Explore Rice

1/15/2006 12:05:00 AM

Do Americans demand tax cuts? When given the power, they rarely do

It is an article of faith in conservative circles that Americans want their taxes cut.  But a new study on the fiscal effects of state initiatives shows that given the power to cut state government spending with a ballot initiative, voters rarely do.

----------------

Since its enactment in 1978, Proposition 13 has become a symbol of conservative fiscal policy -- of voters gaining control over their government's spending. Are states that allow for ballot initiatives versus those that don't more likely to experience the kind of major tax cuts that occurred in California? Scholars and the public alike believe states with initiatives do spend and tax less than those without the initiative, but a Rice University political scientist argues just the opposite is true.

"The initiative or other direct forms of democracy like referendums aren't necessarily tools of conservative fiscal policies," says Melissa Marschall, an associate professor of political science at Rice University.

  "In contrast to other studies, we find that those states with the initiative, as opposed to those without it, actually increased their expenditures, revenues and taxes from the 1960s to 2000. "

Marschall also confirmed prior research that suggests states with larger, more professionalized legislatures are less likely to have the initiative, the assumption being that smaller legislatures are likely to have weaker representation.   She also noted that the initiative is more common in states where citizens are significantly more conservative or liberal than their governments.

In an article in the State Politics and Policy Quarterly titled "Fiscal Effects of the Voter Initiative Reconsidered: Addressing Endogeneity," Marschall and co-author Anirudh V.S. Ruhil from Ohio University outline the history of voter initiatives and why prior studies on the effects of fiscal initiatives have come to different conclusions. Part of the problem with earlier research findings, Marschall says, is that their models did not take into account the possibility that factors leading states to adopt the initiative also influenced the types of policies these states pursued.

"A classic example of this research dilemma is when studies attempt to compare student outcomes between public and private schools," Marschall explains.

"It's not just the schools that determine student outcomes, but a host of factors related to the students themselves. And, it's these factors that often aren't taken into account. "

Marschall and Ruhil first replicated an earlier study on the political economy of state-level direct democracy, which relied on a single-equation model of state fiscal outputs. Using the same data, they compared the results they obtained based on the single-equation model with findings from their two-equation model.

"We found that after taking into account the factors that predict whether a state allows for the initiative, the residual effect of the initiative on state fiscal behavior is positive and statistically significant," Marschall says.

"Our results were the opposite of what the earlier study's single-equation model predicted. "

 

Initiatives have long been used by voters to bypass or signal to their legislators that they want to establish or eliminate programs, impose or remove regulations, allocate funds, or, as in the case of California's voters in the late '70s, to cut taxes.   Instead of being a means to force action on the part of state legislators, initiatives are increasingly being used by special interest groups or as a way of attracting more voters to the polls.

"For example, it has been suggested that in the last election, immigration and gay marriage were two issues placed on several states' ballots to encourage more conservative voters to go to the polls," Marschall says.

"Because it's being used increasingly and in different ways, the initiative as a vehicle for direct democracy has a lot of implications for elections and public policy," she concludes.

Marschall's research on local politics, participation and issues of race and ethnicity, and educational policy appears in numerous scholarly journals, including the American Political Science Review, the American Journal of Political Science, Educational Policy, the Journal of Urban Affairs, Social Science Quarterly and Urban Affairs Review.

She also is a co-author of the 2001 award-winning policy book, Choosing Schools: Consumer Choice and the Quality of American Schools, which focuses on four types of school districts in New York City and suburban New Jersey.

For more information on this research, contact Marschall at marschal@rice.edu or B.J. Almond in the Office of News and Media Relations balmond@rice.edu .