IDEAS home Printed from https://ideas.repec.org/a/ntj/journl/v63y2010i3p603-21.html
   My bibliography  Save this article

Making Mountains of Debt Out of Molehills: The Pro-Cyclical Implications of Tax and Expenditure Limitations

Author

Listed:
  • McCubbins, Mathew D.
  • Moule, Ellen

Abstract

This paper presents evidence that property tax limits have detrimental effects on state and local revenues during recessions. Property tax limits cause states to rely on income-elastic revenue sources, such as the income tax or charges and fees. Greater reliance on these revenue sources results in greater revenue declines during economic downturns. We present analysis of time-series, cross-sectional data for the U.S. states for each of these conclusions. Our results suggest that states would have fewer and more modest financial problems during economic downturns if they did not enact property tax limitations.

Suggested Citation

  • McCubbins, Mathew D. & Moule, Ellen, 2010. "Making Mountains of Debt Out of Molehills: The Pro-Cyclical Implications of Tax and Expenditure Limitations," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(3), pages 603-621, September.
  • Handle: RePEc:ntj:journl:v:63:y:2010:i:3:p:603-21
    DOI: 10.17310/ntj.2010.3.09
    as

    Download full text from publisher

    File URL: https://doi.org/10.17310/ntj.2010.3.09
    Download Restriction: Access is restricted to subscribers and members of the National Tax Association.

    File URL: https://doi.org/10.17310/ntj.2010.3.09
    Download Restriction: Access is restricted to subscribers and members of the National Tax Association.

    File URL: https://libkey.io/10.17310/ntj.2010.3.09?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Benedict S. Jimenez, 2017. "Institutional Constraints, Rule-Following, and Circumvention: Tax and Expenditure Limits and the Choice of Fiscal Tools During a Budget Crisis," Public Budgeting & Finance, Wiley Blackwell, vol. 37(2), pages 5-34, June.
    2. Łukomska Julita & Neneman Jarosław, 2018. "Local Taxes and Fees as a Source of Revenue for Polish Municipalities: Substitutes or Complements?," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 14(3), pages 49-59, September.
    3. Andrea Louise Campbell & Michael W. Sances, 2013. "State Fiscal Policy during the Great Recession," The ANNALS of the American Academy of Political and Social Science, , vol. 650(1), pages 252-273, November.
    4. Pengju Zhang, 2018. "The unintended impact of tax and expenditure limitations on the use of special districts: the politics of circumvention," Economics of Governance, Springer, vol. 19(1), pages 21-50, February.
    5. Tom Downes & Kieran M. Killeen, 2014. "So Slow to Change: The Limited Growth of Nontax Revenues in Public Education Finance, 1991–2010," Education Finance and Policy, MIT Press, vol. 9(4), pages 567-599, October.
    6. Matthew Walshe, 2019. "Does Local Government Autonomy Promote Fiscal Sustainability? Lessons from Illinois," IMFG Papers 42, University of Toronto, Institute on Municipal Finance and Governance.
    7. Nalitra Thaiprasert & Dagney Faulk & Michael J. Hicks, 2013. "A Regional Computable General Equilibrium Analysis of Property Tax Rate Caps and a Sales Tax Rate Increase in Indiana," Public Finance Review, , vol. 41(4), pages 446-472, July.
    8. Judith I. Stallmann & Steven Deller & Lindsay Amiel & Craig Maher, 2012. "Tax and Expenditure Limitations and State Credit Ratings," Public Finance Review, , vol. 40(5), pages 643-669, September.
    9. Sharon N. Kioko & Christine R. Martell, 2012. "Impact of State-Level Tax and Expenditure Limits (TELs) on Government Revenues and Aid to Local Governments," Public Finance Review, , vol. 40(6), pages 736-766, November.
    10. Steven Deller & Craig Maher & Judith Stallmann, 2021. "Do tax and expenditure limitations exacerbate rising income inequality?," Economics and Politics, Wiley Blackwell, vol. 33(3), pages 611-643, November.
    11. Cheongsin Kim, 2015. "The Effects of Recessions on Contracting Moderated by Institutional Arrangements of Government: Evidence From California Cities, 1993–2009," Public Budgeting & Finance, Wiley Blackwell, vol. 35(2), pages 40-65, June.
    12. Alex Williams, 2020. "Moral Hazard in a Modern Federation," Economics Public Policy Brief Archive ppb_152, Levy Economics Institute.
    13. Steven Deller & Judith I. Stallmann & Lindsay Amiel, 2012. "The Impact of State and Local Tax and Expenditure Limitations on State Economic Growth," Growth and Change, Wiley Blackwell, vol. 43(1), pages 56-84, March.
    14. Austin M Aldag & Mildred E Warner & Yunji Kim, 2019. "Leviathan or Public Steward? Evidence on Local Government Taxing Behavior from New York State," Publius: The Journal of Federalism, CSF Associates Inc., vol. 49(4), pages 671-693.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:63:y:2010:i:3:p:603-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The University of Chicago Press (email available below). General contact details of provider: https://www.ntanet.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.