Proposition 13 and the California Fiscal Shell Game

49 Pages Posted: 8 Feb 2010 Last revised: 12 Nov 2013

Colin H. McCubbins

Stanford University

Mathew D. McCubbins

Department of Political Science and Law School, Duke University

Date Written: December 31, 2009

Abstract

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 secondary 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 to spend the proceeds so gained. The devolution of authority has been among the swiftest growing aspects of government finance in California, to a far greater extent than in other states. Lastly, we argue that the new tax and spending authorities that have been created to circumvent Proposition 13 have led to a reduction in government transparency and accountability and pose an increasing threat to our democracy.

Keywords: Proposition 13, California, Taxes, Expenditures, Tax Limitations

Suggested Citation

McCubbins, Colin H. and McCubbins, Mathew D., Proposition 13 and the California Fiscal Shell Game (December 31, 2009). USC CLEO Research Paper No. C10-16; USC Law Legal Studies Paper No. 10-19. Available at SSRN: https://ssrn.com/abstract=1548024 or http://dx.doi.org/10.2139/ssrn.1548024

Colin H. McCubbins (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Mathew D. McCubbins

Department of Political Science and Law School, Duke University ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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