The Right to Vote on Taxes (2001)

The revolution has indeed been born without an analytical blueprint or even an analytical map. Geoffrey Brennan & James Buchanan (1980)1 INTRODUCTION One cannot study American history for long before noticing the conspicuous role of tax revolts. Time and again Americans have turned mutinous against taxes-the Boston Tea Party, the Whiskey Rebellion, the Depression-era tax strikes.2 Tax revolts, as one commentator put it, as American as 1776.3 This spirit of tax rebellion is once again taking hold. In a handful of states across the country, a new movement is quietly underway. Over the past two decades, voters in several states have gone to the polls demanding a more direct role in local tax decision-making. As a result of a 1996 initiative, for example, the California Constitution now requires local governments to secure voter approval before any new or increased tax may take effect.4 Several other states have either considered or adopted similar IMAGE FORMULA6 provisions for local taxes.5 Additional tax voting initiatives are on the horizon.6 In most of these jurisdictions, interest in popular control of taxation can be traced to reforms brought about by the tax limitation movement of the mid-1970s. California's recent emphasis on tax voting has its roots in Proposition 13 (Prop 13), the famous property-tax-cutting initiative approved by voters in June 1978.(7) Prop 13 marked a watershed moment in the evolution of American attitudes toward government and taxation.8 The controversial initiative not only inspired similar measures in other states,9 but also served as a local precursor to the tax-cutting Reagan revolution that dominated the national political scene throughout the 1980s.10 As Michael Graetz explains, this nation has known very few days that have turned American tax politics upside down, but June 6, 1978 was one of those days.11 If Prop 13 was a fiscal earthquake felt throughout the country, then California's local public sector was its epicenter. The initiative rocked the state's system of local public finance, transforming the way cities, counties, and school districts are funded. By access to the property tax, Prop 13 pushed local governments to find new ways of raising money, which they often did through aggressive legal arguments and creative financial engineering. These fiscal machinations spawned litigation over what was and was not subject to the new constitutional limits. Eventually, Prop 13's defenders responded by proposing new initiatives to ensure direct voter control over local tax decisions. In November 1996, California voters adopted Proposition 218-the self-styled Right to Vote on Taxes Act.12 As with IMAGE FORMULA8 similar initiatives in other states, Prop 218 promised greater taxpayer protection by limiting the methods by which local governments exact revenue from taxpayers without their consent.13 This Article explores the recent upsurge in tax voting14 and investigates the broader question of what role a right to vote on taxes might play within a fiscal constitution designed to limit the taxing powers of local governments. My analysis departs from traditional methods of examining direct democracy. Most scholars interested in popular lawmaking proceed from the assumption that either the people themselves or their representatives will make political decisions-the question they address is which approach is preferable. Indeed, a rich and valuable literature as old as democracy itself has developed around the debate over which form of decision-making is truer to basic democratic principles. While some discussion of that literature will be necessary to set the stage for my own analysis, my aim is not to analyze whether direct democracy is superior to representative government or vice versa. Rather, I intend to examine voter approval requirements as a type of constitutional device that might be deployed by a hypothetical constitutional architect charged with designing rules and institutions to limit the taxing powers of local government. …