NM is Last or Near Last in Almost Everything. What you need to know about how easily this could be fixed. Also, a week full of action alerts. Much to do in Santa Fe almost every day this week. Check it out.Lots of opportunities to get in the game. Depending on the source, NM ranks virtually last in most every socio-economic indicator, dead last in childhood poverty. Today, we examine one of the root causes of NM’s plight. As the blog will describe, this is a self-inflicted problem, something that could be addressed with relative ease, if not for one thing: seemingly impenetrable Roundhouse roadblocks to anything like serious tax reform. Today, with NM Voices for Children doing the heavy lifting, we present the hole we are in and how much we stand to gain by reversing some very specific tax policies. If, as MLK, Jr. once famously stated, a budget is a moral document, then NM’s budget and the tax policy that feeds it are perversely immoral as this blog illustrates. But first, there are some opportunities for action in Santa Fe over the next few days and I want to highlight them:
- Thurs. June 14, 5-7pm, Retake Our Democracy Roundhouse Advocacy Team meets at New Energy Economy, 343 E Alameda;
- Friday, June 15, 8am-1pm. Santa Fe Convention Center, Mayor’s Report on Year I plans from 8 transition teams;
- Friday June 15, 10am. Santa Fe Bandstand. Greet and hear from the Apache Stronghold Spiritual Quest as they travel to Washington, D.C. for the New Poor People’s Campaign on June 23.
- Saturday, June 16, from 8 am to 11 am. TEWA Women’s United. A Chance to Get Your Fingers Dirty and Burn Some Calories While Working On Tewa’s Healing Garden.
- Poor People’s Campaign. Action 6. Monday, June 18, 2pm Roundhouse and 5pm in Gallup.
- Wed. June 20, 5:30-7pm. First Christian Church, 645 Webber St., Santa Fe. Family Separation on the Border with Allegra Love, Santa Fe Dreamers Project. (I will be writing more about this shameless practice in Saturday’s blog)
- Local Action Team Mtg. Monday June 25. 6-7:15pm at New Energy Economy 343 E. Alameda.
Click here for details on all of these actions and opportunities..
The Path to a More Prosperous NM Economy
Over time, I have found that when I have a short synopsis of a report with a link to the full report, very few click through to the full report. So, today I have copied and pasted from a remarkably important document produced by NM Voices for Children. It identifies one NM state tax giveaway after another. As you go over each of these tax reform items keep in mind one thing. In most every single instance, the beneficiary of these failed tax policies are the 1% and large corporations. Eliminating those loopholes would almost always benefit the 99%. If tax policy is a moral document, we now rank 50th in yet another indicator: the morality of our tax system. Thank you NM Voices for Children for all you do.
I want to add one thing before we dive in to NM Voices’ work. Look at the graphic, below right. NM’s system is so regressive, it is almost comic. Or tragic. In NM, people earning $17K a year pay 11% of their income to state and local taxes while those earring over $300K pay under 5%. Seriously, this is so out of whack as to be embarrassing. Take it away, NM Voices, tell us how we can fix this mess. I turn the over to NM Voices.
The path to a strong New Mexico begins with making smart investments. Investments that would shrink class sizes in our schools, provide child care for more hard-working families, allow us to reopen the school-based health centers that had to close, and lower college tuition to what it was before we made all the deep cuts to higher education funding. There are many common-sense ways to raise new revenue, which could be used to educate our workforce, create jobs, and bolster our economy:
- Repeal the 2013 corporate income tax cuts
The big corporate tax cut of 2013 cost more than expected, and it’s also failed to create jobs. There is no excuse for keeping bad tax policy on the books and New Mexico lawmakers need to repeal this one. Could raise more than $100 million a year.
- Repeal the tax break for manufacturers
At the same time the corporate income tax rate was cut, the formula for how manufacturers were taxed was changed so that companies like Intel could get away without paying any taxes. But Intel has since cut jobs in New Mexico. Could raise $45 million a year.
