Proposition 4, Tax Reduction Mirage: An Exploratory Note on Its Potential Spending and Tax Impacts

What would the true government expenditure and tax burden im­pacts of California's Proposition 4 likely be if it (or its equivalent) were enacted in all 50 states? What happened to actual state plus local government expenditures per capita over the period 1970-1976 is examined. Next, we examine what would have happened to such expenditures (per capita) if Proposition 4 had been in effect over the same period. Comparing the results reveals that Proposition 4 might have exercised little impact over per capita state plus local spending levels. This implies that such legislation might not have resulted in significant tax reductions.