NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Restraining the Leviathan: Property Tax Limitation in Massachusetts

David M. Cutler, Douglas W. Elmendorf, Richard J. Zeckhauser

NBER Working Paper No. 6196
Issued in September 1997
NBER Program(s):   PE

Proposition 2.5, a ballot initiative approved by Massachusetts voters in 1980 sharply reduced local property taxes and restricted their future growth. We examine the effects of Proposition 2.5 on municipal finances and assess voter satisfaction with these effects. We find that Proposition 2.5 had a smaller impact on local revenues and spending than expected; amendments to the law and a strong economy combined to boost both property tax revenue and state aid above forecasted amounts. Proposition 2.5 did reduce local revenues substantially during the recession of the early 1990s. There were two reasons for voter discontent with the pre-Proposition 2.5 financing system: agency losses from inability to monitor government were perceived to be high, and individuals viewed government as inefficient because their own tax burden was high. Through override votes, voters approved substantial amounts of taxes above the limits imposed by the Proposition.

download in pdf format
   (1804 K)

email paper

This paper is available as PDF (1804 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6196

Published: Journal of Public Economics, Vol. 71, no. 3 (March 1999): 313-334. citation courtesy of

Users who downloaded this paper also downloaded these:
Wasi and White w11108 Property Tax Limitations and Mobility: The Lock-in Effect of California's Proposition 13
Arnott and Petrova w8913 The Property Tax as a Tax on Value: Deadweight Loss
Cutler, Elmendorf, and Zeckhauser w4283 Demographic Characteristics and the Public Bundle
Mieszkowski and Zodrow w1481 The New View of the Property Tax: A Reformulation
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us