Tax study deems Monroe ‘donor county’

The Indiana Fiscal Policy Institute (IFPI) released a study that tracked the flow of Indiana’s tax dollars by county, and results show that Hoosier dollars are flowing from urban to rural areas.

According to the information brief provided by the IFPI, the study did not attempt to analyze any federal or local taxes, but it did account for 98 percent of taxes collected by the state, including sales tax, corporate income tax, personal income tax and others.

Michael Hicks, director of the Center for Business and Economic Research at Ball State University, which collaborated with the IFPI on the study, was interested in clearing the air on tax dollar dispersion.

“We wanted to clarify where tax dollars are coming and going,” Hicks said. “We wanted to clear any misperceptions that only Indianapolis is capturing tax dollars.”

To determine if a county was a net donor or a net recipient, the amount of state expenditures in each county was subtracted from the amount of taxes collected by each county and then divided by the population of that county. A net donor is defined as a county that supplied more tax dollars than it received, and a net recipient received more than it supplied.

Seventy counties emerged as net recipients, while the remaining 22, including Monroe County, were net donors. For the most part, metropolitan areas were donors while counties in rural regions were recipients.

John Ketzenberger, president of the IFPI, said the ultimate reaction to this study will depend on where one lives.

“This study allows people to bring facts to the conversation about tax distribution. Urban counties mostly contribute more than they consume,” he said.

As for Monroe County, the outlook looks very secure. Monroe was one of the donor counties, ranking fifth in per capita net tax payments with $622.98. In addition, it also ranked fifth in per capita income for counties with greater revenues than expenditures.

Monroe County Treasurer Catherine Smith believes the status of Monroe as a donor county reflects the fact that it hasn’t seen many traumatic effects in terms of unemployment.

Smith said the county just received an additional $2.2 million tax dollar supplemental for distribution in January 2010.