The Equity Effects of Restraints on Taxing and Spending,
RAND CORP SANTA MONICA CA
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This paper derives from Rand research that was stimulated by Californias passage of Proposition 13. We learned two lessons early in our research. First, Prop. 13 was a manifestation of a process that extends far beyond a single law in a single state. We call this process fiscal containment--a moderation of rapid growth in government that means a less prominent role for government in the economy and society. Most Americans seem to favor containment of government and, more and more, are electing officials who promise to act accordingly. The second lesson is that fiscal containment may have equity effects--consequences that especially benefit some population groups and especially hurt others. At each level of government federal, state, and local the rate of growth in spending has fallen to about half what it was previously, with a sharp change during the 1970s. Containment has several well-known positive consequences, of course It puts money in the taxpayers pockets it seems to stimulate local economies it may promote the efficiency and responsiveness of government. This paper, however, will concentrate on some of the possible adverse effects, many of them unexpected even by opponents of the fiscal containment movement.
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