As the New Mexico Legislature’s 30-day session kicks off on Tuesday with massive budget surpluses and (likely) massive spending increases, there is at least a fighting chance for some kind of tax cuts. The Gov. has put forth a proposal for a slight gross receipts tax cut while a few other bills have been introduced to eliminate the tax on Social Security. You can find them here and here.
Sen. Bill Tallman (D-Bernalillo County) has also introduced a bill that would eliminate the Social Security tax for. 90% of New Mexicans. We have not been able to find the pre-filed bill, BUT there is a news story about it here. Unfortunately, rather than providing a pure tax cut, the bill strives to be “revenue neutral” by adding new taxes on tobacco users.
Given New Mexico’s incredibly large budget surplus ($1.6 billion) AND the massive spending expected this session (a 13.5% increase or $1 billion), the ONLY acceptable option is to eliminate Social Security taxation (reducing revenues by a mere $85 million), not to replace one tax with other tax hikes as Tallman would do. It also happens that Tallman’s bill would be “regressive.” That is, it would cut taxes on relatively high income seniors while raising them on relatively low income smokers and other tobacco users.
New Mexico is one of just 13 states that tax Social Security. It’s time to eliminate New Mexico’s Social Security tax once and for all.