Celebrate Democracy: It’s Tax Day!

by Raphael Pacheco, MBA
April 17, 2018

Growing up in Clovis, New Mexico, my favorite place to go as a kid was Clovis-Carver Public Library. Although it has been several years since I last visited the cozy library right across Main Street from the courthouse, I still see it as my second home. During the summers, my mom, a public school teacher, would take my sister and me to a program called Story Hour where the librarians would read aloud a book to the kids in attendance. After the story, sometimes we would have a guest speaker; it was always someone from the community, like a police officer, or a firefighter, or once we had a zookeeper from Hillcrest Park Zoo bring in some of their animals to talk about. Once Story Hour ended, my mom let me and my sister loose in the library where we proceeded to quietly raise hell. Checking out and reading hundreds of books about Egypt and Goosebumps, about pirates, kings and queens, and folklore and other fiction that transported us to other worlds. Appropriately, somewhere else in the library (hopefully not the children’s section) was a book on what made this beautiful childhood experience possible. A book about taxes. (Fun fact: everything underlined in this paragraph is funded at least in part by state and local taxes.)

While it’s easy to tick off a list of the things we enjoy that are paid for out of our taxes, paying taxes is really a moral duty that we all participate in. It is a contract that we honor collectively because it’s the way we invest in our communities. In fact, some research shows that Americans see being a taxpayer as a role worthy of pride and respect. Unfortunately due to the Tax Cuts and Jobs Act (TCJA) signed into law last December—not to mention the many trickle-down tax cuts that came before it—the responsibility of paying taxes is not distributed equitably. Namely, the tax cuts that were enacted largely benefit the wealthy and large corporations, according to an analysis done by the Institution of Taxation and Economic Policy on the TCJA. For example, the top 1 percent will receive the lion’s share of the tax cut in nearly every state—and New Mexico is no exception.  New Mexican families with the highest incomes—those with incomes in the top 40 percent—will get 85 percent of New Mexico’s total tax cut. Far more than the 15 percent that the majority of us—those with incomes in the bottom 60 percent—will receive (see figure below).

An uneven, inequitable tax cut is bad enough. Our nation’s tax code is thrown even further out of balance by the permanent tax cuts for corporations made possible through the TCJA. These tax cuts will all simultaneously drive up federal deficits and that will be used as an excuse to force cuts to food assistance, health care, and other programs that benefit millions of Americans. That money would be put to much better use repairing our roads and educating our children.

Cuts to federal programs will only put more pressure on state budgets to compensate for the loss of federal funding. Federal funding accounts for 41.4 percent of all government spending in New Mexico, but thanks to insufficient state revenues, the state has still had to make deep cuts in spending over the past decade. Since the recession, we’ve cut K-12 education by 14 percent on a per-pupil, inflation-adjusted basis and the state could lose a multi-million dollar lawsuit for underfunding education as a result. We’ve cut higher education by 33 percent, which resulted in incredible increases in tuition, and our students have more debt than students in almost every other state. Only a small fraction of New Mexico’s children receive NM Pre-K and state-supported home visiting services and our child care assistance program is serving thousand fewer families than it did in 2010.

Of course, our deep cuts to education were due to more than the recession. They’ve also been the result of state-level tax cuts that went disproportionately to corporations and the wealthy but have done nothing for our sluggish economy. The state’s revenue levels are just barely back to where they were before the recession and now we could face significant cuts from the feds. It is our imperative as a state to create a strong, fair economy and we can do so with cleaner, more equitable tax codes that make corporations and wealthy individuals pay their fair share and bring in the revenue we need to invest in our communities. New Mexico Voices for Children’s Blueprint for a Prosperous State outlines several common-sense paths to a more prosperous economy.

So call me crazy but I really enjoy Tax Day because I am truly proud to pay taxes. If voting during Election Day is a self-expression of our values, then filing our tax returns on Tax Day is the method through which we celebrate those values. Taxes provide the resources to make shared investments in the things we all care about like a cleaner environment, public health, and quality schools. Ever wonder how White Sands National Monument and other public spaces stay clean? Or how we have this magical faucet in our homes that we can turn on and out comes life-sustaining water that is safe to drink, cook with, and bathe in? Remember your favorite teachers in elementary school and the impact they had on you as a kid? You have these awesome experiences because of investment in our communities through taxes that have led to greater opportunities that we all can enjoy.

Raphael Pacheco is a research and policy analyst and State Priorities Partnership Fellow.