Let’s be realistic. Taxes have to come from somewhere.
Many New Mexicans are uncomfortable that the state depends heavily on revenue from the oil and gas industry. If we want to be less dependent on oil and gas but still have schools, roads, a health department and the rest of government, we have to be able to tax other things.
This year several bills were introduced (none passed) to reduce or eliminate the income tax on Social Security, with rhetoric that implied we were taking bread from poor elderly by taxing their benefits. We’re not. The lowest income taxpayers are already protected by existing exemptions. In-depth analysis on this issue can be found in the fiscal impact report on House Bill 29, on the legislature website. It’s worth reading.
New Mexico’s tax on Social Security probably deters some retirees from moving here, as advocates claim. However, the website Smartasset.com rates New Mexico as overall “moderately tax friendly” toward retirees. And tax calculations don’t measure the weather, which retirees care about. Remember that terrible hurricane or the awful flood? Neither do I because we didn’t have one.
Retirees also are fond of low property taxes. New Mexico has some of the lowest in the U.S, says Smartasset.com. The state’s average effective property tax rate is 0.78%. Our median annual property tax is $1,272, about $800 less than the national median.
Our property tax is low because unlike most states, New Mexico does not use local property tax to fund schools. Our schools are funded statewide, so that spending is roughly equalized among school districts throughout the state.
That funding comes largely from gross receipts tax, which originally was a very low tax on virtually everything we buy, but which has been transformed by exemptions adopted over the years. School funding also receives a major contribution from the earnings of the Land Grant Permanent Fund, more than half a billion dollars this year.
A proposal to increase the gasoline tax didn’t get very far this session. The bill was HB173 (Rep. Matthew McQueen, D-Santa Fe).
Legislators from rural communities opposed any increase in this tax, claiming it hurts their constituents who have to drive long distances. That’s true, but those same residents would benefit the most from improved roads. According to the report “New Mexico Transportation by the Numbers,” 54% of major roads and highways in New Mexico are in poor or mediocre condition, costing the average New Mexico driver $770 annually in operating costs. The impact of bad roads is probably worst for those rural residents.
Ironically, two similar bills (HB104 and HB276) proposed to provide a tax exemption to any person or corporation that donates money to a county road fund. The donor would be able to designate which roads to repair with the donation. So rich corporations could, in effect, pay to have their own roads fixed. The exemption would have applied to donations up to $1 million.
I might be indignant about the unfairness of such a proposal except that it came from Eddy County. Both bills were sponsored by Rep. Catherine Brown (R) of Carlsbad, where oil is making everybody rich but people are being injured or killed by the deadly condition of the roads.
New Mexico’s tax policy is already riddled with exemptions. For several years legislators have been saying they want to review the existing exemptions to see which ones continue to serve a valuable public purpose, but it has not been done.
That’s understandable. Legislators get pats on the back for granting new exemptions but when they try to repeal one, they get only resistance. Maybe the coming interim would be a good time to bite that bullet and clean out a few old exemptions before establishing any new ones.
Contact Merilee Dannemann through www.triplespacedagain.com.