Study funded by New York-based Rockefeller fund recommends New Mexico raise taxes
(The Center Square) – A study financed by the Rockefeller Family Fund reported that many tax reforms implemented by previous administrations are to blame for New Mexico’s troubled tax system.
In a presentation, the Philadelphia-based PFM Group, which was paid by the fund to perform the study, presented its findings and recommendations to the New Mexico Legislature’s Revenue Stabilization and Tax Policy Committee, as reported by the Santa Fe New Mexican.
Recommendations included raising the top personal income tax rate back up to 8.2% from the 4.9%, reinstating the food tax and instituting a refundable tax credit for those who qualify, and increasing both fuel taxes and property taxes.
Jason Espinoza, state director for the National Federation of Independent Business (NFIB), pointed out that raising the personal income tax rate, which was cut to 4.9% in 2003 by former Gov. Bill Richardson, will directly hurt small businesses. Due to structuring, many small business owners pay taxes on their business income through personal income tax.
“It would mean less dollars for the small business owner to reinvest in their small business whether it be increase wages, expanding their businesses, creating new jobs, which would be detrimental to small business,” Espinoza told The Center Square.
The recommendation would negatively impact New Mexico’s economic recovery efforts, Espinoza stated.
“Small businesses really rely on cash flow to pay day to day expenses like wages, benefits to employees, utilities, rent, and even in non-pandemic years, 50% of small businesses regularly face cash-flow problems so increases in personal income tax would compound that problem and make it harder for businesses as we look toward economic recovery to get back on their feet,” Espinoza said.
Think New Mexico Founder and Executive Director Fred Nathan takes particular issue with reinstating the food tax.
“We believe it would be highly counterproductive to reinstate the food tax and try to offset it with what they call a Low Income Tax Rebate, it’s actually called LICTR,” Nathan told The Center Square. “The facts are these: about 500,000 New Mexicans qualify for LICTR, but only slightly more than 200,000 receive it. That’s because many low income people don’t realize that even though they have no tax liability they need to file in order to receive the rebate.”
It creates burdensome and ineffective bureaucracy to create a roundabout rebate system, Nathan points out.
“We believe it would be smarter to simply keep the tax off of food,” Nathan said. “That way low income people essentially receive a rebate immediately at the cash register in direct proportion to the fruits, vegetables, baby food and whatever foods they purchase.”
Nathan also notes that neither New York nor Pennsylvania, the states where the Rockefeller Family Fund and PFG Group are respectively based, tax food.
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