For an instructive look at why government shouldn’t pick winners and losers in the marketplace, read “Tax credits hurt cash-strapped state,” which ran in Sunday’s edition of the Santa Fe New Mexican.
Reporter Bruce Krasnow explored a credit designed to “provide an incentive for urban and rural businesses to create and fill new high wage jobs in New Mexico.” The policy actually empowered employers to find “loopholes that were soon costing the state millions of dollars in lost taxes without creating … well-paying jobs.” Even worse, “among those who have cashed in are companies largely funded with taxpayer money to begin with. Lockheed Martin received a break of $4.8 million, and Los Alamos Technical Associates received $337,000. Both are part of partnerships that manage the national laboratories in New Mexico.”
But left unexamined in Krasnow’s article was the big picture: How have wages fared during the era of the High Wage Jobs Tax Credit? The answer won’t come as a surprise. Far from spurring the creation of “industry clusters” with lucrative compensation, the tax perk has failed to move the needle on New Mexicans’ pay. Between 2004, when the credit was enacted, and 2015, the median hourly wage in the state rose from an inflation-adjusted $15.31 to $15.54. That’s right — less than a quarter, in more than a decade.
Looking at our neighbors, New Mexico’s growth of 1.5 percent ranked second to Arizona’s rock-bottom performance of 1.2 percent. Oklahoma grabbed the top slot (6.1 percent), followed by Texas (4.1 percent), Utah (2.6 percent), and Colorado (2.6 percent.)
How many more times do policy analysts and reporters have to expose New Mexico’s economic-development gimmicky for the failure it is, before Santa Fe embraces deregulation, tax reform/relief, school choice, and a right-to-work law? We know what doesn’t work. Why not try something different?