Democrats’ “Tax Reform” raise and make income tax more progressive

Recently, Paul Gessing of the Rio Grande Foundation sat on a panel and attended the annual conference put on by New Mexico Tax Research Institute

Senate Majority Leader Peter Wirth was the keynote speaker and in his keynote talk he outlined what I believe is his Party’s strategy for the next few years with regard to taxes. He said, “progressivity and higher taxes are not dirty words.” He also said he doesn’t take pledges and alluded to the “No Tax Hike” pledge of Grover Norquist and Americans for Tax Reform in what seemed to be a thinly-veiled swipe at Gov. Susana Martinez who has steadfastly opposed raising taxes.

So, here is my take on the Dems strategy for the year or so ahead:

  1. No tax reform and really no major policy moves during 2018;
  2. Move forward under the expectation that Michelle Lujan-Grisham wins the Governor’s mansion in 2018 and that the Democrats hold both houses in the Legislature;
  3. Enact higher tax rates specifically on higher income New Mexicans essentially negativing or at least repealing a significant portion of the cuts enacted under former Democratic Gov. Bill Richardson. 

Notably, as seen in the graphic below from Ernst & Young, New Mexico’s income tax is already progressive up to about $50,000 in income. Remember, “progressive” simply means that rates rise as income levels rise. Under most tax systems as you make more money you pay more money. It’s a question of rates. 

Of course, as the following chart shows and as the Rio Grande Foundation has pointed out repeatedly in the past, New Mexicans already face tax burdens that are among the heaviest in the West when personal incomes are considered. So, higher income tax rates and higher tax burdens is the Democrats’ position and it isn’t exactly a secret. They may think productive New Mexicans will “just take it,” but given our State’s dire economic straits, I’m not sure. 2018 will be an interesting year. 

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3 Replies to “Democrats’ “Tax Reform” raise and make income tax more progressive”

  1. From a democrat of 48 of my 70 years

    Data show mean of 5.77 (Wyoming, +/-)
    NM is 21% above mean
    We pay $121 for each $100 dollars paid by the average

    Time to repost (update) the years Democrats vs Republicans have held control of New Mexico – EXCELLENT chart

    As a Jeffersonian Democrat (Lower-case libertarian), I am bothered by: these data; the assumption that public employment is “job creation”; the lack of a truly viable and successful private sector in NM; and public unions, which we see nationally have and are bankrupting the people. Perhaps the overall sensible new Federal tax laws will help.

    As a Political Science person, I take note of long-time, appropriate definitions:
    Progressive Republican – Pragmatist (Theodore Roosevelt)
    Progressive Democrat – Collectivist (FDR – ‘Roosevelt “light” ‘)
    Expounding here would not alleviate the deficiency of or in education.

  2. If this is the plan Democrats have for our future, it’s a great way to drive retirees from the state. Home prices will sink. People with children will not relocate to a state with lousy schools, high taxes, and marginal medical care.

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