The next governor should improve our tax system and increase wages

By James Jimenez, NM Political Report
Nov. 2, 2018

While election season seems to highlight our nation’s political divide, most New Mexicans agree on what we’d like for our state: a strong economy with opportunity for everyone; good jobs; safe communities; and resilient families with healthy, well-educated children. We all want the best possible future for our children and the generations to come.

The issue, then, is how we go about building such a state. That will be the fundamental question the new governor will need to answer. She or he will have to sell his or her vision to legislators, agency staff, and a whole host of other players in order to make it a reality.

We can’t effectively look forward without first knowing where we are and how we got here. From a child’s-eye view, New Mexico is not doing well. We’re ranked dead last in the nation for child well-being and for educational outcomes. The state just lost a lawsuit for not adequately funding public education, and two new lawsuits allege that the state has failed to protect children from abuse. We have one of the highest rates of child poverty in the nation.

For eight years, New Mexico has been on a starvation diet. We’ve made deep cuts to our schools and universities, underfunded our roads and bridges, and short-changed our courts and communities. Austerity has left our state, our neighborhoods, and our families far behind. While the rest of the nation has recovered from the recession, we’re still limping along.

But the good news is, we have the power to improve opportunities for New Mexico’s kids, and the new governor can do it by taking the lead on public policies that have been proven effective.

First, we recommend that the new governor work to make our tax system fairer and more stable. Thanks to 15 years of failed trickle-down tax cuts, New Mexico is now much too dependent on revenue from oil and natural gas extraction to fund our state services like education and public safety. But the amount of revenue we collect from oil production is based on prices that are set at the global level, so we’re stuck in a boom-or-bust cycle. Right now, we’re in a boom, but prices and production will go down again and, unless we’ve fixed this structural fault, we’ll be forced to cut services to the bone – again.

When it comes to fairness, New Mexico’s tax system is backwards. Those who earn the smallest incomes pay the highest rates in state and local taxes, according to a new report from the Institute on Taxation and Economic Policy. The responsibility for taxes should not fall hardest on those with the least ability to pay, but it does. There are several ways we can make our tax system fairer.

First would be to enact a state Child Tax Credit. The recent federal tax cut actually raised taxes on many families with children because it eliminated the deduction for dependents. A state child tax credit would help alleviate the damage done by the federal tax change and address child poverty in the process.

The Working Families Tax Credit is a state version of the federal Earned Income Tax Credit, which Ronald Reagan called the best anti-poverty program to come out of Congress. The state credit is worth 10 percent of the federal, and we have long advocated for raising it to 15 or 20 percent. These two effective tax credits, 40,000 New Mexico families have been lifted of poverty. The Low-Income Comprehensive Tax Rebate, on the other hand, is available to those without children. It was enacted to help New Mexicans in deep poverty, but it hasn’t been updated in 20 years. It’s long past time for an increase.

Finally, one way to improve the state’s economy and help working families would be to raise the state minimum wage, which hasn’t been increased in nearly a decade. As prices have gone up, its purchasing power has eroded – so the $7.50 wage is now worth just $6.30. Increasing the state minimum wage could benefit more than 100,000 children.

These are just four of the policy recommendations we have for the next governor. You can read about all of them on our website at www.StrongerNewMexico.org.

James Jimenez is the executive director of New Mexico Voices for Children.

Copyright 2018, NM Political Report (http://nmpoliticalreport.com/2018/11/02/the-next-governor-should-improve-our-tax-system-and-increase-wages/)