Republican Tax Proposal Would Disproportionately Benefit Wealthiest New Mexicans, LFC Data Shows
Report reveals that cutting personal income tax would strip billions from the state budget, while potentially increasing the tax burden on the lowest earners
Santa Fe, N.M. – Last week, nonpartisan economists with the Legislative Finance Committee (LFC) presented data to state lawmakers showing that recent proposals to eliminate New Mexico’s personal income tax would disproportionately benefit the wealthiest New Mexicans, while gutting the state’s budget for education, public safety, and more.
The LFC presentation to the legislature’s Revenue Stabilization and Tax Policy Committee outlined that New Mexico filers making over $1 million per year stand to gain nearly $150,000 annually from the elimination of personal income tax, while the state’s lowest earners could end up owing an additional $430 in yearly taxes. This proposal would also take roughly $2.25 billion away from the state’s annual budget, with no plan to replace this critical funding.
“This nonpartisan data demonstrates that while proposals to eliminate state income tax may make nice campaign soundbites, the reality is they would harm our state and communities while further lining the pockets of the wealthiest among us,” said Committee Chairman Rep. Derrick Lente (D-Sandia Pueblo). “Actually putting money back into the pockets of working families requires considering the full impact of our tax policies on our schools, our first responders, and everyday New Mexicans. When it comes to cutting income tax, the data is clear – the wealthy stand to gain while working class New Mexicans will lose.”
LFC examined the state’s current tax structure and the potential impacts of rolling back various state taxes. All proposals to cut or eliminate personal income tax would give the greatest relief to the wealthiest New Mexicans, while cutting funding for everything from healthcare to law enforcement and public schools.
Currently, thanks to legislative reforms to make New Mexico’s tax code more fair, the majority of New Mexicans already pay less than 1% in personal income tax. The state’s highest earners, especially those making over $1 million dollars, stand to gain the most from personal income tax elimination.
Currently, the majority of New Mexicans already pay less than 1 percent of their family income in personal income tax. The state’s highest earners stand to gain the most from eliminating income tax. Source: LFC Report
Additionally, if the existing state tax credits designed for working families were eliminated to help offset the cost of personal income tax elimination, those making under $25,000 a year in our state would actually pay more in taxes.
Data presented to the committee also showed that New Mexico is in the middle of the pack nationally when it comes to state tax policy, further noting that New Mexico is the best state in the nation for property taxes.
The Revenue Stabilization and Tax Policy Committee met at the Roundhouse on Wednesday and Thursday of last week, to discuss tax policy and proposals ahead of the upcoming legislative session. A recording of the LFC presentation can be found here.
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