The political geography of tax preferences in Massachusetts

In 1956, economist Charles Tiebout set out to explain how people choose the communities in which they live. When a family buys a home, as any realtor will remind us, they are also buying a community. Tiebout took this idea seriously.

For Tiebout, people choose a community in which to live by sorting themselves out among like-minded people. This goes beyond simple racial or ethnic affinity or diversity. Tiebout considered people’s location decisions according to their willingness to pay taxes and according to their demand for public goods and services such as schools, open space, cultural amenities and the like.

Tiebout observed that some people want to live in high-tax, high-public-service communities while others want to live in low-tax, low-public-service communities. That they do so does not reflect negatively on either choice but shows how diverse communities accommodate people with diverse tastes.

One of the key elements of the Tiebout model is the notion that people “vote with their feet.” If taxes are high in one community and some residents don’t want all the public services offered by that community, they can move somewhere else that imposes lower taxes and offers fewer services. Likewise, if services are poor, they can move to another community that offers better services and higher taxes.

In the end, this migration from one community to another reaches an equilibrium, in which, much like the marketplace, the amenities offered by an individual community reflect the demand for public services and how much the people in that community are willing to pay for them. The Tiebout model shows how “like minded people tend to congregate” when it comes to taxes and public spending.

In an effort to see how people thus sort themselves out in Massachusetts, the Beacon Hill Institute examined the voting records of the 351 cities and towns in Massachusetts on major state referenda since 1980 and on Proposition 2 1/2 overrides since 1983. The goal was to determine which communities in the Commonwealth meet the preferences of persons who prefer limited government and which meet the preferences of people who prefer more expansive government. We can label these communities, respectively, as “anti-tax” and “pro-tax.”

We considered seven major ballot questions since 1980, beginning with the grandfather of them all, Proposition 2 1/2, which limited the ability of local governments to raise property taxes. The other questions included the successful repeal of the tax surcharge (1986), the failed rollback of the personal income tax rate to 4.25% (1990); the successful attempt to raise the cigarette tax (1992); the failed attempt to institute a graduated income tax (1994); the successful rollback of the personal income to 5% (2000) and the failed attempt to abolish the state income tax (2002).

After tabulating the data, we identified the top seven anti-tax towns and the top seven pro-tax towns. The top seven anti-tax towns are Berkley, Billerica, Carver, Halifax, Plympton, West Bridgewater and Whitman. The majority of voters in these towns always declined to raise state taxes and was less willing to raise them locally.

The pro-tax towns are: Amherst, Conway, Leverett, Pelham, Shutesbury, Wendell and Williamstown. On every major statewide voter referendum, the majorities in these towns opted for increased taxation.

We then considered Proposition 2 1/2 overrides in all 14 communities. We found that preferences to raise or cut taxes at the local level fairly reflected preferences to raise or cut taxes at the state level. Since 1983, only eight of 64 overrides were successful in our anti-tax towns. Three towns, Berkley, Billerica and Whitman, rejected every appeal since 1983 to override Proposition 2 1/2.

The story is predictably much the opposite for the pro-tax towns. Thirty-seven of the 63 attempts to override Proposition 2 1/2 in these towns – more than half – were successful in increasing local property tax levies. Only one pro-tax town, Wendell, rejected more attempts to override Proposition 2 1/2 than it approved. The town of Pelham approved all six of the overrides taken up since 1983.

Pro-tax or anti-tax, it appears that different communities permit different voters to accommodate their preferences, much as the Tiebout model predicts. If you want to live in a community that’s open to more spending, take a tip from Horace Greeley: Take Route 2 west. We found the towns most open to higher taxes to be located in the western part of the state. Rural Massachusetts offers both beauty and a preference for expansive government.

In contrast, people with the most fervent anti-tax sentiments tend, with one exception, to gravitate toward the southeastern portion of the state. If you are looking for towns that accommodate anti-tax preferences, go south or take Route 3A straight to Billerica.

How does your city or town lie on the tax continuum? You can discern your locality’s tax preferences by visiting www.beaconhill.org, where we’ve posted the voting records of all 351 cities and towns on the major state tax questions of the past 23 years.

Director of Research John Barrett and intern Charles Gibbons assisted in the preparation of this article.