and the
Citizens Economic Research Foundation

Barbara's Column
November #1

Tax limits have put more money in your pocket
by Barbara Anderson

The Salem News
Tuesday, November 1, 2005

Here's a scary thought for Halloween: What if Proposition 2 had not been passed by the voters on Nov. 4, 1980?

Citizens for Limited Taxation (CLT) recently hired Gerald Amirault to research the impact of Prop. 2 on some individual taxpayers, whose assessed values and tax rates could be traced by their local assessors back to 1970. Using an annual compounding factor, their average property tax increase was determined for those 10 years prior to 1980, along with their average increase in the 25 years since. From these figures we were able to determine what they would be paying this year if Prop. 2 hadn't passed.

Of course this is a "what if" study. It could be speculated that if Prop. 2 had not passed, angry voters might have eventually abolished the property tax altogether. Or after continuing years of the third highest taxes in the nation, there may have been a population exodus and property value decline.

The CLT study assumes a status quo over 25 years, with compliant taxpayers, and property values that increase despite the tax burden on owners.

Since government can never get enough, so it is assumed that even without Proposition 2, the trend toward higher user fees, particularly water, sewer and trash fees, would have continued after 1980. Some of the tax increases during this period were the result of Prop. 2 overrides or debt exclusions, with all but one of the communities studied having passed at least one. What follows are case studies of nine actual tax-paying households in Massachusetts. I begin with myself.

Taxpayer A, in my five-room cottage that was purchased in 1975.

Property value, 2005: $376,400. Tax bill: $3,109.

Average annual property tax increase before Prop. 2: 8.81 percent. Average annual increase since Prop. 2, even with several Marblehead overrides: 5.38 percent.

If the pre-Prop. 2 trend had continued, my present property tax bill would be $6,710. I saved $3,601 this year alone!

Taxpayer B, a Marblehead businessman living with his wife and four children in the small cape that was built by his lobsterman grandfather. Located on Marblehead Harbor, it has always carried a relatively high assessment. So the savings for Taxpayer B is a relatively small $617 this year. However, he also owns the property next to Taxpayer A, which he rents to ...

Taxpayer C, a taxpayer activist who pays part of the $4,032 tax bill in his rent on this cottage that is assessed at $488,100 because it's attached to some rare Marblehead open space. The savings from Prop. 2 on this property: $6,341 this year alone.

Along with the property tax levy limit, Prop. 2 created a rental deduction from the state income tax, and cut the annual auto excise rate from $66 per $1,000 of valuation to $25 per $1,000. The tenant also deducted $2,448 from his state income tax for this year, and saved $77.99 from the auto excise cut.

Taxpayer D, a couple, now in their early 50s, bought their four-bedroom colonial in 1977 and raised three children, one still at home. The city of Malden, where she teaches, has never had an override. The taxes increased 5.75 percent a year on average during the 1970s and 0.966 percent annually after Prop. 2 became law, saving them $5,834 this year alone.

Taxpayer E, an orthodontic lab technician and illustrator of children's books, with two dogs and two cats, reside in a Topsy-style, four-bedroom cottage near the water in Scituate, where the couple raised three children as they added rooms. Their savings this year was $5,787.

Taxpayer F, a semi-retired executive-federal official-educator and his wife, who have three sons and five grandchildren, live in a home now valued at over $1 million in Rockport, which has had many overrides and debt exclusions. Their annual tax increases before and after Prop. 2 were not as dramatically different as those of the other taxpayers 7.985 percent before, and 6.249 percent afterward. Nevertheless they saved $5,520 this year.

Taxpayer G, a couple that has lived together for many years in a modest home with a swimming pool. One is a systems analyst and the other was appointed by then-Gov. William Weld as the official astrologer of the commonwealth. They have two dogs. Their taxes increased 3.083 percent a year on average until Saugus had the highest vote for Prop. 2 in 1980. Since then the average increase has been 0.906 percent and they saved $2,173 this year alone.

Taxpayer H, a retired Air Force master sergeant and his wife, raised four sons in a Billerica bungalow, where two sons still live and they entertain three granddaughters. They saved $2,400 this year toward the one-story home they are building.

Taxpayer I, a recent widow with one grown son, has just retired from social work and lives in her East Bridgewater family home, inherited from her grandmother. She saved $1,260 this year.

The property tax limit may still scare people who like unlimited taxes, but it's safe to say that all homeowners, renters and drivers have saved a bundle over 25 years.

Happy Halloween-week birthday, Proposition 2 and many more.

Read the Report

A Study of the Impact of Proposition 2 on Massachusetts Taxpayers
Celebrating the 25th Anniversary of Proposition 2

Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem News, Newburyport Times, Gloucester Times, (Lawrence) Eagle-Tribune, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence Journal and other newspapers.