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Lawmakers: Simplifying The Tax Code Is Easier Said Than Done

By Brandon Smith

Posted September 29, 2014

Tax experts, officials from the Department of Revenue and lawmakers agree that the state's tax code needs to be simplified.

But legislators say that's easier said than done.

As part of the effort to revamp the  code, several lawmakers met today in a legislative study committee.

Indiana Department of Revenue officials testified that many of the tax experts who took part in the governor's tax conference earlier this year stressed the need to make the tax code less complex.

Department of Revenue Commissioner Mike Alley says, for instance, there are about 35 tax credits and deductions available on individual income tax returns. He says last year 24 of those credits were used by less than 1,000 people out of more than 3 million people who filed tax returns.

"It has resulted in our income tax forms going from what used to be, 20 years ago, about two pages to 12 pages and our instruction booklet from about 15 pages to 63 pages," he says.

Senate Tax and Fiscal Policy Committee Chairman Brandt Hershman says eliminating tax credits makes a lot of sense if lawmakers could agree on which ones to cut.

"Politically, it can be more difficult than it appears to make changes to individual credits or deductions because somebody's always benefitting from them in some way," he says.

Alley says eliminating the 24 underused credits and deductions would have no significant impact on state revenues.

Doing so would only generate about $2.7 million for the state out of a more than $4 billion tax base.

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