Tax structure and the size of government: An empirical analysis of the fiscal illusion and fiscal stress arguments

Misiolek, Walter S.; Elder, Harold W.

doi:10.1007/bf00124807

Cited by 74 publications

(45 citation statements)

References 23 publications

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“…2 This contention stands in contrast to the empirical findings of many previous works, such as Misiolek andElder (1988), Elder (1992), Shadbegian (1998), Bails and Tieslau (2000), and New (2001). However, we suspect that much of the previous scholarship that finds TELs to be effective may be based on the flawed assumption that TELs uniformly affect fiscal outcomes, and that previous results were driven by a few disparate cases.…”

mentioning

confidence: 84%

For Whom the TEL Tolls: Can State Tax and Expenditure Limits Effectively Reduce Spending?

Kousser

McCubbins

Moule

2008

State Politics Policy Q.

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Can voters stop state governments from spending at high rates through the enactment of tax and expenditure limits (TELs), or do these laws become dead letters? We draw upon the principal-agent literature to theorize that TELs -one of the most frequent uses of the initiative process across the country -may be circumvented by the sorts of elected officials who would inspire their passage.In order to investigate our claim, we conduct an event study. First, we test for the effectiveness of TELs across states using a differences-in-differences model. Second, we dissect our treatment variable using different legal provisions of the limits to test whether there is a uniform effect across different types of TELs. Finally, we compare state fiscal patterns before and after adoption on a state-by-state basis. Using this simple approach and other methods, we show that TELs are largely ineffective, and that state officials can circumvent them by raising money through fees or borrowing. Our finding is consistent with recent studies showing that policies passed through direct democracy can often be thwarted by the politicians charged with implementing them.

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mentioning

confidence: 84%

For Whom the TEL Tolls: Can State Tax and Expenditure Limits Effectively Reduce Spending?

Kousser

McCubbins

Moule

2008

State Politics Policy Q.

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“…This is especially true for cross-country studies, and for this reason, we do not explore this point further in this paper. Misiolek and Elder, 1988;Heyndels and Smolders, 1995). The expansion of government expenditure may thus create more opportunities for corruption (e.g., Goel and Nelson, 1998;Ali and Isse, 2003;Alesina and Angeletos, 2005).…”

Section: Theoretical Hypothesesmentioning

confidence: 99%

Tax structure and corruption: cross-country evidence

Liu

Feng

2014

Public Choice

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“…Following the Bennett and DiLorenzo argument that growth in off-budget activity is related to tax-and expenditurelaws, we use a dummy variable for the nineteen states that had nominal tax and expenditure limitations in effect in 1984. Following the Misiolek and Elder (1988) criteria, we define TEL = 1 for states with tax-and expenditure-laws and TEL = 0 otherwise. 7 While Misiolek and Elder report that tax-and expenditure-limitations have exerted significant influences on public budgets, Abrams and Dougan (1986) find no such effect.…”

Section: Model Of Off-budget Behaviormentioning

confidence: 99%