Tax and Expenditure Limitations: Introduction and Overview

Abstract

A principle and an event were key motivating factors behind the American Revolution and subsequent establishment of the United States. The principle was ‘‘No taxation without representation,’’ protesting the absence of colonists’ representation in England on decisions relating to the colonial power’s ability to extract payment for the support of government. The event was the Boston Tea Party, where patriots threw bags of tea into Boston Harbor to protest taxation of that everyday staple. Over 200 years later, 1978’s Proposition 13 in California reignited the flames of taxpayer revolt in America. Voters found that they could go into a voting booth and grant themselves a $7 billion property tax break. While other state and local tax and expenditure limitations (TELs) had been imposed throughout our nation’s history, and the trend had accelerated in the 1970s, Proposition 13 captured the attention of the nation, yielding its sponsor, Howard Jarvis, an unlikely Time magazine cover. The general issue of the level of, and dissatisfaction with, taxes swept across the land, and played a large part in the 1980 election of Ronald Reagan to the presidency. The anti-tax stance has remained a staple of campaigns ever since. As Proposition 13 had been put on the ballot through the initiative process, its progeny appeared most rapidly and widely in those states where voters had direct access to the ballot. Indeed, one study of early initiatives found that access to the ballot was a more significant predictor of a voter initiative passing than was the level of a state’s taxation. Legislators in states with the initiative process often either passed their own TEL measures or put legislatively crafted limits out to referendum in an effort to prevent more severe voter-initiated action. Legislators in states without the initiative often did the same, fearful of retribution at reelection time for failure to act. Within two years of the passage of Proposition 13, 43 states had implemented some kind of property tax