Supermajority voting requirements for tax increases: evidence from the states

This paper measures the effect of state-level supermajority requirements fo r tax increases on tax rates. Unobserved attitudes towards taxation tend to influence both the adoption of supermajority requirements and tax policy. Consequently, one cannot distinguish between the effect of these requiremen ts and their correlation with these unobserved attitudes. A model is presen ted in which legislatures controlled by a pro-tax party adopt a supermajori ty requirement to reduce the majority party agenda control. The propensity of pro-tax states to adopt supermajority requirements results in an underes timate of the true effect of these requirements on taxes. To correct this i dentification problem, the paper first uses fixed effects to control for un observed attitudes and then employs instruments that measure the difficulty of amending state constitutions. The paper concludes that supermajority re quirements have significantly reduced taxes. (C) 2000 Elsevier Science S.A. All rights reserved.