I'll concede the headliners at the recent Indiana Tax Competitiveness and Simplification Conference was a Who's Who of conservative economists and fiscal policy experts.
If the idea was to hammer home Gov. Mike Pence's faith in the ideas of supply-side economist Arthur Laffer and Americans for Tax Reform Founder Grover Norquist, it was mission accomplished.
This is what caught the attention of Rep. Scott Pelath, D-Michigan City, who leads the House Democrats. "This symposium is nothing more than a class club meeting of board room insiders, Wall Street apologists, and Nineteenth Century economic theorists," noted Pelath in a news release.
Points to Pelath for grabbing attention, but it is unfortunate the headliners siphoned all the attention and caused most Democrats to avoid the conference. It is becoming clear Pence plans to introduce a comprehensive tax reform package in the General Assembly. Look closer at the agenda and you'll notice the rest of the conference included top-notch Hoosier academics and business types talking seriously about how to approach tax reform.
If tax reform is coming, now is the time to parse the issues, do the research and suggest ideas. This is the premise driving the Indiana Fiscal Policy Institute's five research projects slated for release this fall and it was the underlying motivation behind the conference organized by the Indiana Department of Revenue and the Office of Management and Budget.
There is little doubt the Democrats who did attend the conference, including Sen. Karen Tallian, D-Portage, and Rep. Steven Stemler, D-Jeffersonville, cringed at some of what they heard. If the administration wants broad support for its plans, however, Tallian, Stemler and other Democrats will be important voices in the coming debates.
Pence first will need to convince enough fellow Republicans now is a good time to reform Indiana's tax system. Any reform should focus first on simplification, not necessarily lowering or raising the overall amount of tax the state or local governments collect. Lawmakers have already trimmed revenue by more than $750 million a year at the behest of Pence and his predecessor, Mitch Daniels.
Complexity in the nation's tax system has produced a $10 billion preparation industry that employs more than 300,000 people, according to market research firm IBISWorld. Aside from draining taxpayers' personal resources and tying up brainpower, the complexity breeds suspicion.
This is the point I made when I introduced the panel I moderated, "How to Succeed at Tax Simplification." I told the audience, "For me, there is no more central question. I know the administration and others are interested in the competitiveness part of the conference's title, but for me, someone fully invested in the Hoosier State, the simplification part is most important. I understand the proposition that there is value in the organizing principles of government and I have a responsibility to contribute a fair share to that effort. This concept allows us to gather here today.
"Yet we're here because, I believe, too many Hoosiers and too many Americans don't believe they're paying a fair share — they believe they're paying too much — mostly because they don't grasp the value in this proposition. And the reason for that is the complexity that has cluttered the tax system, certainly on the federal level and also at the state and local level. There are a lot of reasons for this, but the root cause in my opinion is that very complexity.
"Even in Indiana, which has a flat income tax rate, complexity has made it difficult for the average Hoosier to do his or her own taxes. A two-page return with two pages of instructions in 1949 has become 10 pages of forms and 63 pages of instructions. Incidentally, much of that complexity has come about as Indiana has decoupled from many federal tax credits, which creates add-backs, which creates additional forms and instructions.
"A simpler tax structure squares the deal between government and its citizen taxpayers. A simpler tax structure leads to the assurance we're all paying a fair share and will help restore confidence in the process. In an 'I-got-mine era,' this may seem naïve, but I'd counter we live in a democratic republic that requires the broadest possible participation of its citizens, and that we will respond best when we're not coerced."
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