“Progressives” Should Support GRT Reform

New Mexico’s gross receipts tax is a disaster. The Rio Grande Foundation tends to focus on its negative impact on the private sector, particularly small businesses and entrepreneurs. However, that is hardly the only way in which the GRT does serious harm. Consider (and even consider signing) this petition which was posted on the left-wing MoveOn website.

The issue being addressed in the petition is that “New Mexico charges a gross receipt tax on Medicaid and Medicare Federal monies.” In other words, the individual who put this petition together is a clinical psychologist currently working with Native American youth and families in New Mexico who receives about 96% of their income from Medicaid. Medicaid of course is a program that provides health care services for low-income Americans. The petition as written states:

The gross receipts tax is traditionally reserved for retail businesses that charge the consumer a “tax” on items bought and sold. I cannot bill my clients a “gross receipts tax” as the clients I see receive Medicaid due to compromised incomes and are living below the poverty line, usually unable to afford bus fare or food. How can I charge them gross receipts tax when they see me? So then it is I who absorbs this tax, as well as being additionally liable for federal and personal state income tax on these same “fee-for-service” monies. It is simply not fair.

The author is absolutely right. It is unbelievable that New Mexico taxes doctors who provide services to the needy via Medicaid (at much lower reimbursement rates than private insurance). Taxing these folks at rates approaching or even exceeding 8 percent to merely pad New Mexico’s bottom line is simply unacceptable.

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