Proposition 13 and State Budget Limitations: Past Successes and Future Options
This report examines the impact of California's Proposition 13 on tax limitations and explores broader tax and expenditure limitations (TELs) as a means to control government growth.
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| Quick Facts | |
|---|---|
| Report location: | source |
| Language: | English |
| Publisher: | CATO Institute |
| Authors: | Michael J. New |
| Geographic focus: | California, Colorado, Washington State, New Jersey, Texas, United States |
Methods
The research method involved examining historical tax and spending data, legal challenges to Proposition 13, and the design and impact of TELs in various states. A regression analysis was conducted to determine the effectiveness of specific TEL provisions.
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Key Insights
Proposition 13, passed by California voters in 1978, significantly reduced property taxes and inspired tax limitation efforts nationwide. While it provided immediate tax relief, it did not effectively control long-term state and local spending, leading to California's current fiscal crisis. The paper analyzes the effectiveness of TELs in other states, particularly Colorado's Taxpayer Bill of Rights, and suggests that well-designed TELs can limit government growth and provide tax relief. It advocates for the use of sunset commissions to eliminate unnecessary programs and for TELs to include spending limits tied to inflation and population growth, as well as mandates for immediate tax rebates when revenue exceeds limits.
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Additional Viewpoints
Categories: California geographic scope | Colorado geographic scope | English publication language | New Jersey geographic scope | United States geographic scope | Texas geographic scope | Washington State geographic scope | economic growth | expenditure limitations | fiscal crisis | government spending | legal challenges | policy analysis | proposition 13 | tax limitation | tax rebates | tax reduction