More Tax-Uncompetitive Than Ever?

There are several solid reasons why New Mexico should not raise taxes this legislative session. An economy that hasn’t climbed its way out of the Great Recession and a political establishment that won’t pursue a thorough right-sizing of state government lead the pack.

But keeping an eye on the competition is another justification for no new taxes. As the American Legislative Exchange Council (ALEC) puts it, a “large volume of academic literature finds taxes negatively affect economic growth.” In a country where picking up and bolting for lower-tax jurisdictions is relatively simple, states that enjoy thriving economies get that simple truth.

ALEC’s annual “Tax Cut Roundup” is out, and the organization found that in 2016, nine states “provided substantial tax relief for their citizens.” The best of the best included:

* Arizona, which eliminated the sales tax placed on electricity and natural gas purchased by manufacturers and hiked its bonus depreciation schedule to 100 percent of the federal allowance

* Mississippi, which “passed what may be the largest tax cut in state history,” including lower income taxes and a phase-out of the “business franchise tax on investments in business property and capital”

* North Carolina, which made 2016 “another year of substantial tax relief,” dropping the rates for both its income and corporate taxes

* Tennessee, which adopted a full zeroing-out of its tax on dividend and interest income and put a final end to its death tax

* Florida, which continued cutting taxes “for the fourth consecutive year” by making permanent the sales-tax exemption for manufacturing equipment and reducing “the ‘required local effort’ property taxes for schools”

ALEC notes that “more than half the states have cut taxes over the last five years.” And there’s sure to be more tax-cutting in 2017, including, possibly, Ohio, Florida, Idaho, Minnesota, Wisconsin, Texas, and Iowa.

So where does that leave the Land of Enchantment? With Santa Fe’s revenue-grubbers pushing tax hikes on gasoline, “smoking,” and motor-vehicle purchases (as well as a constitutionally shaky extension of the GRT to sales from beyond-borders vendors), New Mexico is headed in the wrong direction, and offering individuals and entrepreneurs one more reason to leave — or avoid — the state.

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