Lifting New Mexico up by the bootstraps

New Mexico gets $2 back for every $1 in federal taxes paid, according to the Tax Foundation. It’s not because the state demands more from the federal government that other states like New Jersey which receives about 55 cents back for every $1, it is because of the progressive income tax. New Mexicans are poor and the federal tax structure provides the Earned Income Tax Credit and other negative income taxes to help the poor.
New Mexico, as of 2002-2004, had a rate of poverty as defined by the US Census of about 17%, among the highest in the country.
But is the progressive income tax the best way to help out poor New Mexicans? According to a new study reported by the Heritage Foundation the cost to the private sector of providing the government an additional $1 in tax revenue is about $2.50 not $1 as many people assume. So, the redistribution of tax money from the rich – who may live outside New Mexico or within – to the poor, costs jobs, growth, wages, opportunity and innovation of 2.5x the amount actually taxed and redistributed.
Although the progressive tax structure is supposed to help the poor, a low flat tax and smaller government would mean much greater economic growth, the only proven way to lift the poor out of poverty. Aid to developing countries has done little to nothing to alleviate poverty, while policies of growth have lifted millions each year out of poverty – why not help the remaining impoverished within the US in the same way?

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