A number of bi-partisan bills have been introduced in the New Mexico Legislature to reduce or eliminate taxes on Social Security. As the folks at Think New Mexico note, New Mexico is one of 13 states that tax benefits provided under the program. And, while reform to New Mexico’s gross receipts tax remains the Rio Grande Foundation’s top economic policy priority, we strongly believe that taxpayers should participate in the current budgetary largess.
As this Albuquerque Journal article notes, the initiative is “gaining momentum,” but unlikely to happen this year according to Speaker Egolf because all of the surplus money has been “spoken for” by the various agencies.
I t has always been the view of the Rio Grande Foundation that when it comes to receiving the benefit of good economic and budgetary times that taxpayers tend to come last. This is just the first public and clear acknowledgement of that from the folks in charge.
The General Fund is set to grow from $6.3 billion to $7.8 billion since Susana Martinez left office. And what are taxpayers getting? They got a tax hike last year and not even crumbs this year. If they lived in Colorado where they have strict spending and taxation limits in place, taxpayers would come first, not last.
The most grievous betrayal of New Mexicans occurred in 1990 when the New Mexico state legislature passed and the then Governor Garrey Carruthers signed into law obnoxious legislation basically double-taxing all New Mexico residents 65 or older who receive Social Security. This tax is a form of double taxation, since New Mexicans pay income tax on the money that is deducted from their paychecks for Social Security, and then they are taxed again on the benefits they receive.
Social Security is arguably one of the most important Federal social programs in this state. More than 225,000 residents each month receive a Social Security check. A quarter of these older New Mexicans rely on Social Security as their only source of income. Yet in 1990 New Mexico and the Governor double-taxed retirees with low incomes to feed the state coffers.
Only 13 states allow this double taxation of social security. New Mexico has the second worst tax costing the average Social Security recipients hundreds of dollars per year. The state legislature dominated by Senate Finance Chairman John Arthur Smith and Governor Michelle Lujan Grisham need to work together to REPEAL NOW this grossly unfair tax.