The best budget rule in the United States is Colorado’s Taxpayer Bill of Rights. Known as TABOR, this provision in the state’s constitution says revenues can’t grow faster than population plus inflation. Any revenue greater than that amount must be returned to taxpayers.
Combined with the state’s requirement for a balanced budget, this means Colorado has a de facto spending cap 
(similar to what exists in Switzerland and Hong Kong).
The second-best budget rule is probably a requirement that tax increases can’t be imposed without a supermajority vote by the legislature.
The underlying theory is very simple. It won’t be easy for politicians to increase the burden of government spending if they can’t also raise taxes. Particularly since states generally have some form of rule requiring a balanced budget.
Basically a version of “Starve the Beast.”
Anyhow, according to the National Council of State Legislatures, 14 states have some type of supermajority requirements.
And more states are considering this reform.
Here are some excerpts from a column in the Washington Post.
Florida Republicans are pursuing a plan to make it harder for lawmakers to raise taxes in the state, adding new hurdles for Democrats hoping to enact bold social programs such as “Medicare for all” and more robust education spending. …Florida’s Republican lawmakers have approved a ballot measure that,
if approved by the voters, would require a two-thirds “supermajority” of the legislature to enact any new taxes. …In…additional states — …Oregon and North Carolina — conservative lawmakers and business groups are currently advancing similar measures… The supermajority requirements have proved effective at keeping taxes low in the states where they have been implemented, said Joel Griffith of the American Legislative Exchange Council… “These supermajority rules make policymaking incredibly difficult,” said Elaine Maag, senior research associate at the Tax Policy Center, a nonpartisan think tank. “If a state can’t increase spending because of these very high bars for raising taxes, they can’t expand programs.”
Dean Stansel crunched the numbers in 1998 and got some encouraging data.
There is some evidence that supermajority requirements have at least helped to restrain the growth of taxes. From 1980 to 1996, state tax burdens as a share of personal income
increased by 1.1 percent in states with supermajority requirements. Taxes rose five times faster in states without such requirements. In 10 states, residents face higher top personal income tax rates today than they did in 1990. None of those states require supermajority approval for tax hikes. None of the 13 supermajority states have higher top rates today than they did in 1990, and three of them have lowered their top rate in the 1990s.
Academic experts also have found positive effects.
In a 1990 study published in the William and Mary Law Review, Jim Miller and Mark Crain found some evidence of modest spending restraint.
Seven states require approval of tax proposals by a super-majority vote in the legislature. …According to this hypothesis, the amount of revenue available to politicians resembles a budget constraint,
and when this constraint shifts, government spending consequently changes. …the tax-and-spend literature suggests a causal connection that should be controlled. This variable is expected to produce a negative coefficient because in making an increase in revenues more difficult, the requirement tightens the total constraint on spending options. …The super-majority required to increase taxes variable is negative, as expected, although it is significant at only the 10% level in the three models.
In a 2000 study published in the Journal of Public Economics, Brian Knight also determined that supermajority provisions limited taxation.
This paper measures the effect of state-level supermajority requirements for tax increases on tax rates. …A model is presented in which legislatures controlled by a pro-tax party adopt a supermajority requirement
to reduce the majority party agenda control. The propensity of pro-tax states to adopt supermajority requirements results in an underestimate of the true effect of these requirements on taxes. To correct this identification problem, the paper first uses fixed effects to control for unobserved attitudes and then employs instruments that measure the difficulty of amending state constitutions. The paper concludes that supermajority requirements have significantly reduced taxes.
In a 2014 study published in State Politics & Policy Quarterly, Soomi Lee concluded that a supermajority has restrained the fiscal burden in California.
My article examines whether supermajority vote requirements (SMVR) to raise taxes in California’s constitution suppresses state tax burdens. The rationale behind the rule
is to contain the growth of government by making it costly to form a winning coalition to raise taxes. …I take a different approach from extant literature and estimate the causal effect of SMVR by using synthetic control methods. The results show that, from 1979 to 2008, SMVR reduced the state nonproperty tax burden by an average of $1.44 per $100 of personal income, which is equivalent to 21% of the total tax burden for each year. The effect…has abated over time.
This last study is remarkable. The long-run fiscal outlook is quite grim in California, so just imagine how much worse it would be if the supermajority requirement didn’t exist.
I’ll close with this amateurish visual that I created.
Though the evidence from California shows the kitten shouldn’t be peacefully sleeping if there is a supermajority requirement.
The best way to think of such a provision is that it is akin to putting locks on your doors in a crime-ridden neighborhood. The crooks may figure out how to mug you on the street or break through your windows, so you’re still in danger.
But having locks on your doors is definitely better than not having them.
P.S. It’s not a fiscal rule, but the best tax policy for a state is to have a zero income tax. The second best rule is for a state to have a flat tax.
