NotesFAQContact Us
Search Tips
ERIC Number: ED538860
Record Type: Non-Journal
Publication Date: 2010-May
Pages: 20
Abstractor: ERIC
Reference Count: N/A
Do Property-Tax Caps Work? Lessons for New Jersey from Massachusetts. Civic Report No. 62
Barro, Josh
Manhattan Institute for Policy Research
New Jersey is considering a tax reform called "Cap 2.5," under which a municipality's tax levy on existing property could not grow more than 2.5 percent in any year, unless its voters pass a referendum allowing a greater increase. This reform is similar to Massachusetts's Proposition 2.5, which that state adopted in 1980. New Jersey lawmakers may therefore be interested in giving serious consideration to Massachusetts's experience: Did the reform succeed in controlling growth in property taxes? Were property-tax savings merely offset by increases in other taxes? And given that education is by far the largest component of local expenditure, how has the reform affected educational performance in Massachusetts? Overall, Proposition 2.5 has succeeded in restraining growth of property-tax collections, total tax collections, and per-pupil education spending in Massachusetts. These fiscal successes have not come at the expense of the state's educational outcomes, which are the nation's best, consistently outperforming--or at least tying--New Jersey's results on national school exams. Massachusetts's advantage persists even within certain traditionally disadvantaged demographic groups. Massachusetts's experience suggests that New Jersey, by adopting a similar reform, could significantly restrain tax growth without hurting educational outcomes. The Bay State has shown that it is not necessary to be the national leader in school spending to be the national leader in school outcomes. The findings of the report are: (1) In Massachusetts, Proposition 2.5 has been effective in controlling growth in property taxes. Real-dollar property-tax growth from 1980 to 2007 was just 22 percent in Massachusetts. It was 68 percent nationwide and 102 percent in New Jersey; (2) Tax collections in Massachusetts from other sources rose faster than the national average over the same period, as did state aid to localities; (3) Since 1980, spending per pupil grew significantly more slowly in Massachusetts than in New Jersey or the country as a whole; (4) Massachusetts's lower spending levels cannot be explained by a lesser need to serve hard-to-teach students; (5) Despite their lower spending levels, Massachusetts's public schools are the country's clear top performers, as measured by National Assessment of Educational Progress (NAEP) exams administered by the U.S. Department of Education; and (6) Massachusetts's stronger NAEP performance is not explained by favorable demographics. Within most demographic groups, students in Massachusetts achieved higher average NAEP scores than their counterparts in New Jersey. (Contains 11 charts, 1 table, and 3 endnotes.)
Manhattan Institute for Policy Research. 52 Vanderbilt Avenue, New York, NY 10017. Tel: 212-599-7000; Fax: 212-599-3494; Web site:
Publication Type: Reports - Descriptive
Education Level: Elementary Secondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Manhattan Institute for Policy Research; Common Sense Institute of New Jersey (CSI-NJ)
Identifiers - Location: Massachusetts; New Jersey
Identifiers - Assessments and Surveys: National Assessment of Educational Progress