“There is a big state income tax hike ($193 on average per filer, raising an estimated $66 million) brought about by elimination of the deduction for sales tax. It is, in fact, a tax on a tax.”
Presumably this is a reference to the measure that would disallow individuals who itemize from deducting their state and local taxes on their state income tax forms. What the Journal doesn’t tell you is that this will affect only about 20% of NM tax filers. The other 80% of the state’s tax filers use a standard deduction that doesn’t allow them to deduct these same taxes, so they would not be subject to what the Journal calls “a tax on the tax.”
The phrase “a tax on a tax” makes no sense in reference to this measure. What the Legislature did was remove a deduction that never should have been there in the first place.
New Mexico is only one of only a handful of states that currently allows this deduction, probably because most other states have figured out that allowing it doesn’t make any reasonable fiscal sense. Indeed, the only real effect of allowing the deduction has been to reduce state tax liabilities for wealthy individuals — that is, those most likely to itemize on their state tax forms.
New Mexico Voices for Children developed this table to clearly show who benefits the most from this policy:
According to the Taxation and Revenue Department’s analysis about 70% of the increased liability would come from households with an ADJUSTED gross income of $100,000 or more. Only 4% would come from households making less than $50,000.
Therefore, the Journal’s claim that removing this deduction would raise taxes “$193 on average per filer” is misleading at best.
A look at the facts serves to underscore the progressive nature of this policy. In fact, it is the only revenue enhancement in the tax package that actually makes the rich pay their fair share.
It is clear that whomever wrote the editorial didn’t do their homework on the actual policy but instead merely inserted some boilerplate talking points courtesy of corporate lobbyists who opposed the measure during the legislative session.
Tags: Albuquerque Journal, NM Legislature, PIT add back, tax policy
You know, like the places you and I take our children to.
The legislation was introduced during the most recent regular session by Sen. George Munoz, a Democrat, who had complained in the press that his gun was stolen from a locked car while in the possession of his sister – in the state of Nevada. If people were allowed to take their guns with them while they ate, they wouldn’t be stolen from their cars, Sen. Munoz argued.
Never mind that the incident that prompted Sen. Munoz to sponsor this bill took place in another state. Never mind that none of the bill’s supporters could produce any statistics showing that this is an actual problem in New Mexico.
The whole premise – that people should be able to bring concealed guns into places where alcohol is served – goes against common sense, not to mention specific studies done by non-partisan think tanks like the Virginia Center for Public Safety.
“I just think it’s a terrible idea,” said Sen. Eric Griego, a Democrat who opposed the bill and spoke out against it. “Families who go to restaurants now have to worry about whether someone may or may not be carrying a weapon.”
Griego acknowledged that permitted gun carriers may have great intentions to use their guns only for protection, but said he worries that accidents can happen whenever a dangerous weapon is present.
Griego said the new law puts restaurant owners – many of whom opposed the bill – in an unenviable position of enforcing the new law.
Griego said he tried to amend the bill to include a measure that would require restaurants to post a notice indicating whether they allow concealed guns or not – forcing the issue so customers would know. That amendment failed, he said. Now, if a restaurant doesn’t post a notice, it can be assumed that they allow concealed carry guns.
In my opinion, Gov. Richardson played awfully coy with this gun bill. He put it on the call for a session that was supposed to focus on the budget. Then the Governor had a spokesman say that in no way should be taken as a sign that he supports the bill. Immediately after the session, Richardson declined to say whether he’d approve the bill, saying “We’ll have to wait and see.”
Today in his announcement, he said, “My decision to sign this bill came after much contemplation and thought. I heard strong opinions from both those for and against the bill. As the Governor of a western state, I know well the deep feelings that come with such a measure, but I also understand those feelings and beliefs must be tempered by the enactment of certain safeguards.”
Richardson also said today that he was directing the New Mexico Department of Public Safety to revise a regulation that would make it clear that those with concealed weapons could not consume alcohol.
Sorry, that’s not good enough.
Thank God that restaurants who reject this new law can opt out by posting a conspicuous notice telling patrons that concealed weapons are not permitted in their restaurant.
Let’s hope they all do.
I won’t take my family to the ones that don’t.
Tags: concealed carry, Gov. Bill Richardson, guns and alcohol don't mix, Sen. Eric Griego, Sen. George Munoz, Virginia Center for Public Safety
Passed a budget, I mean.
Legislators were able to avert further significant cuts to education, public safety and health care. This was good, because maintaining necessary funding levels for these critical programs is the best path to pulling out of the recession.
However, the 2011 budget plan it approved is a mixed bag for those who truly care about tax fairness for low income and working families.
Let’s review what’s actually in the new plan.
We’ve got some regressive taxes – the kind that affect those least able to pay. The list includes a new two percent tax on food. That’s a big hit for low income and working families, who studies indicate spend a higher proportion of their income on food.
We’ve got a new one-eighth percent additional tax on sales, which will affect, well…everyone in New Mexico who ever buys something. Again, not hitting the ones most able to pay.
