Tax Breaks on Top of Tax Breaks: But Where are the jobs?
Lawmakers talk a lot about accountability when they’re spending taxpayer money on programs and services, and that’s entirely appropriate. We want to get the most from our investments in the state’s human resources, systems, and infrastructure. Programs that don’t work should be overhauled or de-funded. Programs that work well need to be replicated or expanded to better serve unmet needs. Our lawmakers take this part of their job seriously. Too bad the same cannot be said when it comes to lawmakers giving away state revenue in the form of tax breaks.
Think back to early 2003. Governor Richardson is only a few weeks into his first term when he pushes through a massive half-a-billion dollar personal income tax cut for the highest earning New Mexicans that has no accountability measures. Economic developers pushed for it, saying that our high income tax rate was preventing our economy from growing. They promised that cutting taxes would bring more high-paying jobs―and even corporate headquarters―to New Mexico. The tax cuts happened, but not the jobs.
Think back to early 2012. Governor Martinez says we need tax breaks for construction and manufacturing—again with no accountability measures. We’re told that if we pass these tax credits, New Mexico will bolt out of the recession, and construction and manufacturing jobs will suddenly appear. Not only did that not happen, but a year later, our state had the some of the worst job growth in the nation. On top of that, the administration made a ‘mistake’ and the tax cut ended up costing twice the original estimate.
Think back to early 2013. As legislators debate whether to ‘fix’ the 2012 tax mistake, business lobbyists begin the push for corporate income tax cuts. Apparently they’ve decided that it wasn’t a personal income tax cut that was needed, or the tax cut for construction and manufacturing, but the problem is that our tax on corporate profits is too high. So the Legislature cuts hundreds of millions of dollars more from the state bank account on a corporate tax cut that—once again—lacks any accountability measures and ends up costing much more than the original estimate.
In ten short years, state leaders have managed to wipe away billions of dollars that could have paid for education, health care, and public safety. All for the promise of jobs that never materialized.
Instead of “creating” jobs, here’s what we got for those tax cuts:
• We’ve seen 14 percent tuition increases at UNM because we cut our per-pupil higher education spending more than any other state
• We’ve seen the fifth deepest cuts in the nation in per-pupil spending on K-12 education
• We’re dead last in child well-being in the national KIDS COUNT ranking
• We’re worst in the nation in child hunger
• We’re worst in the nation in income inequality
• We have the highest rate of working families who are low-income
• We still have high unemployment and little to no job growth
• And the state was recently ranked dead last for quality of life by Forbes magazine.
And big surprise―we’re now told that, you guessed it, taxes are too high and the answer to all our woes is more tax cuts! Apparently, it was not that personal income taxes and corporate income taxes were the problem, because now we’re told that the real problem with our economy is our sales tax (or gross receipts tax) and its “high burden” on business-to-business transactions.
There’s been no talk of the failure of previous tax breaks, no serious discussion of repealing any of those worthless tax breaks, and no talk of how we might pay for education, health care, and public safety if we keep cutting taxes. In fact, there is little talk of even trying to track how much money we’ve been giving away. Legislation that would have added up all these tax breaks and looked at whether they did what they were supposed to do was vetoed three times! Apparently, someone would rather not know how much the tax breaks cost or whether they worked. If we knew that, or had any accountability at all, it might be a little harder to justify the next tax break!
Bill Jordan is NM Voices’ Senior Policy Advisor/Governmental Relations