Travis Brown has been making waves with his excellent website How Money Walks which details how wealth moves from states with poor economic policies (especially taxes on income) and to those with good policies. Brown, in a recent column in Forbes, compares Texas and New Mexico. Not surprisingly, New Mexico under-performs relative to Texas, but has made strides in recent years including Richardson’s tax cuts and the corporate income taxes that were passed last year in New Mexico.
Notes Brown regarding the battle to create jobs and spur economic growth:
The competition among states for companies and jobs has never been fiercer. State leaders have started to recognize that having a more attractive tax code is the key to winning this race.
While the economic news can be depressing for New Mexicans, good tax policies make a difference. Richardson’s tax cuts took the top income tax rate from 8.2 to 4.9 and dramatically reduced taxes on capital gains, resulting in personal income growth for the 2000’s that exceeded any state in the region and the national average by a long shot. See the following chart which was taken from an RGF paper on the Richardson tax cuts:
Only Oklahoma compares with New Mexico in terms of personal income growth during the decade. Interestingly, Oklahoma happened to adopt Right to Work in 2001.
The fact is that New Mexico can change (it must if we are going to really get our economy on-track and reduce poverty levels).