The Federal Reserve Board eagle logo links to home page
Finance and Economics Discussion Series
The Finance and Economics Discussion Series logo links to FEDS home page Restraining the Leviathan: Property Tax Limitation in Massachusetts
David M. Cutler, Douglas W. Elmendorf, and Richard Zeckhauser
1997-47


Abstract: We examine the effects of Proposition 2-1/2--a property tax limitation law approved by Massachusetts voters in 1980--and assess voter satisfaction with these effects. We find that the proposition had a smaller effect on local revenues and spending than expected, as a result of both amendments to the law and a strong economy. Voters in 1980 believed there was significant waste in local government, partly because of an inability to monitor local officials. Proposition 2-1/2 curbed these agency losses, but direct local override votes and municipal expenditure patterns imply that the proposition initially reduced spending more than voters wanted.

Keywords: Property tax limits, agency problems

Full paper (246 KB PDF) | Full paper (431 KB Postscript)


Home | Economic research and data | FR working papers | FEDS | 1997 FEDS papers
Accessibility
To comment on this site, please fill out our feedback form.
Last update: January 27, 1998