Restraining the Leviathan: Property Tax Limitation in Massachusetts
Board of Governors of the Federal Reserve System Finance and Economics Discussion Series No. 97-47
51 Pages Posted: 20 Apr 1998
Date Written: September 11, 1997
We examine the effects of Proposition 2-1/2--a property tax limitation law approved by Massachusetts voters in 1980--and assess voter satisfaction with these effects. We find that the Proposition had a smaller effect on local revenues and spending than expected, as a result of both amendments to the law and a strong economy. Voters in 1980 believed there was significant waste in local government, partly because of an inability to monitor local officials. Proposition 2-1/2 curbed these agency losses, but direct local override votes and municipal expenditure patterns imply that the Proposition initially reduced spending more than voters wanted.
JEL Classification: D72, H41, H71, H72
Suggested Citation: Suggested Citation