IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v27y1999i5p481-510.html
   My bibliography  Save this article

Why do Tax and Expenditure Limitations Pass in State Elections?

Author

Listed:
  • James Alm

    (Georgia State University)

  • Mark Skidmore

    (University of Wisconsin-Whitewater)

Abstract

This article uses information on the actual conditions in all states over the extended period 1978 to 1990 to estimate the probability of tax and expenditure limitation (TEL) passage in state elections. This probability is a function of economic, fiscal, demographic, and political factors in the state, as well as specific features of the TEL; these variables are chosen to measure demand-side and supply-side features of the political process in the state. The estimation procedures use maximum likelihood techniques; a special feature of the estimation is correction for the sample selection bias that may occur with standard probit estimation because a threshold set of conditions must exist before any limitation is even placed on a statewide ballot and a voting outcome is actually observed. The results show that increases in both property taxation and local revenues relative to state revenues increase the probability of TEL passage; however, increases in total state tax revenues are associated with a lower likelihood of TEL passage. Furthermore, changes in income and in the tax price of state and local public services are important determinants of TEL passage over time. Specific features of a limitation do not generally affect passage probabilities, although a state that has already imposed a limitation is less likely to do so again. Political and demographic features of the state also have little impact on TEL outcomes.

Suggested Citation

  • James Alm & Mark Skidmore, 1999. "Why do Tax and Expenditure Limitations Pass in State Elections?," Public Finance Review, , vol. 27(5), pages 481-510, September.
    • Handle: RePEc:sae:pubfin:v:27:y:1999:i:5:p:481-510
    DOI: 10.1177/109114219902700502
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114219902700502
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114219902700502?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
    ---><---

