Working NM needs real tax reform and lawmakers to do it

It’s been clear for some time that getting thestate Legislature to fix the tortuous tax code will be a Herculean task.

Thanks to several recent stories from Journal reporters Dan McKay and Dan Boyd, the public has a much clearer idea of exactly how monumental that effort will be, as well as how absolutely essential it is for the financial well-being of current and future New Mexicans.

Meaningful reforms include adding people to the tax base while lowering the state’s gross receipts tax rate — in other words, making it broader and shallower — and ending the state’s ongoing “hold-harmless” payments. These payments mean taxpayers backfill local government budgets after the repeal of the tax on food and medicine — even while many of those governments have increased their taxes on consumers.

It’s also past time to finally evaluate the state’s many tax breaks and keep only those that actually deliver a return on investment for the public and the state, and not just to the chosen few who have had the ear of lawmakers over the years.

Then there’s the Think New Mexico plan to repeal the tax on Social Security, the second-most onerous in the nation, which hurts our ability to attract middle- and upper-income retirees.

It all sounds achievable, and it should be — that is, until you learn that state lawmakers attempting a tax overhaul can’t even get the information they need to know what recommendations to make. At least 10 tax breaks are so narrow they apply to a handful of people, so analyzing them would violate the privacy of the taxpayers using them.

Nice unaccountable carve-out if you can get it, right? It’s an outrageous situation — even more so because a bill to allow staff economists limited access to some confidential taxpayer information was killed earlier this year. For real tax fairness, it must be revisited. Our elected lawmakers can’t make reforms in the dark — well, unless that inertia is exactly what they want.

As Gov. Michelle Lujan Grisham’s two newly minted tax code task forces move forward, it’s imperative New Mexico’s hard-pressed middle class be protected.

Medicaid, health care coverage for the poor and disabled, is expected to sop up tens of millions more dollars in the upcoming budget. We have to get a handle on crime, homelessness and addiction. And we already spend $3 billion a year, close to half the state budget, on K-12 public education, with dismal results. While these societal ills must be addressed and even though each dollar the state spends on Medicaid brings in federal dollars, poverty should not be our lead economic driver. New Mexico has to get more of the population not only working, but also financially self-sufficient, and that means eliminating benefit cliffs and tax penalties that disincentive work.

At the same time, accountability for every public dollar should be job No. 1.

That’s especially important as billions flow in from the Permian oil and gas boom. That lawmakers increased taxes on working folks this year while counting record surpluses defies credulity. Why is it that government finds it so hard to give taxpayers some of their money back to put into the economy when the good times roll?

With state coffers full to bursting, the powers that be should curb government’s insatiable desire for more and recognize the backbone of New Mexico’s economy, hard-working middleincome earners, deserve a break and a fairer tax system.

At the end of the day, we don’t need to make this state any less attractive to current and future working professionals. We need to keep those people in New Mexico — now and long after the Permian goes dry.