And we’ve got an additional 75¢ tax on cigarettes, which when added to the existing federal tax of $1.01, would raise the average price of a pack from $4.60 to $5.35. Taxes on cigarettes and alcohol are commonly known as sin taxes.
What’s not in the budget? Any sort of progressive taxes, including a combined reporting measure that would make large, out-of-state corporations pay their fair share on income they make in New Mexico.
Also proposed, but not adopted: A surtax on the income of the state’s richest residents.
As the session ends, I see lots of coverage from the mainstream media about the all the tax hikes New Mexicans will be forced to endure to maintain necessary services like education, transportation and public safety.
But I think the real question New Mexicans need to ask their legislative leaders isn’t “Why did you raise our taxes,” but rather “When will the rich and out-of-state corporations be asked to pay their fair share?”
That’s what Sen. Finance Committee Chairman John Arthur Smith told the New Mexico Independent today as legislators met for their third day of the special budget-only session.
Smith told the news site that if the food tax is taken out of the House bill or amended in any way, it could torpedo the legislature’s chances of approving a budget during this special session.
Besides spooking legislators, Smith’s threat brings about a worst–case scenario that strikes fear into the hearts of New Mexicans who just want to see a budget deal cut.
But how credible is it…and why is Smith insisting on levying a food tax on New Mexicans while steadfastly refusing to consider closing the tax loophole that allows out-of-state corporations to avoid paying their fair share?
It is no secret that Smith strongly supports reinstating the food tax, which would impose a gross receipts tax on all food items. He introduced the bill calling for it in this session as well as during the last regular session.
But the food tax is problematic for so many reasons – not the least being that studies show that poor and working families spend a larger percentage of their income on food, and thus would be disproportionately affected by the tax.
Because of their disproportionate effect on the poor, food taxes fall into the category of so-called “regressive” taxes.
In fact, with the food tax and a proposed increase in the overall gross receipts (sales) tax, the entire omnibus bill put forth by legislators places a unduly regressive burden on New Mexico’s lower-income families.
Check out what the Institute on Taxation and Economic Policy had to say about New Mexico’s omnibus bill here.
Smith, who is calling all of the shots in the Senate during this session as head of the powerful Finance Committee, refuses to consider the significant amount of revenue that could be raised by instituting more “progressive” taxes, or ones that require those who earn more to pay their fair share.
Take combined reporting, which would require large companies who do business in New Mexico to pay taxes on income they make in New Mexico. Can you believe the state’s tax code currently allows those companies to avoid doing just that?
According to Sen. Peter Wirth, who introduced a combined reporting bill in the regular session and again in the current special session, implementing the measure could painlessly generate millions of dollars for the state coffers.
Don’t be fooled by Smith’s threats. It’s still not too late for legislators to throw out the food tax and adopt more progressive methods of taxation to benefit all New Mexicans.
Tags: Food Tax, regressive tax, Sen. John Arthur Smith, Sen. Peter Wirth
Monday was the start of the Special Session - a time set aside (at a cost to the taxpayers of $50k a day) for the New Mexico Legislature to finally come together to come up with a budget for the state.
Many New Mexicans disagree with the fact that the current budget deal includes regressive measures like the food tax to shore up the budget instead of progressive moves like rescinding tax breaks for the rich and taxing out-of-state corporations like Wal-Mart.
Yet our state legislators still convened to try and finalize the budget they’ve been working on the past week.
Well, most legislators were at the Roundhouse on Monday. However, Sen. David Ulibarri of Grants decided it would be best to go testify on behalf of big oil and gas interests at yesterday’s Environment Improvement Board (EIB) hearing instead of helping to figure out the state budget.
On the EIB’s agenda was a petition by a local, environmental non-profit, New Energy Economy, requesting the EIB establish a cap on in-state greenhouse gas emission for reductions of the gases of 25% below 1990 levels by the year 2020.
This has obviously been met with much opposition from the oil, gas, and coal burning industries in New Mexico, because it aims to set regulations on their ability to pollute the air in our state. That opposition has also included a few legislators from southern New Mexico. But at Monday’s EIB hearing Senator Ulibarri chimed in with his support as well.
Advocates for the cap had many passionate and persuasive arguments concerning serious health effects of pollution, while opponents took to arguing from an economics point of view.
From an Alamogordo News article on the hearing:
I have treated too many babies and children and adults who were gasping for air because of asthma and other respiratory diseases that were caused or worsened by pollutants that could be eliminated or decreased with existing technologies,” Dr. Bruce Trigg told the board.
Tags: carbon cap, emissions, Environmental Improvement Board, special session
The House Tax and Revenue Committee just passed a cigarette tax that would add 75 cents to the cost of a pack. The bill, which cleared the committee on a 10-6 vote, would generate an estimated $33 million for the state, including $10 million that would go toward public education.
It was the first significant agreement on ANY measure that would help the state close a projected shortfall of hundreds of millions of dollars for the fiscal year 2011.
