IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v42y2014i1p92-116.html
   My bibliography  Save this article

Reevaluating the Effect of Tax and Expenditure Limitations

Author

Listed:
  • Rui Sun

    () (California State University, CA, USA)

Abstract

This article evaluates the effect of tax and expenditure limitations (TELs) on municipal general own-source revenue in the United States. Using an instrumental variable approach, this study addresses the endogeneity problem of TELs that has been largely overlooked in previous research. Data are collected on 724 US cities with populations of at least 25,000 from 1970 to 2006. Results indicate that when the endogeneity of TELs is taken into account, TELs lead to considerable reductions in property taxes but substantial increases in sales taxes, income taxes, and user charges per capita. The increases in the latter forms of revenue not only offset the loss in property taxes but also generate a supplemental revenue effect, resulting in a net gain of total municipal general own-source revenue per capita. The study provides important policy implications and suggests that TELs may have unintended consequences and lead to bigger government.

Suggested Citation

  • Rui Sun, 2014. "Reevaluating the Effect of Tax and Expenditure Limitations," Public Finance Review, , vol. 42(1), pages 92-116, January.
  • Handle: RePEc:sae:pubfin:v:42:y:2014:i:1:p:92-116
    as

    Download full text from publisher

    File URL: http://pfr.sagepub.com/content/42/1/92.abstract
    Download Restriction: no

    Citations

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


    Cited by:

    1. repec:spr:ecogov:v:19:y:2018:i:1:d:10.1007_s10101-017-0198-4 is not listed on IDEAS
    2. Justin M. Ross & Madeline Farrell & Lang Kate Yang, 2015. "Indiana's Property Tax Caps: Old Idea, New Approach, and Surprising Incentives," Public Budgeting & Finance, Wiley Blackwell, vol. 35(4), pages 18-41, December.

    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:42:y:2014:i:1:p:92-116. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.