The idea that taxes and their rates don’t make a difference in economic activities is perpetuated by many on the left. Two recent examples, one from New Mexico and one national story illustrate that they do drive economic activity (or kill it). Check out this story from the Aircraft Owners and Pilots Association on New Mexico’s gross receipts tax. It has effectively driven the aircraft repair business out of New Mexico (thus costing our state jobs and economic activity).
The other story has been widely reported in the national media and involves pro golfer Phil Mickelson who is extremely upset by the rising tax rates that he’ll face both as a US taxpayer and as a resident of California where the top rate on income now exceeds 13 percent (the easy answer is to at move out of California and to a state like Nevada, Florida, or Texas where personal incomes are not taxed).
The fact is that taxes dictate a lot of economic activity. While not much can be done about Washington at this point, New Mexico policymakers should consider ways to create a fairer, more transparent tax code that incentivizes entrepreneurship and business formation for all New Mexicans.