Congratulations, legislators – now could you please take advantage of the momentum and consider the many other non-regressive revenue options on the table?
Instead of the punitive and controversial food tax favored by Senate Finance Committee Chairman John Arthur Smith, how about the non-controversial PIT-add back?
Instead of a gross receipts tax on New Mexicans, how about making out-of-state corporations pay their fair share?
Just asking.
Tags: combined reporting, Food Tax, gross receipts tax, PIT add back, Sen. John Arthur Smith
If you want to get the skinny on how today’s Special Session of the legislature is shaping up, you are well advised to check out Barb’s latest posts on DFNM (look here, here and here).
So forget your Smith & Wesson. Now it’s Smith (Senator John Arthur) and Jennings (Senator Tim), the leaders of the conservative coalition in the state senate, who have a gun pointed at the heads of the House Democratic leadership – and the latter blinked.
To some observers, it is still rather astonishing just how quickly, and obligingly, they capitulated.
Indeed, during the regular session the House and Senate each passed different plans to address the state’s revenue shortfall. That session ended with the two sides unable to come to an agreement. And while both plans imposed a disproportionate share of tax increases on the poor and middle class New Mexicans, the Senate version was especially egregious.
The Senate Plan hit low-income families with tax hikes roughly 18 times higher, as a share of income, than those on the wealthiest taxpayers.
Now with the House’s apparent surrender to the newest iteration of the Smith and Jennings tax injustice plan, it would seem that any hope of introducing some much needed progressivity into New Mexico’s grossly unfair tax structure is off the table.
Here’s a good recap from the Santa Fe Reporter on where the tax burden currently falls in New Mexico.
Tags: NM Legislature, Sen. John Arthur Smith, Sen. Tim Jennings, Special Session 2010, tax policy
It’s taken me a while to settle down and write this post-session wrap-up. Partly because I’ve been so annoyed with some of what I saw happen at the Legislature, and partly because I wanted to get the chance to compare notes with others who experienced it too.
It’s been a week now – so, I’ve done my comparing, and I’ve found plenty of others who had the same thoughts as me.
One overwhelming theme I witnessed during the most recent 30-day session was the continuing lack of public access to the legislature.
Important decisions were literally made in the middle of the night.
I sat in a Tax and Revenue Committee after midnight on the last night of the session listening to legislators debate (and reject) a cigarette tax that could have raised millions for the state. No one was there to hear the pros and cons except the legislators, their staffers, a bunch of paid lobbyists and a handful of reporters.
And the so-called tortilla tax – remember that? That much-maligned measure sailed through the Senate in the dregs of a Saturday morning. It would be an understatement to say that the rest of New Mexico was pretty mad when it woke up and heard the news.
Am I naïve to think that is just plain wrong?
Part of the problem of public access could be solved if there was better public notice of when bills will be heard in committee or on the floor. I saw a lot of bewildered “regular” people up there waiting to testify on bills that affected them. Should legislators be required to give more notice? For the sake of the public, perhaps so.
This is where webcasting the committees could also help. Sen. Eric Griego had proposed an amendment which would have done so, but didn’t get the chance to introduce it on the floor. And what about archiving those webcasts, so the public can watch them later? Even a webcast committee hearing at midnight won’t get an audience — but the public can access an archive.
One last thing – toward the frantic end of the session, I noticed an awful lot of Republicans in the House using up the maximum three hour debate limit per bill in order to run out the clock. Good bills die in the waning moments of the session because of those “minibusters.”
Similarly, SR1, the measure to expand the number of cameras used for webcasting of Senate floor proceedings, languished for four days on the table before dying when the session ended. This happened despite Leader Michael Sanchez, who controls the Senate calendar, suggesting that he would bring it to a vote.
But inexplicably it didn’t happen. It was all a big tease.
The fact that I saw some legislators waste colossal amounts of time made it hard for me to accept the excuse offered by some Thursday afternoon that they were “so close” on the budget and simply “ran out of time.” I know some legislators did work hard and were as frustrated as the rest of the state when the session ended without a budget.
Legislators were supposed to meet this week Wednesday to finish their job, but got a last minute-reprieve from Governor Bill Richardson.
When they reconvene next Monday at noon, let’s hope they make much better use of their time.
Tags: Gov. Bill Richardson, New Mexico Legislature, Sen. Eric Griego, Sen. Michael Sanchez, Tortilla Tax, webcasting legislature
Clearly’s New Look
Today we’d like to introduce a new look for Clearly New Mexico – one that we hope makes your visits to our site a bit more pleasant visually. Don’t worry – we’ll still feature the same biting commentary and socially responsible take on the issues we’ve become known for.
We did add one little thing – a weekly question – which we’d like our thoughtful readers to answer in comments we’ll publish on the site.
Thanks for sticking with us through our redesign – and tell your friends to come check out Clearly’s new look, too!
Tracy Dingmann
Tags: Clearly New Mexico