Report: NM Tax Overhaul Would Benefit Kids, Families

by Roz Brown, Public News Service – NM
October 17, 2018

ALBUQUERQUE, N.M. – Regressive tax systems hurt children and families, according to a new report from the Institute on Taxation and Economic Policy – and by that standard, it says New Mexico has the 19th-worst tax system in the United States.

The study showed that as a share of their income, the lowest-income New Mexicans are paying state and local tax rates almost double those of the state’s wealthiest residents.

James Jimenez, executive director of New Mexico Voices for Children, said state policymakers could address the inequity by embracing a more progressive tax system.

“It’s really a much fairer way of allocating tax responsibility to support the kinds of things that we need – good, strong schools and higher education, great infrastructure,” he said. “Those are really the fundamental things that we need to figure out how to pay for in a fair way.”

In New Mexico, the report said, those who earn the least pay 10.6 percent of their income in state and local taxes, while those who earn the most pay just 6 percent. That means after state and local taxes are collected, the after-tax income of New Mexico’s top earners increases to an average 77 times the after-tax income of the state’s low-income residents.

New Mexico’s tax system is considered regressive because the lower a person’s income, the higher their effective tax rate. In other words, the smaller your paycheck, the more of it you spend on daily living expenses, most of which are taxed. Jimenez said the state’s current tax system ensures that those who can afford to pay the most actually pay the least.

“We are asking those who make least in our state to pay the highest share of their income in state and local taxes,” he said, “which we just think is just fundamentally unfair, that we need to reverse that.”

Both of New Mexico’s gubernatorial candidates have vowed to tackle the tax system, if elected. Democrat Michelle Lujan Grisham has said she’ll convene a bipartisan tax commission to revise the complex system of gross receipts taxes. Republican Steve Pearce also has pledged to overhaul the state tax system.

The study is online at itep.org.

Copyright 2018, Public News Service – NM (https://www.publicnewsservice.org/2018-10-17/childrens-issues/report-nm-tax-overhaul-would-benefit-kids-families/a64278-1)