A RENT-SEEKING MODEL OF TELS

Tax and expenditure limits or TELs are constitutional or statutory constraints on the fiscal powers of government. Since the taxpayer revolt beginning in the late 1970s, TELs have been introduced in twenty-three states. In recent years a number of studies attempting to test the impact of TELs have found little evidence that TELs significantly reduced the growth of state government. In this study we challenge the implicit Leviathan model that underlies most of these studies, and offer an alternative rent-seeking model. Econometric tests provide support for this rent-seeking model, and indicate that TELs have been significant in reducing the growth of state government, at least in the short run. ''...the very principle of constitutional government requires it to be assumed, that political power will be abused to promote the particular purpose of the holder; not because it always is so, but because such is the natural tendency of things, to guard against which is the especial use of free institutions''(1)