Two Massachusetts tax experts yesterday criticized Proposition 2 1/2, a property-tax relief proposal on the November 4 ballot, as an ineffective and disadvantageous way to reform the tax system.

Richard Manley, president of Massachusetts Taxpayers Foundation, a business lobbying group, said the measure--which would limit property taxes to 2 1/2 per cent of assessed property values--is "poor tax policy."

Robert Kuttner, author of an evaluation of the tax revolt movement, agreed, saying, "The result would be simply too chaotic."

Although he predicted the proposition would pass with a 60-per-cent majority, Manley outlined its faults, saying it would reduce tax revenues, bankrupt several cities, force cities to lay off hundreds of municipal employees, and discourage municipal bond investment.

As a result, Manley said, "(Mayor) Kevin White will have to dip into his campaign chest to finance the city of Boston."

Nevertheless, both Manley and Kuttner agreed that the state needs tax reform. Massachusetts property taxes, twice as large as the national average, take up "as much as 10 to 13 per cent of (a taxpayer's) gross income," Manley said.

Kuttner criticized the present system, in which 70 per cent of the Commonwealth's revenues come from property taxes, as highly regressive. To generate enough revenue, poorer communities have to set higher tax rates because property taxes are lower, Kuttner said. The current tax system "punishes poor people for being poor," he added.

Both said that the underlying cause of "Taxachusetts's" problems is an ineffective legislature. "Historically, we have had the most generous legislature in America," Manley said, saying the state has set up many social programs that the cities had to pay for. That sort of legislation ends up "screwing the cities and towns," he added.

Kuttner also questioned the legislature's competence. "It is 1890 preserved in amber. It is a primitive government," he said.