The Diversity Discount: When Increasing Ethnic and Racial Diversity Prevents Tax Increases

Abstract

According to recent research, racial and ethnic diversity reduces U.S. localities' investment in public goods. Yet we remain unsure about the mechanisms behind that relationship and uncertain that the relationship is causal. This essay addresses these challenges by studying the impact of racial and ethnic demographics on property tax votes in Massachusetts and Texas. Employing novel time-series cross-sectional data, it departs from the emerging consensus by showing that diversity does not always influence local tax votes. Instead, diversity reduces localities' willingness to raise taxes only when localities are undergoing sudden demographic changes. Theoretically, this finding points us away from the dominant understanding of diversity as divergent preferences, and towards approaches that emphasize how sudden demographic changes can destabilize residents' expectations and influence local elites. To understand how diversity influences public good provision, we should look to those towns that are diversifying, not those towns that are diverse.

Redistribution and the New Fiscal Sociology: Race and the Progressivity of State and Local Taxes

“…Analyzing local tax votes in these two states, Hopkins (2009) finds no evidence of an association between the level of racial heterogeneity present and the likelihood a community votes to increase taxes, yet he does find strong evidence of reduced support for increased taxes in communities that had experienced recent demographic change, specifically an increase in racial heterogeneity. The idea that racial change is the key driver of both shifting public opinion and public policy, as evidenced in this study by Hopkins, motivates both the theoretical model and empirical strategies employed below.…”

The complicated constituency: a study of immigrant opinions about political representation

“…And voters often bypass representatives altogether and opt for direct democracy (Sabato, Larson, and Ernst 2001). Diversity and identity underlie these trends, from the fact that ballot initiatives often target minority rights, to heated debates about racial gerrymandering, to the concern that heterogeneous political communities are less supportive of redistribution, to the growing recognition of unequal representation (Alesina, Baqir, and Easterly 1999;Alesina and La Ferrara 2002;Gilens 2005;McDonald 2006;Putnam 2007;Hopkins 2009;Bartels 2010). How communities use institutional mechanisms for establishing representation is often influenced by their degree of ethnic heterogeneity.…”

Framing Labels and Immigration Policy Attitudes in the Iowa Caucuses: “Trying to Out-Tancredo Tancredo”

“…As recent scholarship demonstrates, non-Hispanic white attitudes toward immigrants are not driven by the size of the immigrant group in question, but rather by the rate at which that immigrant population is growing (Hopkins 2009). With the high growth rates in places like South Dakota, New Hampshire, Utah, and Maine, we may be able to apply our findings from this study of Iowa to other cases of states in the midst of a rapid, demographic shift.…”