Economic Impacts of a Property Tax Limitation: A Computable General Equilibrium Analysis of Oregon's Measure 5

A state-level computable general equilibrium (CGE) model was used to investigate economic adjustment to a property tax limitation in Oregon. Findings under two CGE model variants are compared with results using a fixed-price, input-output type model. The analysis suggests that: (1) total output and income increase under the limitation, with high-income households benefitting most and low-income households least; (2) even with income growth, total state and local government tax revenues and spending shrink significantly; (3) the limitation makes Oregon's tax system slightly less progressive at the top of the income distribution but slightly more progressive at the bottom.