Other People’s Taxes: Nonresident Voters and Statewide Limitation of Local Government

Abstract

Why would voters resort to a statewide tax limitation to force change in their own local government? This paper develops and tests the hypothesis that property tax limitations succeeded because they allowed voters to lower tax rates in other communities. Statewide limitations effectively extend the voting franchise to individuals who have no standing in local elections. Voters may have preferences for tax and expenditure levels in other jurisdictions because they receive rents from employment in those jurisdictions, because they directly own taxable assets in those jurisdictions, or because changes in other jurisdictions might influence their own residential location choice. Empirical tests of this hypothesis focus on the Massachusetts experience with Proposition 2$$\frac{1}{2}$$, which passed in 1980. Voting patterns, household mobility patterns, and postproposition growth in property values all support the nonresident hypothesis.