A graphic explainer of problems with New Mexico’s Gross Receipts Tax

The Washington, DC-based Tax Foundation has published an interesting report on the myriad problems with gross receipts taxes (like New Mexico’s). We at the Rio Grande Foundation have long supported reforms put forth most recently by Rep. Jason Harper (R) and Sen. John Arthur-Smith (D). Speaker Brian Egolf spoke favorably about GRT reform recently and Gov. Lujan Grisham recently announced a task force to “study” GRT reform. 

Two graphic illustrations put together by the Tax Foundation can be found. The first chart shows how a traditional sales tax works. Below that is a chart illustrating the problem with a GRT like New Mexico’s. Will the current Legislature and Gov. address the serious issues of NM’s GRT? I don’t know. They have not shown a very strong grasp of basic economics to date. But, this chart illustrates to average people what the basic economic (not political) problem is with the GRT.

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