Caveat: It is too early to tell at this point, but, according to this article from the Albuquerque Journal Governor Bill Richardson may be pushing a “fix” for the problem of tax lightning during the upcoming legislative session. For the uninitiated, “tax lightning” is a situation in New Mexico dealing with property taxes in which someone who buys a new home experiences a dramatic increase in property tax burdens because the property they are purchasing is no longer covered under the state’s 3 percent annual assessment increase limit.
The fix, as it is spelled out in The Journal would involve altering New Mexico’s Constitution to “allow for a class of people to be taxed differently. This would allow the state to continue protecting longtime homeowners with the 3 percent cap on rising home values.”
While we applaud efforts to protect homeowners with the 3 percent cap, the idea of allowing the politicians in Santa Fe to start taxing different groups of people differently would open a dangerous new way for them to discriminate against various groups of taxpayers. In fact, New Mexico’s “anti-donation clause” was meant, in part, to prevent this discrimination among various groups of taxpayers, but it has been weakened over the years to the point that various special interests are able to use the rest of us as a piggybank.
Rather than changing the Constitution, New Mexico’s elected leaders should consider a flat 3% cap for everyone. That would be the fairest solution to “tax lightning.”