Legislative Priorities on Fairness, Finance, and Taxes 2019
LWVNM believes that the tax system should be progressive and equitable, taking into consideration relevant differences in annual income. The tax system should generate adequate revenue to meet essential needs. Also, LWVNM believes that the Legislature should consider new progressive revenue generators. Although regressive, the LWVNM may support “sin taxes” if they achieve a socially desirable goal.In the 2019 legislative session, LWVNM will be supporting: Raise the personal income tax rate for high earners
In 2003 New Mexico cut the personal income tax rate by nearly half for the wealthiest households. Restoring the rate would help turn our upside-down tax system right-side up. Today the wealthiest pay a smaller percentage of their income in state and local taxes than anyone else does. The 2003 rate cut made that worse. Repeal of the 2003 cuts for high earners would raise $250 million.
Repeal the tax breaks for capital gains income
New Mexico taxes income from capital gains (the profits from sales of assets such as stocks or real estate) at a lower rate than 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 investment. It has also made our tax system less fair. Repeal of this tax break would raise $53 million.
Repeal wasteful and ineffective tax breaks
There are hundreds of tax breaks that have been carved out of the 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 revisited, let alone evaluated. Repealing wasteful and ineffective tax breaks will allow lawmakers to put that money to work where it will make a difference for our kids, families and communities. Would raise $125 million.
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 lose out. A partial fix (called Mandatory Combined Reporting) to this was enacted in 2013, but it exempted many profitable corporations such as banks. This change could raise $25 million.
Raise taxes on tobacco including e-cigarettes
These taxes could both increase revenue and deter young people from using products that are harmful to their health. This could raise $90 million.
Raise the alcohol tax: an increase in the alcohol tax of 25 cents a drink could raise $150 million.
Extend the gross receipts tax to all 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.A 2019 U.S. Supreme Court ruling cleared the way for states to impose taxes on internet sales.
A tax on internet sales could raise $25 million.
Require a tax expenditure budget in statute
A tax expenditure budget allows legislators to see the hundreds of tax exemptions, deductions and credits they have enacted over the years. This makes it easier to review tax expenditures for cost-effectiveness and repeal those that do not grow the economy. While the tax department does produce a tax expenditure budget under executive order, requiring one by state law would give legislators more authority over which expenditures are studied.
Contact Information: Richard Mason (505) 239-3804 email@example.com