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Other People's Taxes: Nonresident Voters and Statewide Limitation of Local Government

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  • Vigdor, Jacob L

Abstract

Why would voters resort to a statewide tax limitation to force change in their own local government? This paper develops and tests the hypothesis that property tax limitations succeeded because they allowed voters to lower tax rates in other communities. Statewide limitations effectively extend the voting franchise to individuals who have no standing in local elections. Voters may have preferences for tax and expenditure levels in other jurisdictions because they receive rents from employment in those jurisdictions, because they directly own taxable assets in those jurisdictions, or because changes in other jurisdictions might influence their own residential location choice. Empirical tests of this hypothesis focus on the Massachusetts experience with Proposition 2 1/2, which passed in 1980. Voting patterns, household mobility patterns, and postproposition growth in property values all support the nonresident hypothesis.

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  • Vigdor, Jacob L, 2004. "Other People's Taxes: Nonresident Voters and Statewide Limitation of Local Government," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 453-476, October.
    • Handle: RePEc:ucp:jlawec:y:2004:v:47:i:2:p:453-76
    DOI: 10.1086/425061
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    Cited by:

    1. Federico Revelli, 2013. "Tax Mix Corners and Other Kinks," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 741-776.
    2. Cheung, Ron & Cunningham, Chris, 2011. "Who supports portable assessment caps: The role of lock-in, mobility and tax share," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 173-186, May.
    3. 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.
    4. Daniele Coen-Pirani & Michael Wooley, 2018. "Fiscal Centralization: Theory and Evidence from the Great Depression," American Economic Journal: Economic Policy, American Economic Association, vol. 10(2), pages 39-61, May.
    5. Ron Cheung, 2005. "The Effect of Property Tax Limitations on Residential Private Governments," Working Papers wp2005_05_01, Department of Economics, Florida State University.
    6. Federico Revelli, 2012. "Business taxation and economic performance in hierarchical government structures," Working Papers 2012/12, Institut d'Economia de Barcelona (IEB).
    7. Revelli Federico, 2012. "Business taxation and economic performance in hierarchical government structures," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201204, University of Turin.
    8. Hawley, Zackary & Rork, Jonathan C., 2015. "Competition and property tax limit overrides: Revisiting Massachusetts' Proposition 2½," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 93-107.
    9. Springer, Job D. & Lusby, Aaron K. & Leatherman, John C. & Featherstone, Allen M., 2007. "Property Tax Lids and the Effect on Kansas," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34887, Southern Agricultural Economics Association.
    10. David Switzer, 2020. "The Context of Responsiveness: Resident Preferences, Water Scarcity, and Municipal Conservation Policy," Review of Policy Research, Policy Studies Organization, vol. 37(2), pages 260-279, March.

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