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taxes, tax and expenditure limits, revenue, state and local government


This paper presents evidence that property tax limits have detrimental effects on state and local revenues during recessions. Property tax limits cause states to rely on income–elastic revenue sources, such as the income tax or charges and fees. Greater reliance on these revenue sources results in greater revenue declines during economic downturns. We present analysis of time–series, cross–sectional data for the U.S. states for each of these conclusions. Our results suggest that states would have fewer and more modest financial problems during economic downturns if they did not enact property tax limitations.


This is an article pre-print.

Library of Congress Subject Headings

Tax expenditures, Taxation, State governments, Local government, Tax expenditures--Law and legislation, Tax collection