New Mexico Voices for Children Core Value: Economic Justice

Issue Areas:
Progressive Tax Policy Reform
Reducing Poverty Through a Living Wage
Reducing Poverty By Helping Families Develop and Hold On To Assets

Economic justice means that no one who works full time should live in poverty, that every family has the opportunity to build assets, and that the tax system is just—meaning those who have benefited the most from this country's resources, pay a higher percentage of their income in taxes.

Progressive Tax Policy Reform
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New Mexico Voices for Children supports progressive tax policies that assure adequate state revenue to fund all-important services like health care, education and public safety, and that reduce poverty. We oppose regressive tax policies that favor the wealthy and harm families by reducing the amount of money available to pay for education, health care and public safety.

In the 2004 and 2003 legislative sessions New Mexico policymakers reduced the top rate of the personal income tax from 8.2 percent to 4.9 percent. This benefits New Mexico's wealthiest residents and means that the state's highest income residents no longer pay a fair share of taxes.

When it was completely phased in (2008), individuals with taxable incomes of $295,000 or more began getting a tax cut of $13,227 a year, while an individual with a taxable income of $29,000 or less began getting a tax cut of zero. Those with a taxable income of between $29,000 and $45,000 per year get $38.

The capital gains tax cut also passed in 2003 is another windfall for wealthy people who tend to own stock or property and therefore are most likely to gain from this tax cut.

These cuts are not only unfair, they put tremendous pressure on the state budget. The personal income tax alone cost the state $330 million in 2008. That means the state has hundreds of millions less to invest in programs and services like education, health care and public safety.

Please go to the Fiscal Policy Project for more information about New Mexico's tax policy and the coalition effort for progressive tax reform.

Policy Priorities:

• Close the loophole in the personal income tax for higher income people who itemize deductions. The loophole allows mostly upper-income taxpayers who itemize to take a deduction on their federal income tax for the state and local taxes they paid. Then, they are allowed to report the lower taxable income amount from the federal form as the state taxable income. In other words, New Mexico allows these taxpayers a deduction for paying taxes to the state!
• Reinstate the estate tax on property worth more than $2 million. Family farms would be exempted. New income generated: approximately $20,000,000.Close the loophole for corporations, which allows those that conduct business in more than one state to avoid paying corporate income tax to New Mexico on the profits they make here.
• Greater transparency of the state's tax policy. Every year, New Mexico grants hundreds of millions of dollars in tax cuts, credits and incentives (called 'expenditures') to the business community with the expectation that jobs will be created. But nobody knows exactly how much money is lost to the state budget each year because of these policies, nor does anyone know what, if anything, we gain economically. It's our money, we have a right to know where it's going.

Policies We Oppose:

• Making the federal income and estate taxes permanent. The Bush administration's tax cuts have lead to unprecedented debt and cuts to vital programs like Medicaid and food stamps.

Reducing Poverty Through a Living Wage
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New Mexico Voices for Children believes that everyone should have the opportunity to work towards economic stability and prosperity. A living wage enables families to work their way out of poverty and into prosperity. We support living wages.

The Federal Poverty Level (FPL) is the metric used to determine if a family is eligible for assistance like food stamps and Medicaid. Unfortunately, the system used to determine FPL is woefully outdated. It does not take into account expenses like health care and childcare, and it is not adjusted for the different cost of living in various cities and regions. Depending on family size and geographic area, New Mexico's working families need to earn from 136 percent to 247 percent of the FPL just to live at a bare bones level.

A better way to determine if a family lives in poverty is to use a Basic Family Budget, which is a set of calculations developed by the Economic Policy Institute. The Basic Family Budget (BFB) determines what it realistically takes for a variety of family configurations to live at a basic level in various communities. What's the BFB for your community?

• Click Here to calculate a Basic Family Budget for New Mexico's rural counties.
• Click Here to calculate a Basic Family Budget for Albuquerque, Farmington, Las Cruces or Santa Fe via the Economic Policy Institute's website.

Policy Priorities:

• Index the state minimum wage so that it rises with inflation. A statewide raise in the minimum wage should not preclude cities and counties from enacting higher minimum wages.
• Raise the wage level at which families lose childcare assistance. Often, families are unable to accept pay raises because it would make them ineligible for childcare assistance—even when the raise amount is less than the assistance.

Reducing Poverty By Helping Families Develop and Hold On To Assets
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Research shows that having assets—such as a house or savings account—are essential to a family's ability to move out of poverty and into economic security. New Mexico Voices for Children supports policies that enable low-income families to develop and maintain assets. For a Financial Security Scorecard on New Mexico published by CFED, see 2005 Assets and Opportunity Scorecard: Financial Security Across the States.

Policy Priorities:

• Limit the fees and interest that can be charged to consumers by payday, car title and tax refund lenders. Under current law, New Mexico does not limit fees and interest or regulate the length and term of consumer loans. Unscrupulous lenders often charge interest in excess of 600%. Voices supports legislation that would end predatory lending practices and encourage fair and honest lending. Weak legislation that falls short of limiting interest and fees should be rejected.
• Add additional money to the Housing Trust Fund that would allow low-income families to obtain financial help to buy a house.