ERIC Number: ED158413
Record Type: Non-Journal
Publication Date: 1978-Jul
Reference Count: N/A
Proposition 13: Its Impact on the Nation's Economy, Federal Revenues, and Federal Expenditures. Background Paper.
Congress of the U.S., Washington, DC. Congressional Budget Office.
When effects of Proposition 13 are taken as a whole, the amendment will have an insignificant overall effect on the nation's economy. The property tax cut will stimulate consumer spending somewhat and lead to a lower price level because property taxes are a part of the housing component of the consumer price index (CPI). These economic stimulants, however, will be balanced by necessary cutbacks in state and local spending that should depress the economy. More precisely, Proposition 13 will cause (1) marginally lower levels of real economic activity through the first half of 1978 and marginally higher levels by mid-1980; (2) an employment loss of about 60,000 by the end of 1978 that will gradually diminish; and (3) a reduction in the CPI of .2 percent by the end of 1978 and .4 percent by mid-1980. The proposition will cause only slight increases in federal revenues, as smaller federal property tax deductions balance the lower income tax collections resulting from the measure's depressive influences. Total federal expenditures will not be significantly affected. If similar propositions spread to a large number of states, the net effect could be a slowdown in economic activity and employment growth, unless tax reductions are at least twice as large as the accompanying expenditure cuts. (Author/JM)
Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402 (Stock No. 052-070-04593-1; $2.20)
Publication Type: Reports - Research
Education Level: N/A
Authoring Institution: Congress of the U.S., Washington, DC. Congressional Budget Office.