Pent-up anger among voters over taxation broke loose during the 1970s. At the federal level, Congress enacted a tax reduction bill that President Carter signed reluctantly, disappointed that his more comprehensive tax reform proposal had failed. The bill provided for an increase in "earned-income credits" for the working poor. This gave low-income persons tax exemptions up to a certain percentage of their income and cash refunds to the extent that this exceeded the taxes they owed. It also increased personal exemptions for each taxpayer and each dependent, and made several other adjustments. The most significant breaks largely benefited middle- and upperincome taxpayers and corporations.
The most consequential actions on taxation occurred at state and local levels, where voters insisted that policies change. By mid-1978 legislators in four states had approved measures to limit state and local spending, and similar bills were under consideration in seventeen state legislatures.
In California, voters took things into their own hands. In June 1978 they approved a tax-cutting measure known as Proposition 13, an amendment to the state constitution that had been proposed in petitions signed by 1.3 million Californians. The petition drive and campaign for passage of the proposition by referendum was led by Howard Jarvis, a wealthy industrialist who had long fought for lower taxes and less govemment, and by Paul Gann, a retired real estate broker. Proposition 13 reduced property taxes to 1 percent of a property's cash value in 1976; this amounted to an overall reduction of 57 percent. Further, it limited increases in the assessed value of any property to 2 percent annually as