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Reform During Crisis: The Transformation of California's Fiscal System During the Great Depression

Published online by Cambridge University Press:  03 March 2009

James E. Hartley ,
Steven M. Sheffrin  and
J. David Vasche
James E. Hartley
Affiliation:
Assistant Professor of Economics at Mt. Holyoke College, South Hadley, MA 01075.
Steven M. Sheffrin
Affiliation:
Professor of Economics and Director, Center for State and Local Taxation, University of California, Davis, Davis, CA 95616.
J. David Vasche
Affiliation:
Director of Economics and Fiscal Forecasting in the Office of the Legislative Analyst of California, Sacramento, CA 95814.
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Abstract

In the midst of the Great Depression, California engaged in a massive restructuring of its tax system, reducing reliance on the property tax and introducing sales and income taxes. Our analysis suggests that this restructuring, which included a voter referendum, was primarily driven by a desire to change the mix rather than the level of taxation. Nonetheless, by introducing new taxes that had a higher revenue elasticity than the existing taxes, California created a revenue system that allowed the rapid growth of spending to continue.

Type
Articles
Information
The Journal of Economic History , Volume 56 , Issue 3 , September 1996 , pp. 657 - 678
Copyright
Copyright © The Economic History Association 1996

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