Tuesday, October 30, 2018
Ariel Jurow Kleiman (San Diego) presents Tax Limits and Public Control at UC-Hastings today as part of its Tax Concentration Speaker Series:
Local governments are severely restricted in their ability to raise tax revenue, in part by state-level statutes that place caps on local tax rates and revenue. Many attribute the proliferation of these local tax limitations to entrenched antitax sentiment among U.S. taxpayers. This antitax narrative is attractive for its simplicity and explanatory power. It provides a clear mandate for those enacting tax limiting laws as well as a simple fiscal rubric for those evaluating the success of such limits—namely, lower taxes equals success. However, the explanatory power of the antitax narrative is limited. Perhaps most notably, it fails to explain why voters regularly approve tax increases, even in places with strict tax limitations. Using the lens of the 1970s Tax Revolt, this Article complicates the traditional antitax narrative surrounding tax limitations, offering evidence that voters also supported tax limits in order to increase public control and oversight of local government fiscal decisions.
Having identified this additional tax limit objective, the Article next assesses the laws’ potential efficacy in achieving such governance goals. To do so, the Article offers a novel taxonomy of statutory features that undermine local public control. Using this taxonomy, the Article surveys local tax limits in all fifty states, coding the statutes for features affecting the power of local voters. The survey results demonstrate that certain tax limits may undermine public control by reducing voter power, instead shifting power to the state level and prioritizing a pure tax reduction goal. In this way, the dual tax limit goals of restraining taxes and improving public control can work at cross-purposes. The Article finishes by exploring policy implications of the survey results and accompanying analysis, providing model statutory language designed to balance potentially conflicting objectives.