Fair tax reform is a win-win for New Mexico

Repealing capital gains break would raise $80M, or much more if entire 2003 tax package were repealed

For the second year in a row, New Mexico ranked as the worst-run state in the nation. Even after holding a special legislative session to address our 2016 budget deficit, the shortfall has increased to nearly $70 million for the current fiscal year, and we face a projected shortfall for the upcoming year that could be upward of $300 million.

Our unemployment rate is second only to Alaska’s, and our economy remains stagnant.

How we got to this point is not simply because of a downturn in oil and gas. The often overlooked truth is that our state has undergone years of short-sighted tax policy reform that has resulted in deep revenue holes. The deck has also become decidedly stacked against everyday New Mexicans.

New Mexico has one of the most unfair tax systems in the country, according to the Institute for Taxation and Economic Policy, a nonpartisan research group that studies taxes in each state. Middle class and lowincome families pay a much higher total state tax rate than the richest households. A family making $15,000 a year pays nearly 11 percent of their income towards state taxes, including sales, property and income taxes, while those making $350,000 pay only 4.8 percent of income towards state taxes.

Meanwhile, New Mexico gives preferential treatment to large corporations and other special interests through millions of dollars in tax giveaways. New Mexicans were promised jobs and economic development for these “tax incentives,” but those benefits have not come to fruition. Instead, these incentives, which are not tracked well, often help out-of-state corporations rather than our local New Mexican businesses.

This system can be repaired, but it will take political will to put our families before all other interests. The personal income tax code should be restructured to give low-income and middle-class families a tax break, instead of upper-income households whose tax rates were lowered in 2003. That cut also included an unnecessary capital gains deduction that has not benefitted New Mexico.

Restructuring the tax code and repealing the capital gains tax break would raise at least $80 million and potentially much more if the entire 2003 tax package were repealed.

The corporate income tax should remain at its current rate of 6.6 percent, which is competitive with other states, and all out-of-state corporations should pay taxes on their profits made in New Mexico. The revenue generated — an estimated $45 million — could be invested in things that would actually attract businesses to our state: quality infrastructure, education, workforce development and health care.

We should also consider raising taxes for non-essential items, including alcohol, tobacco, and new cars, as well as leveling the playing field for our local businesses by ensuring remote Internet sellers like Amazon pay the same taxes. These actions would generate hundreds of millions of dollars in much-needed revenue.

The alternative is to continue making deep cuts to our schools, health care and public safety agencies — hurting our hardworking families and losing thousands of jobs for New Mexico.

Our kids are hungry, and our education system is not preparing them for the workforce. Over 2,500 jobs were lost in health care due to under-funding Medicaid last year. Our backlog of rape kits is the highest per capita in the country. Our chief public defender is in contempt of court because of understaffing.

We have lost nearly 3,000 state jobs since 2008, and even our economic development department does not have enough funding to get us back on track with job creation.

Nearly 60 percent of New Mexico voters polled — including the majority of Republicans and most Democrats with an opinion on the issue — said they would be willing to raise taxes to avoid deep cuts to these vital services.

Responsible tax reform is a win-win for our families. We can make the system more fair for average New Mexicans and raise the revenue necessary to fix this budget crisis.

Our opportunity is here and now. It is time for leadership to build a stronger, healthier Land of Enchantment.