, which was decided by the Supreme Court in 1990. From the analysis of judicial reasoning in such decisions, one can derive important arguments regarding the discussion over First Amendment guarantees with regard to financial participation in the electoral process.

The controversy concerned the actions of the Michigan Chamber of Commerce, which intended to publish – even though its ad discussed the issues – materials promoting a candidate to the state legislature. Classified as independent expenditure, it was also prohibited by state law (Michigan Campaign Finance Act of 1976). The law allowed corporate expenditures only if they were made from independent sources, known as ‘segregated funds,’ but the Michigan Chamber of Commerce used its general funds instead. In a 6–3 decision, the Supreme Court upheld the Michigan regulations, arguing that there was a compelling interest of the state to control the financial participation of corporations in a campaign election. The Justices stated that despite First Amendment protection, the government should manage the process whereby political candidates were controlled by corporate entities. According to the majority, the fact that the Michigan law provided for independent expenditures by corporations reduced the threat of corruption in the system. In a dissenting opinion Justice Antonin Scalia pointed out that the Court should have interpreted the First Amendment free speech guarantees from an originalist perspective and acknowledged a right to political speech by corporations. In 2010, the Supreme Court overruled the Austin decision permitting corporate funding in Citizens United v. F.E.C.

MR. JUSTICE MARSHALL delivered the opinion of the Court