South Valley-area Representative Miguel Garcia has a really entertaining column on the state’s budget crisis and steps that need to be taken to resolve it in today’s Albuquerque Journal. Garcia, who is apparently just to the left of Karl Marx, portrays Governor Richardson, who cut income and capital gains taxes during his term, as a radical free marketeer. That isn’t the end of Garcia’s confusion.
First and foremost, Garcia claims to wish to cut “wasteful spending” to solve the budget crisis, but he outlines nary a program that he wants to cut. Rather, in Garcia-land, all money apparently belongs to the government and he and his cronies in Santa Fe are in charge of giving us the scraps that aren’t spent on their noble causes. Where else could one get the line (referring to the supposed lack of multiplier associated with tax cuts “one New Mexico government dollar invested in personal income tax breaks for the wealthiest New Mexicans is a negative investment.”
Of course, when economists and politicians start talking about “multipliers,” I know that they are lying. If $1 invested in infrastructure really were “multiplied” 1.59 times, the only responsible thing for any politician to do would be to raise taxes to 100% and spend 100% of government revenue on infrastructure. Of course, in the real world, things don’t work out this way. Multipliers are simply another way for those who want to do something the want to do with your money, to convince you that they have your best interests in mind (particularly when they don’t).
While I could spend many pages critiquing Garcia’s arguments, there is one more that merits special attention: the idea that cutting income taxes would “bring more millionaires to New Mexico.” This is simply non-sensical. By definition, millionaires have already done rather well for themselves. Cutting income and capital gains taxes will encourage entrepreneurs to become millionaires by starting businesses, working hard, and making smart investments here in New Mexico. That is why cutting taxes is such a powerful tool for economic development and Garcia is so far off base. Regardless of tax cuts, New Mexico has a ways to go before it has the kind of tax and regulatory policies it needs to be an economic leader, but the tax cuts we’ve seen in recent years have gone a long way towards pushing us up from the very bottom. Hopefully Richardson, John Arthur Smith, Tim Jennings, and others in Santa Fe ignore Garcia’s advice and reduce spending instead of putting New Mexico back to pre-2003 tax rates (or worse).
Oh, and kudos to the Guv!