Abstract
Tax and expenditure limits (TELs) are an important fiscal institution for policymakers to restrain government taxing and spending. However, traditional theories have proposed different hypotheses about the effectiveness of TELs, and empirical studies have not been able to reach a consistent conclusion. In this article, we employ a meta-analysis to synthesize existing empirical evidence and explore why different studies find different results on the effect of TELs on state and local budgets. Our meta-analysis results show that TELs are associated with small but significant decreases in both state and local revenue and expenditure. The findings from a subsequent meta-regression analysis add to the TEL literature by showing that the design features of TELs, types of revenue, and level of government can all contribute to the observed variations in the effect of TELs on state and local budgets. The conclusion of this study sheds light on the long-standing debate over the impact of TELs and suggests useful ways for policymakers to improve their TEL designs and policies.
Acknowledgements
We thank four anonymous reviewers for their helpful comments and suggestions.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 Detailed information on the Bayesian results are available upon request.
Additional information
Funding
Notes on contributors
Zhen Guan
Zhen Guan is a lecturer at the School of Public Administration, Zhongnan University of Economics and Law, China. Her research interests are public budgeting and finance, local governance, intergovernmental relations and government transparency.
Jun Peng
Jun Peng is a professor at the School of Government and Public Policy, University of Arizona. His research focuses on state and local government financial management in the U.S., such as budgeting, debt management and pension management.
Qiushi Wang
Qiushi Wang is a professor at the Center for Chinese Public Administration Research and School of Government, Sun Yat-sen University, China. His research interests include public budgeting and finance, and public management.