It’s the most hated tax in America. That’s why New Mexico needs more of it.
The state’s constitution limits the mill rate that may be applied to real and personal property. And in 1981, the “Big Mac” tax shift made the “property tax no longer a source of public school funding and [required] public school operations to be funded almost entirely by the state’s general fund.”
This week’s Tax Foundation map explores one consequence of New Mexico’s eschewment of the property tax. The mean effective rate on owner-occupied housing in the Land of Enchantment is one of the lowest in the nation:
Good news? Maybe not. Economist Caroline Hoxby has “consistently found evidence that both students and taxpayers are better off under locally based systems of school funding and school control.”
The Northeast gets a lot of policies wrong, but one of the few sound strategies its states follow is local funding, and thus local control, of government schools. And the property tax, which is paid in annual or biannual installments, often motivates those it impacts to demand more from educrats.
A proposal: Bring the property tax back to New Mexico in a significant way, financed by cuts in the tax rates on personal income and gross receipts.