    References listed on IDEAS

    as
    1. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-296, June.
    2. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    3. George Stigler, 1972. "Economic competition and political competition," Public Choice, Springer, vol. 13(1), pages 91-106, September.
    4. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, September.
    5. Gramlich, Edward M & Rubinfeld, Daniel L, 1982. "Micro Estimates of Public Spending Demand Functions and Tests of the Tiebout and Median-Voter Hypotheses," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 536-560, June.
    6. Steve Mariotti, 1978. "An economic analysis of the voting on Michigan's tax and expenditure limitation amendment," Public Choice, Springer, vol. 33(3), pages 15-26, January.
    7. Howard R. Bowen, 1943. "The Interpretation of Voting in the Allocation of Economic Resources," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 58(1), pages 27-48.
    8. Skidmore, Mark, 1999. "Tax and Expenditure Limitations and the Fiscal Relationships between State and Local Governments," Public Choice, Springer, vol. 99(1-2), pages 77-102, April.
    9. Robert Stein & Keith Hamm & Patricia Freeman, 1983. "An analysis of support for tax limitation referenda," Public Choice, Springer, vol. 40(2), pages 187-194, January.
    10. Thomas Romer & Howard Rosenthal, 1979. "Bureaucrats Versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(4), pages 563-587.
    11. Gordon Tullock, 1959. "Problems of Majority Voting," Journal of Political Economy, University of Chicago Press, vol. 67(6), pages 571-571.
    12. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Daniel R Mullins, 2010. "Fiscal Limitations on Local Choice: The Imposition and Effects of Local Government Tax and Expenditure Limitations," Chapters, in: Sally Wallace (ed.), State and Local Fiscal Policy, chapter 9, Edward Elgar Publishing.
    2. 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.
    3. Raúl Alberto Ponce Rodríguez, 2009. "Political institutions and tax rate initiatives," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 65-94, November.
    4. James M. Poterba, 1996. "Do Budget Rules Work?," NBER Working Papers 5550, National Bureau of Economic Research, Inc.
    5. Mark Skidmore & Chad Cotti & James Alm, 2013. "The Political Economy of State Government Subsidy Adoption: The Case of Ethanol," Economics and Politics, Wiley Blackwell, vol. 25(2), pages 162-180, July.
    6. Leah Brooks & Yosh Halberstam & Justin Phillips, 2016. "Spending Within Limits: Evidence From Municipal Fiscal Restraints," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(2), pages 315-352, June.
    7. Blankenau, William & Skidmore, Mark, 2002. "The Relationship Between Education Finance Reform and Tax and Expenditure Limitations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 32(1), pages 1-18.
    8. Thomas A. Husted & Lawrence W. Kenny, 2007. "Explanations for States Adopting Limits on Educational Spending," Public Finance Review, , vol. 35(5), pages 586-605, September.
    9. Deborah A. Carroll, 2005. "Are State Governments Prepared for Fiscal Crises? A Look at Revenue Diversification during the 1990s," Public Finance Review, , vol. 33(5), pages 603-633, September.
    10. Samuel H. Baker, 2005. "Why Executive Power Centralizes Government," Public Finance Review, , vol. 33(6), pages 747-766, November.
    11. Michael S. Hayes, 2015. "The Differential Effect of the No Child Left Behind Act (NCLB) on States’ Contributions to Education Funding in States with Binding School District Tax and Expenditure Limitations," Public Budgeting & Finance, Wiley Blackwell, vol. 35(1), pages 49-72, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Benoît Le Maux, 2009. "Governmental behavior in representative democracy: a synthesis of the theoretical literature," Public Choice, Springer, vol. 141(3), pages 447-465, December.
    2. Eric J. Brunner & Stephen L. Ross, 2007. "How Decisive Is the Decisive Voter?," Working papers 2007-28, University of Connecticut, Department of Economics, revised Aug 2008.
    3. Mark Skidmore & William Dyar, 2015. "Diminishing Health, Rising Health Care Costs and Long-run Growth in Local Government Spending," CESifo Working Paper Series 5646, CESifo.
    4. Janet G. Stotsky, 1990. "The Effect of the Elimination of Sales Tax Deductibility on State Fiscal Decisions," Public Finance Review, , vol. 18(1), pages 25-46, January.
    5. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    6. Randall Holcombe, 2005. "Government growth in the twenty-first century," Public Choice, Springer, vol. 124(1), pages 95-114, July.
    7. Blankenau, William & Skidmore, Mark, 2002. "The Relationship Between Education Finance Reform and Tax and Expenditure Limitations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 32(1), pages 1-18.
    8. Eric J. Brunner & Stephen L. Ross, 2009. "Is the Median Voter Decisive? Evidence of 'Ends Against the Middle' From Referenda Voting Patterns," Working papers 2009-02, University of Connecticut, Department of Economics, revised May 2010.
    9. Randall Holcombe, 1989. "The median voter model in public choice theory," Public Choice, Springer, vol. 61(2), pages 115-125, May.
    10. Becker, Gary S & Mulligan, Casey B, 2003. "Deadweight Costs and the Size of Government," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 293-340, October.
    11. Sergey Sinelnikov & Pavel Kadochnikov & Ilya Trunin, 2008. "From Elections to Appointments of the Regional Governors: Major Challenges and Outcomes," Published Papers 2, Gaidar Institute for Economic Policy, revised 2008.
    12. Fabio Padovano, 2013. "Are we witnessing a paradigm shift in the analysis of political competition?," Public Choice, Springer, vol. 156(3), pages 631-651, September.
    13. Rhee, Se-Koo, 1996. "The impact of intergovernmental grants-in-aid on public school expenditure under the segregated school system," ISU General Staff Papers 1996010108000012396, Iowa State University, Department of Economics.
    14. Jorge Martinez-Vazquez & Robert McNab, 1997. "Fiscal Decentralization, Economic Growth, and Democratic Governance," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9707, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    15. Mark Skidmore & Chad Cotti & James Alm, 2013. "The Political Economy of State Government Subsidy Adoption: The Case of Ethanol," Economics and Politics, Wiley Blackwell, vol. 25(2), pages 162-180, July.
    16. Rodney Fort, 1988. "The median voter, setters, and non-repeated construction bond issues," Public Choice, Springer, vol. 56(3), pages 213-231, March.
    17. William F. Blankenau & Mark L. Skidmore, 2004. "School Finance Litigation, Tax and Expenditure Limitations, and Education Spending," Contemporary Economic Policy, Western Economic Association International, vol. 22(1), pages 127-143, January.
    18. D.P. Doessel & Abbas Valadkhani, 2002. "Public Finance and The Size of Government: A Literature Review and Econometric Results for Fiji," School of Economics and Finance Discussion Papers and Working Papers Series 108, School of Economics and Finance, Queensland University of Technology.
    19. Stina Hökby & Tore Söderqvist, 2003. "Elasticities of Demand and Willingness to Pay for Environmental Services in Sweden," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(3), pages 361-383, November.
    20. Arye L. Hillman & Heinrich W. Ursprung, 2016. "Where are the rent seekers?," Constitutional Political Economy, Springer, vol. 27(2), pages 124-141, June.

    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:sae:pubfin:v:27:y:1999:i:5:p:481-510. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: SAGE Publications (email available below). General contact details of provider: .

    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.