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State and Local Government Law

Faculty Scholarship

Tax expenditures

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Proposition 13 And The California Fiscal Shell Game, Colin H. Mccubbins, Mathew D. Mccubbins Jan 2010

Proposition 13 And The California Fiscal Shell Game, Colin H. Mccubbins, Mathew D. Mccubbins

Faculty Scholarship

We study the effects of California’s tax and expenditure limitations, especially Proposition 13. We find that Proposition 13 was indeed effective at reducing both ad valorem property taxes per capita and total state and local taxes per capita, at least in the short run. We further argue that there have been unintended second- ary effects that have resulted in an increased tax burden, undermining the aims of Proposition 13. To circumvent the limits imposed by Proposition 13, the state has drastically increased nonguaranteed debt, has privatized the public fisc, and has devolved the authority to lay and collect taxes and …


Making Mountains Of Debt Out Of Molehills: The Pro-Cyclical Implications Of Tax And Expenditure Limitations, Mathew D. Mccubbins, Ellen Moule Jan 2010

Making Mountains Of Debt Out Of Molehills: The Pro-Cyclical Implications Of Tax And Expenditure Limitations, Mathew D. Mccubbins, Ellen Moule

Faculty Scholarship

This paper presents evidence that property tax limits have detrimental effects on state and local revenues during recessions. Property tax limits cause states to rely on income–elastic revenue sources, such as the income tax or charges and fees. Greater reliance on these revenue sources results in greater revenue declines during economic downturns. We present analysis of time–series, cross–sectional data for the U.S. states for each of these conclusions. Our results suggest that states would have fewer and more modest financial problems during economic downturns if they did not enact property tax limitations.


For Whom The Tel Tolls: Can State Tax And Expenditure Limits Effectively Reduce Spending?, Thad Kousser, Mathew D. Mccubbins, Ellen Moule Jan 2008

For Whom The Tel Tolls: Can State Tax And Expenditure Limits Effectively Reduce Spending?, Thad Kousser, Mathew D. Mccubbins, Ellen Moule

Faculty Scholarship

Can voters stop state governments from spending at high rates through the enactment of tax and expenditure limits (TELs), or do these laws become dead letters? We draw upon the principal-agent literature to theorize that TELs – one of the most frequent uses of the initiative process across the country – may be circumvented by the sorts of elected officials who would inspire their passage.

In order to investigate our claim, we conduct an event study. First, we test for the effectiveness of TELs across states using a differences-in-differences model. Second, we dissect our treatment variable using different legal provisions …