New Mexico Resembles “Taxifornia,” not Economcially-Strong Texas

A new study called “Taxifornia,” by the free-market Pacific Research Institute studies state tax burdens and mechanisms for tax collection nationwide. As you might be able to assume from the study’s title, California does not perform especially well. In fact, according to the study, California’s state and local spending as a share of gross state product is fourth-highest in the nation (New York, South Carolina, and Alaska score worse).

What does this all mean for us in New Mexico? Well, we happen to be fifth worst in terms of spending, only slightly worse than California. Where’s Texas? Not surprisingly, Texas’ tax burden is third-lowest in America with only South Dakota and Delaware lower.

Given this data, it is no surprise that California is quickly becoming America’s equivalent of Greece. It is also not surprising that Texas’s economy is one of the healthiest in the nation.

Needless to say, New Mexico policymakers have long relied on federal spending to make our economy run. Given the need to cut federal spending, it would be great if we decided to change directions by taking a cue from economically-robust Texas rather than failing California.

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7 Replies to “New Mexico Resembles “Taxifornia,” not Economcially-Strong Texas”

  1. Whenever I see these “tax burden” ratings I wonder what’s included. Typically they exclude annual fees to register a car. Given that a car is essentially a necessity it’s important that it be included in any calculation. Texas has high car registration fees while NM is low. Property taxes are high in Texas too. Sure, they have no income tax and their sales tax is not much different than ours. Oil accounts for a good part of their tax revenues too thus taking the burden off the individual taxpayer. Furthermore the article makes the assumption that lower taxes are the reason for Texas’ robust economy. A single cause – I doubt it. Economies are complex with many factors at play. I know Texas has received many new military personnel as a result of base realignment plus additional jobs at its many military facilities due to increased military spending to support the ongoing wars. And baby boomers continue to retire to sun belt states like Texas in increasing numbers. Texas also benefits from its central location with seaport access. Bottom line, you can’t make a cause and effect assumption without studying all the variables.

  2. Economically strong?

    Texas is facing a possible $16 BILLION deficit next year. Billion.

    [http://www.dallasnews.com/sharedcontent/dws/news/texassouthwest/stories/DN-statebudgets_02nat.ART.State.Edition1.4bc0ce1.html]

    And why did this happen?

    “The economic downturn isn’t helping the shortfall, but it’s not driving it, either. The driving factor is a decision by Gov. Rick Perry and the Legislature in 2006 to reduce property taxes by $14 billion every two years and raise only about $9 billion to replace that money.

    In other words, the Legislature committed $5 billion every two years to holding down property taxes instead of spending that money on education, public safety or other priorities.”

    [http://www.star-telegram.com/2010/02/22/1987967/texas-budget-mess-got-started.html]

    Might want to change your talking points, Mr. Gessing. Because Texas is anything but a model — unless you want a model for a state that is facing one of the worst budget deficits in the country next year.

  3. Though, I have to admit, two years ago (when that article you linked to to prove that Texas was “healthy”), things looked pretty good for Texas.

  4. Richard: Stimulus money is NOT free money. Until we move away from this mentality, we will ALWAYS have a problem. Tell me: do you also believe apartment renters don’t pay property taxes?

  5. Bernadette: The point is that Texas is going to have a massive budget gap and one way to have closed that gap is to have received these federal funds. They did not.

    So they have instead put themselves into a budget gap that could be more than $15 billion.

    That is the state that Gessing wants to emulate. A state facing a $15 billion budget gap. You want to say don’t take the federal stimulus money? Fine.

    Pay the consequences. Citizens in Texas are about to pay that consequence. And Gessing is cheerleading all the way, all the while ignoring a massive intrusion of privacy in our neighbor to the west.

    Because that’s what pro-corporatist organizations like the Rio Grande Foundation do.

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