Pegasus Institute calls for consumption based approach to tax reform

04/30/2017 09:06 AM

A new player in the realm of Kentucky public policy is advocating for Kentucky lawmakers to consider consumption based taxing during a special session later this year.

The Pegasus Institute is the first millennial-led, state-based think tank in the nation, and by all accounts they’re already making a splash on the government scene — hosting U.S. Sen. Mitch McConnell earlier this month, and traveling across the state seeking input on Kentucky’s challenges.

The right-leaning group is led by founder and co-executive director Jordan Harris and co-executive director Josh Crawford.

In a recent in-studio, Harris said the single most important factor to any tax reform plan is “economic growth.”

The Pegasus Institute would like to see the state shift towards a consumption-based taxing model, and simplify the tax code.

In a recent interview Jason Bailey of the Kentucky Center for Economic Policy said a shift to a consumption-based taxing model will cut taxes for the wealthy and shift more burden to the lower and middle class. He also said the shift would not raise revenue for the state.

Harris said the revenue side should be looked at, but he was “concerned less about revenue, and more about economic growth.”

“There’s no way we will tax ourselves out of our pension crisis,” Harris said. “There is no way we will tax ourselves to prosperity, but we can grow ourselves out of all of these problems.”

Sen. Damon Thayer, R-Georgetown, floated the concept of an offset to consumption taxing in the form of lower or no income taxing, if the state were to adopt a consumption based model and tax other goods and services, like groceries.

Harris said he’s done the math, and as much as he would like to see the income tax abolished “it’s very challenging” to completely remove the tax at this time.

“There is certainly ways to make up revenue to offset a decrease, but as we talk about a complete removal, as I’ve done the research, I’ve had challenge of finding the exact revenue to make up that 40 percent gap,” he said.


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