TY  - JOUR
AU  - Cutler,David M.
AU  - Elmendorf,Douglas W.
AU  - Zeckhauser,Richard J.
TI  - Restraining the Leviathan: Property Tax Limitation in Massachusetts
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6196
PY  - 1997
Y2  - September 1997
UR  - http://www.nber.org/papers/w6196
L1  - http://www.nber.org/papers/w6196.pdf
N1  - Author contact info:
David M. Cutler
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA  02138
Tel: 617/496-5216
Fax: 617/496-8951
E-Mail: dcutler@harvard.edu

Douglas Elmendorf
Director, Congressional Budget Office
Congressional Budget Office
Ford House Office Building, 4th Floor
Second and D Streets, SW
Washington, DC 20515
E-Mail: doug.elmendorf@cbo.gov

Richard J. Zeckhauser
John F. Kennedy School of Government
Harvard University
79 John F. Kennedy Street
Cambridge, MA  02138
Tel: 617/495-1174
Fax: 617/384-9340
E-Mail: richard_zeckhauser@harvard.edu
AB  - 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.
ER  -