Don’t impose food tax LETTERS

A recent article described a new report commissioned by the New York-based Rockefeller Family Fund and produced by the Philadelphia-based PFM Group. The report recommended that New Mexico reimpose its regressive food tax and replace it with a “refundable tax credit.” (I note that neither New York nor Pennsylvania tax food; only Mississippi, Alabama and South Dakota fully tax the sale of groceries.)

The problem with refundable tax credits, which the Rockefeller Fund and PFM Group might not understand, is that many of the low-income families whom they are supposed to benefit never actually receive them. New Mexico’s existing refundable tax credit, LICTR (the “Low-Income Comprehensive Tax Rebate”) was claimed by just 208,086 families last year. Yet about one in four New Mexicans, 526,347, live in households with annual incomes less than $25,000. This means that hundreds of thousands of New Mexicans, perhaps 50 percent of those who are should be receiving it, are missing out on this tax credit every year.

National research on the federal Earned Income Tax Credit found that about 44 percent of eligible families were not aware that the refundable tax credit even existed, so if their incomes weren’t high enough to require them to file taxes, they did not receive it.

The most efficient way to prevent the food tax from harming low-income New Mexicans is simply not to impose it.

Sincerely,

Fred Nathan, Jr. Executive Director, Think New Mexico *This letter was submitted to other media.