Better Tax Policy

States where citizens enjoy initiative and referendum rights not only have lower taxes, they also have more tax and spending decisions made at the local level, rather than statewide. Furthermore, a recent study by scholars at Wellesley College says I&R states have significantly less government waste and better economic performance than do states without I&R.


Fiscal Implications of the Initiative Process
Initiatives led to significantly lower spending and taxes. Per capita spending, for example, was about $83 per capita lower in a typical initiative state than a typical non-initiative state, which translates into $332 less expenditure (and hence taxes and fees) for a family of four. Compared to the average level of state and local spending, $2,300 per capita, initiatives caused a reduction of 4 percent.

Have Voter Initiatives Paralyzed the California Budget? by John G. Matsusaka of the University of Southern California and the Initiative & Referendum Institute.
Professor Matsusaka concludes that, “the initiative process is a scapegoat for the inability of elected officials to manage the competing demands for public funds in a period of declining revenue.”

Limiting Government: Through Direct Democracy by Michael New.
“State legislatures have occasionally imposed tax and expenditure limitations (TELs) on themselves. TELs passed by initiative are more restrictive and contain fewer loopholes than those enacted by state legislatures. Regression analysis of a comprehensive data set of state government spending shows that TELs enacted by citizen initiatives cause per capita public spending to decrease; TELs enacted by state legsialtures are associated with an increase in government expenditures,” writes Michael New.

By Popular Demand by Pete Sepp of the National Taxpayers Union.
“Arguably the Initiative and Referendum has contributed more to fiscal restraint than any other procedural device or substantive action?.This process has given at least some Americans a choice between meaningless elections and outright revolution, ironically providing the very kind of political stability that critics say I&R seeks to upset,” writes Pete Sepp.

The Impact of Voter Initiatives on Economic Activity: a Wellesley College Working Paper by S. Brock Blomberg, Gregory D. Hess, and Akila Weerapana.
“Our findings suggest that states with initiative systems waste between 20 to 30 percent fewer resources than do non-initiative states resulting in better economic performance?”

Fiscal Effects of the Voter Initiative: Evidence from the Last 30 Years by John G. Matsusaka of the University of Southern California.