Legislative attempts to limit interest rates on payday loans are likely dead for another year. That gives predatory lenders 365 more days to charge an average of 350 percent on small-dollar loans.
Unemployment benefits don’t just help keep laid-off workers afloat. They also help keep the state’s economy from tanking. But the state’s system has failed on both counts.
Increasing the minimum wage, which would positively affect many workers, continues to be discussed during the current legislative session. But not all bills to raise the minimum wage are equal. Some are just plain wrong.
New Mexico’s Working Families Tax Credit is based directly on the federal Earned Income Tax Credit (EITC), which was enacted in 1975. New Mexico’s credit was enacted in 2007 at 8 percent of the value of the federal EITC and raised the following year to its current value of 10 percent of the EITC. Both credits are refundable income tax credits available to low- and lower-middle-income workers. Each year the EITC injects about $500 million into New Mexico’s economy, and the Working Families Tax Credit provides an additional $50 million in benefits to New Mexico families.
Today we’re talking about the state budget, and you know, there’s been a lot of people in this Roundhouse taking credit for—quote—“balancing the state budget during the recession and fixing the worst budget deficit in our history.” And while everybody argues over who balanced the budget, they all missed the more important point about how they balanced the budget. So I’m going to tell you.
Our legislators have a lot of important decision to make, such as how to divvy up the money that pays for services like education, public health, and our court system. That is why they have expert staff members to advise them. For example, the Legislative Finance Committee, which is tasked with creating the annual budget as well as recommending changes to the tax system, has a full-time staff that works year-round. These staff members are available to do things like study emerging issues, analyze best practices, write reports, and make recommendations. Without these services the committee’s work would be much more difficult and the results would be less reliable. The Legislative Education Study Committee, which oversees our state’s educational systems from kindergarten to college, also has a full-time, year-round staff.
Today is National EITC Awareness Day, a nationwide effort to increase public awareness about the benefits of the federal EITC, which is available to low- and middle-income working families. It helps people who work hard meet basic needs for food and transportation and provide for their children. New Mexico’s Working Families Tax Credit (WFTC) is based directly on the EITC and provides additional benefits for New Mexico’s working families and communities. It can be worth up to $614 for those who qualify for the EITC.
When it comes to state and local taxes, middle- and low-income New Mexicans pay a tax rate double what the wealthiest pay and part of this inequity is due to an extremely generous tax cut enacted by the Legislature in 2003. Those who have capital gains income—that’s income from the sale of stocks, bonds, real estate, and the like—can deduct half of it from their personal income taxes. As most capital gains income goes to people who already have the most money, those are the tax filers who receive the most benefit from the deduction.
It’s widely agreed that the poorest among us should not pay the highest tax rate, but in New Mexico (as in most states) they do. State and local taxes—particularly sales and property taxes (shown in the light blue and orange bars in the graphic below)—take up a higher percentage of incomes at the lowest end of the scale. That’s because the smaller your paycheck, the more of it you spend just on day-to-day living expenses—most of which are taxed.
While profitable corporations require roads, police protection, and other public infrastructure and services as much as the rest of us, New Mexico has ensured that they will be paying much less of the cost to maintain them. The tax cuts for corporations enacted by the state Legislature and signed by the Governor in 2013 are proving to be much more expensive than originally estimated. So much so that within the next few years we will lose 60 percent of our corporate income tax revenue.