In a sense, New Mexico’s liberals are correct: The state’s budget does have a revenue problem.
“Progressives” see tax hikes on corporations and “the rich” as the “solution” to deficits. But their prescription is unwise for all sorts of reasons — not the least of which is the damage it will do to New Mexico’s economic competitiveness.
But there is a salutary way for more revenue to contribute to closing current and future budget gaps. A Texas-style, rapidly growing economy would fill the state’s coffers in short order.
The Land of Enchantment’s longstanding economic slump has produced anemic overall tax revenue. As an example, let’s look narrowly, at the levy placed on incomes. It is second only to the GRT as an in-state revenue-generator. Amazingly, in the 2015 fiscal year, the income tax yielded less revenue than it did eight years earlier:
Critics of the income-tax cuts phased in during the administration of ex-Governor Bill Richardson gleefully place the blame for slow/no revenue growth on the rate reductions he touted as “our way of declaring to the world that New Mexico is open for business.” But it’s a facile analysis. Between 2003 and 2008, revenue from the income tax rose by 50 percent, while inflation was just 10 percent.
It was the horrors of Great Recession that reversed the revenue trend. It’s tough to believe, but there are fewer people employed in New Mexico today than there were in 2008, and the jobs that are being created don’t pay impressive wages. Turn that trend around — i.e., immediately implement an effective economic-development strategy — and the revenue will flow, once again.
One Reply to “A Desirable ‘Revenue Enhancement’”
Our taxing policies are just the symptoms of a deeper sickness here in New Mexico. As I told a recent business advocate, its the atmosphere here that keeps businesses away. Yes, uneducated workers and scarce resources do not help, but a century of a democratic anti-business culture is obvious. Liberals want more golden geese to come here only to cook their eggs with eventual regs and taxes. The geese are flying elsewhere.