International Liberty 
[…] any ballot initiative to increase the tax burden. This would augment the 2/3rds supermajority that already existsfor legislatively enacted tax […]
[…] any ballot initiative to increase the tax burden. This would augment the 2/3rds supermajority that already exists for legislatively enacted tax […]
[…] there is a supermajority requirement to raise taxes, but politicians in Sacramento have been very successful in overcoming that […]
[…] Publicado originalmente por International Liberty. […]
the only way to stop the political class from enacting ridiculous policies is to cut off their money… at some point… in the not so distant future we must reform the system,,, that will mean a spending cap at the federal level… term limits… and the possibility of selected states leaving the union… just as the EU is doomed in the 21st century… [not by physical reality…] but by flawed political ideology… and so are we… the same globalist/environmentalist nonsense that the leftist elite has sold throughout Europe is prevalent here… we are fond of saying that bad policy begets bad policy… and the more government we allow to flourish… the more ridiculous policies we must endure… restrict the federal government to 10% of our total economic output… and encourage states to keep their budgets to 10% of their economic output as well… as long as we have a robust defense… and temporary funding for entitlements… we can step back and look at long term reform… close some agencies… lose a bunch of bureaucrats… and move forward into what is rapidly becoming a new world……
some of the stuff I have mentioned… might seem over the top… but we all know that at some point… the s*it’s gonna hit the fan… and the kick it down the road crowd we have governing the nation will be more clueless than we ever imagined… we are facing a technological revolution… that will be every bit as disruptive and trans-formative to societies as the industrial revolution was all of those years ago… we must be prepared for it…
take a decade… reform entitlements… design a workable spending cap… vote these incompetent spendthrift jackasses out of government…
and finally…. “fundamentally transform the United States of America…” not into Obama’s vision of a worker’s paradise… but into a robust capitalist colossus running on free market innovation… and supported by a population capable of independent thought… unsurpassed creativity… and obsessed with opportunity and individual achievement…
a fundamental transformation for the 21st century………
Citizens could also make it a requirement to announce any and all tax hikes before an election, and if politicians want to hike taxes, they have to have an election and announce the exact changes in their platform…
John,
Indeed this is likely why we have pitchfork taxes concentrated on the rich. Better not become one. Get a handful of million and then get out. Fish by the lake, play guitar with your friends, yoga in the morning, golf in the afternoon, and you may spare yourself the pancreatic cancer. I myself I’m only a partime resident of Silicon Valley. But what about all the jobs that these competent but inconspicuous dropouts could have created all over the nation? Ahh let them eat tofu.
The Silicon Valley sticker shock comes from another unrestrained ubiquitous yet little understood by most people form of coercive collectivism: regional planning and restrictive zoning fed by a pervasive culture of enviro-nimbysm. If you look at a google earth image of Silicon Valley you will see that only about one quarter of its land is actually developed. Yet with only half a percent (yes that is just 0.5%!) of the earth’s surface being urbanized we must save the earth by not building any more housing in Silicon Valley. Here in Silicon Valley we are actually forced to pay extra levies through our real estate taxes for the unique special purpose of purchasing undeveloped land and placing it permanently out of circulation. And we actually have huge swaths of land in Silicon Valley (Santa Clara county) zoned to sixty acre minimum lots if you can believe it ! Then the regional planning authority prevents new cities from being formed just outside Silicon Valley to keep the residents cordoned inside the urban boundaries that a bureaucrat drew on a map while the voter-lemmings applauded. The end result is housing that costs 20-30 times annual income; European conditions. Then this exorbitant price of housing permeates everything else, of course. When you hire a gardener he too charges you thirty five dollars an hour because he too has to live in million dollar housing, and he’s still broke most of the time unless he shares a small house with two other families.
The only silver lining to this misery and repression is that these Silicon Valley lemmings are now paying me exhorbitant rents — and they don’t even realize that they dug their own graves. There’s a bit of shadenfreude in having the very children of hippy enviro-nimbys pay me forty percent of their high salaries in rent. A lot of them, in spite of the college and graduate degrees, burn out after a decade or so, or want to start a family and realize they cannot here, so they leave with nothing to show for it. They’ve spent all their earnings in rent and the other high costs which all stem from housing supply restriction. It’s bizzarre and pathetic, yet it’s almost entertaining.
It’s nothing new to me though. I’ve seen this script play out in my native countries of Europe. I know what’s coming and it isn’t pretty.
Zorba, my son recently moved to Silicon Valley and is experiencing ‘sticker shock’ over high prices.
The 2/3 CA reqt combined with more redistributionists is probably why CA relies so much on tax revenue from the rich. (Because it’s often politically popular to raise taxes on the rich, so the 2/3 threshold can be achieved.)
This is a very good question. And it’s the same question as pondering “why do we need constitutions?”. Or do we?
Another way to ask the question is : Do voters need to be protected? From themselves?
I imagine that people who occupy themselves with constitutional law must have pondered these issues several times.
In summary, I think we, as voters, recognize that at some point we will be tempted to form a majority on “something” and oppress some minority. We don’t know what this “something” is a-priori, but we’re afraid it may be us who end up being in the minority. Therefore we draft rules ahead of time and agree to not fall into the temptation to circumvent them, in exchange for majorities not ganging up against us in similar issues. This is essentially the spirit of every article in the constitution. We recognize, for example that at some point we may be tempted to try to outlaw someone’s speech which we find revolting, so we give up that right to oppression so that we may not one day fall victims of this very oppression ourselves. Pitchforks have short memories.
PS. I think [supermajority] is more akin to super gluing the cookie jar lid because you’re obese. That way when you get the munchies in the middle of the night you’re less likely to go through the trouble of smashing the jar and dealing with the broken glass — and you hope you will be more rational by daytime.
PS. Can you imagine where California would be without their supermajority rule? These are supposedly the most educated and competent people in the nation. Coercive collectivism truly is wired in our DNA.
PPS. I wish voters were smarter, rather than lemmings. Then all that would be superfluous. Alas, they are not, so Darwinian selection takes over. Those countries who (most often serendipitously) limit voter power the right way, that is, those countries that draft the right constitutions, prosper. The others are overtaken by those more successful, sometimes through peaceful means, sometimes not. And as everything human is now moving at breakneck speed in this early twenty first century — and accelerating — this reshuffling of country prosperity rankings will happen faster than ever, and accelerating.