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

See all articles by David M. Cutler

David M. Cutler

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Douglas W. Elmendorf

Harvard Kennedy School

Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 11, 1997

Abstract

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

Cutler, David M. and Elmendorf, Douglas W. and Zeckhauser, Richard J., Restraining the Leviathan: Property Tax Limitation in Massachusetts (September 11, 1997). Board of Governors of the Federal Reserve System Finance and Economics Discussion Series No. 97-47. Available at SSRN: https://ssrn.com/abstract=73528 or http://dx.doi.org/10.2139/ssrn.73528

David M. Cutler

Harvard University - Department of Economics ( email )

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Douglas W. Elmendorf (Contact Author)

Harvard Kennedy School ( email )

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Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS) ( email )

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National Bureau of Economic Research (NBER) ( email )

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