- Raise the personal income tax rate for those at the top. In 2003 New Mexico cut the personal income tax rate by nearly half for the wealthiest households. As it is now, the wealthiest pay less of their income in state and local taxes than most of the rest of us. (See the graphic below for just how unfair our tax system is.) Meanwhile the GOP tax plan signed into law at the end of last year gave more tax cuts to the wealthy. Raising income tax rates for very-high income New Mexicans will raise much-needed revenues and help to turn our upside-down tax system right-side up. A full repeal of the 2003 cuts would raise $500 million.
- Curtail tax breaks for capital gains income. New Mexico taxes income from capital gains (profits from the sale of assets such as stocks or real estate) at half the rate that it taxes the wages of working people. This break mainly helps the wealthiest—those making over $200,000—while taking revenue away from much-needed public investments. It also helps make our tax system less fair. Could raise $44 million-$48 million in FY19.
- Repeal wasteful and ineffective tax breaks. There are hundreds of tax breaks that have been carved out of the gross receipts tax (GRT) base over the years, many of which simply qualify as a handout to special interests. What’s more, few of them have ever been evaluated for effectiveness. Repealing wasteful and ineffective tax breaks will allow lawmakers to put that money to work in our schools and communities where it will benefit everyone. Could raise hundreds of millions.
- Require all out-of-state corporations to pay income tax on their profits in New Mexico. New Mexico is one of the few states that still allows out-of-state corporations to shift their New Mexico profits on paper to another state to avoid paying taxes here. We lose millions in revenue, and local businesses can’t compete. A partial fix (called Mandatory Combined Reporting) was enacted in 2013, but it exempted many profitable corporations such as banks. Could raise $25 million.
- Increase the distribution from the Land Grant Permanent School Fund. New Mexico has the nation’s second largest Land Grant Permanent School Fund, now with more than $16 billion. Legislators and voters could choose to increase the distribution of that fund, which would help us better fund K-12 schools and our higher education system, as well as invest a tiny portion in the early childhood education programs that will help our kids do better in school so more of them can attend college. Increasing the distribution by 2% provide an additional $300 million for education.
- Enact a health care provider assessment. Instead of facing cuts in Medicaid reimbursement rates, many health care providers are asking to be assessed a provider fee. The money collected could then be added to the state’s Medicaid budget, allowing the state to draw down federal matching money and prevent additional cuts to health care services for children, the disabled, and elderly. Amount raised would vary depending on rates.
- Raise alcohol and tobacco taxes and include e-cigarettes. These taxes could both increase revenue and promote greater wellness, particularly when they act as a disincentive for young people to take up smoking. A tax increase of $1.50 a pack would raise an additional $90 million. An increase in the alcohol tax of 25-cents a drink could raise $154 million.
- Increase the tax on the sale of motor vehicles. ew Mexico’s excise tax on motor vehicles is lower than the general sales tax on most other goods purchased in the state. It’s also lower than in surrounding states, and could stay lower even if it was increased. Could raise about $100 million.
- Extend the gross receipts tax to more internet sales. “Main street businesses”—those with a brick-and-mortar presence in New Mexico—pay gross receipts taxes on their internet sales here, but businesses without a physical location in the state don’t. This exemption drains a lot of revenue from the state and puts local retailers at a competitive disadvantage. Could raise more than $25 million.
- Enact a new tax on diesel fuel. A large portion of this tax would be paid by out-of-state entities like interstate trucking companies. Amount raised would vary depending on rates.
About two weeks ago, I recorded a show with Bill Jordan from NM Voices for Children. We spoke at length about this situation and how difficult it will be to create substantive tax reform resulting in reversal of the majority of these giveaways, even with a more strongly Democratic Roundhouse, and a Democratic governor. There are many pieces in play in the Roundhouse and Retake’s Roundhouse Advocacy Team is working with Progressive Democrats of America and the Adelante Progressive Caucus to develop a statewide Rapid Response Network to lobby for tax reform and other progressive legislation. If you want to learn more about Retakes advocacy team, we are meeting today at 5pm at New Energy Economy, 343 E. Alameda. If you’d like to attend, please email me so we know how many to expect. email@example.com.
Paul & Roxanne