Tag Archives: commuter tax

Why We Need a Commuter Tax

Can we talk?

The Chamber of Commerce has been getting a lot of grief for championing a commuter tax to be paid by folks who work in Indianapolis and reside elsewhere. But the Chamber is right.

Some folks may still picture Indiana as a patchwork of small, quaint towns and family farms, but those days are gone. Indiana’s workforce and population are increasingly metropolitan. Indiana’s growth has been and will continue to be in our urban centers.

The entire state economy depends upon a strong, thriving Indianapolis. Much as our legislators like to ignore fiscal reality, Marion County, along with the state’s other metropolitan counties, is—and has long been—a donor county. Our taxes support more rural areas. (A report published by the Indiana Fiscal Policy Institute in 2010, identified the donors: in addition to Marion County, they included Lake, Allen and Vanderburgh.)

If we want to talk about “makers and takers,” Indianapolis is a maker, and rural Indiana is a taker. Big time.

Despite the GOP’s resistance to taxing most wealthy “makers,” Republicans in control of the Statehouse have continued to ensure that Indiana’s tax structure–which has historically disadvantaged the very areas that generate Hoosier jobs–will continue to bite the hand that feeds the rest of the state. The disastrous, politically-motivated decision to constitutionalize property tax caps has only made matters worse.

Here in Marion County, we are further disadvantaged by the large number of government and nonprofit institutions that pay no property tax. Add the tax caps and the exempt properties together, and we have a revenue crunch of massive proportions—one that cannot be relieved by reliance on the local income tax, or by naïve demands to “cut fat and waste.” We can all argue about the wisdom of certain expenditures (cricket, anyone?), but the amounts involved are—in the larger scheme of things—a drop in the bucket. We’ve cut fat, we’ve cut muscle, and we’re now into bone.

The foregoing are simply facts. Here’s the sermon: Government is not an irrelevant luxury. Businesses as well as individual citizens depend upon the services provided by municipalities—infrastructure, public safety, transportation, garbage collection and a myriad of other services that collectively comprise a city’s quality of life. If we want to continue receiving those services—if we don’t want to be Detroit—we have to pay for them. Taxes are not theft; they are the dues we pay for civilization. We cannot survive without them; the best we can do is ensure that government operates responsibly and that the “dues” we pay are fairly assessed.

That fairness is what has motivated the Indianapolis Chamber of Commerce’s proposal for a commuter tax.

More than two hundred thousand workers commute into Indianapolis each day. They use our streets, are protected by our police and firefighters, flush toilets into our sewers, and enjoy the other elements of the quality of life our taxes have provided, but they don’t contribute to their cost. They pay their taxes to the places where they live.

Paying taxes to the county where your income is generated is hardly a new and oppressive idea. A good number of Indianapolis’ peer cities around the country have adapted to the realities of regional economies and regional workforces. The Indianapolis Chamber has studied commuter taxes extensively, issuing reports in 2002, 2006 and 2007. Its current advocacy is informed by those studies and by the experience of other cities.

Every economic analysis of the Hoosier state confirms that the health of Indiana is inextricably bound up with the health of the Indianapolis metropolitan region. Starving Indianapolis—making it impossible for even the most creative public servants to deliver the services we all depend upon (and incentivizing “smoke and mirror” solutions that give away the store)—is simply not an option.



Time for Tough Love

The folks who live in Indianapolis’ suburbs are a lot like the kid who moved back into his parents’ basement after college, and despite having a job, doesn’t pay rent or contribute to the grocery money, so he has money to spend on a snazzy new car and vacations.

More than 180,000 suburban residents drive into Indy to work every day. Approximately 50,000 drive out to jobs located in the suburbs. That means we have a 130,000 net influx of people who regularly drive on streets paid for by Indianapolis taxpayers, rely on police protection furnished by Indianapolis taxpayers, flush toilets into sewers paid for by Indianapolis ratepayers…all without paying a penny for those services.

It isn’t just the people who drive into the city to work. Residents of the collar counties have easy access to Indy’s arts, sporting and cultural events and other urban amenities that improve their quality of life without affecting their property taxes. At least in those cases, nonresidents are patronizing important activities–and when they eat a meal in a downtown restaurant, they do pay a small surtax. Commuting contributes nothing.

Indianapolis business and political leaders have talked about imposing a commuter tax for at least thirty years. We discussed it when I was in City Hall. It hasn’t happened–hasn’t even been seriously pursued, to the best of my knowledge. The politically cynical and criminally shortsighted decision to include property tax caps in the state constitution may change that.

Local governments are starved for revenue. We don’t have the money to hire enough police, to maintain public parks, to pave streets and build sidewalks. Important public amenities like the canal are being allowed to deteriorate. The Mayor is trying to cope by selling off public assets–a “penny-wise, pound-foolish” effort that trades up-front money for long-term income streams and shortchanges our childrens’ futures.

Indiana does not have real home rule. Indianapolis lacks the legal authority to raise property taxes. We have to look elsewhere if we are to invest in our public infrastructure and keep our city from going the way of Detroit. We are rapidly running out of public assets to sell off. The logical thing to do is to levy a commuter tax–to insist that the people using our public services pay something toward their maintenance.

Mayor Hudnut used to warn against allowing the city to become a “doughnut” with a hole in the middle. Civic health, he insisted, required patterning ourselves after a “cookie,” solid clear through. Without sufficient revenue, all those suburban residents who depend upon Indianapolis for their employment and quality of life will find their property values diminished along with their job prospects.

It’s time to charge that kid in the basement some rent.