January 30, 2013

CONTACT: Sharon Kayne, Communications Director, NM Voices for Children, 505-244-9505 

ALBUQUERQUE—New Mexico’s lowest-earning families pay state and local taxes at a rate more than double that of the highest-earning households. That’s according to the report, “Who Pays? A Distributional Analysis of Tax Systems in All 50 States,” released today by the Institute on Taxation and Economic Policy (ITEP).

As the table for New Mexico shows, the state’s households in the bottom fifth earning bracket pay 10.6 percent of their income on state and local taxes. Those in the top 1 percent pay just 4.8 percent of their income in those same taxes.

“New Mexico’s tax structure has become more regressive over the years, particularly since the income tax rate for the top bracket was cut in half in 2003,” said Gerry Bradley, Research Director for New Mexico Voices for Children. “Sales taxes have always fallen hardest on those with the lowest incomes because they must spend virtually all of their income on day-to-day necessities, where as those in the higher income brackets are able to set some aside in savings.”

In fact, sales and excise taxes show the largest rate gap—with the lowest 20 percent of households paying about seven times what the highest 1 percent pays. New Mexico has a gross receipts tax (GRT) rather than a traditional sales tax, but the amount is usually passed along to the customer, much like a sales tax.

“New Mexico used to have a fairly low, broadly based gross receipts tax and, coupled with a more progressive income tax structure, that made the overall system much more fair,” Bradley said. “But over the years we’ve enacted numerous exemptions, which meant raising the GRT rate to make up the difference.”

Two other recently released reports also paint a dismal picture of life for New Mexico’s low-wage workers: New Mexico has the highest income inequality in the nation, and the highest rate of working families who are low income.

“Given these reports, coupled with our anemic job growth, things aren’t likely to turn around for low-income families soon unless our lawmakers step up,” Bradley said. “The Legislature is considering a couple of bills that would help—raising the minimum wage and indexing it to inflation, and increasing the Working Families Tax Credit. Conversely, legislation to lower the corporate income tax rate or give a break to manufacturing companies and oil and gas producers will only make matters worse for working New Mexicans. Such proposals will not generate enough new jobs to make up for the lost revenue, so services like education, public safety, and health care will suffer,” he added.

The report can be downloaded here:
Download the New Mexico fact sheet here (pdf)


New Mexico Voices for Children is a nonpartisan, nonprofit organization advocating for policies to improve the health and well-being of New Mexico’s children, families and communities. Our fiscal policy work is funded by grants from the Annie E. Casey Foundation, the McCune Charitable Foundation, the WK Kellogg Foundation, and the Working Poor Families Project.
625 Sliver Ave. SW, Suite 195, Albuquerque, NM 87102; 505-244-9505 (p);

Download this press release here (pdf)