T. Downes and D. Figlio. "Do Tax and Expenditure Limits Provide a Free Lunch? Evidence on the Link Between Limits and Public Sector Service Quality."
National Tax Journal,  March 1999

For discussion in class Monday, March 12th

This article is available through: Proquest, EBSCOhost, reserve desk

Instructions for using Proquest and EBSCOhost | Schaffer library electronic resources

Note: This paper is basically a literature survey; rather than presenting new work, it summarizes many papers that provide evidence on the subject. I suggest that you start by reading the beginning and the end so you have a sense of what the article is about. Then try reading the whole paper carefully. You may need the textbook to answer some questions; Chapter 21 will be most useful. I assure you that I don’t expect you to remember the names of the authors of all the papers mentioned in the article.

1. What is Proposition 13? Describe the conflicting predictions of the effects that Proposition 13 would have that were made when voters adopted it.
2. If we know that tax limits reduce expenditure per pupil, why doesn’t that necessarily allow us to conclude that there has been a decline in school quality?
3. What are the non-financial ways in which tax limits can affect public sector output?
4. What did surveys following Proposition 13 in California and Proposition 2 = in Massachusetts reveal about residents’ perceptions of their effects? Were these perceptions confirmed by objective measures of service quality?
5. Why do Downes and Figlio say that Downes (1992) doesn’t show that Proposition 13 had no detrimental effect on California schools?
6. Briefly describe Serrano v. Priest.
7. What does Table 1 show?
8. Briefly describe Hanushek’s position regarding the relationship between expenditure per pupil and student achievement. Is this view confirmed by all studies on the subject?
9. How can we explain the finding that more spending doesn’t increase achievement? What is meant by the terms "rents" and "rent-seeking?"
10. Why might achievement fall when spending falls even though it doesn’t rise as spending rises?
11. How do the authors explain the finding that Illinois school districts did not cut expenditure on instruction relative to administration in response to tax limits?
(1997).
12. According to Downes and Figlio, has "the central desire of supporters of property tax limitations, reductions in taxes with no appreciable reductions in student outcomes" been achieved.
13. Do Downes and Figlio conclude that tax limits are "bad public policy?" Would you be inclined to support a tax limit if you had an opportunity to vote for one? Why or why not?