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| Mitchell Freedman |
Economically-oriented progressives like a progressive income tax. The New Mexico income tax system is, sadly, a mostly regressive income tax system, and needs to be reformed. Right now, a New Mexican wage/salary earner is paying between 4% and 5% income tax, whether the earner is making $30,000 or as much as $200,000.
That is much more flat than progressive. Most people who call themselves economically conservative like a flat, not progressive, income tax system or oppose any income tax at all (as in right wing Texas and Florida).
As an economic progressive, I will be pushing our representatives to ensure nobody making $40,000 or less should be paying any state income tax--plus those earning over $175,000 should be paying 7% on the margin and those making over $500,000 9% on the margin.
I emphasize "on the margin," because, in my lifetime, our news media--and too many government class teachers-- have been awful in teaching people about marginal taxation rates, which means the rate one pays rises only after reaching different levels of income. So, a millionaire pays the same tax sum on the first $50,000 earned that a person making $50,000 annually earns, and so on.
As I look at the slight increase in progressive tax rates in the legislative bill last year, most, but not all, progressive Democrats supported that bill. It was mostly Republicans and conservative Dems who opposed making the tax rates more progressive. So, let's not confuse readers into thinking the vast majority of Republicans, who are no longer anything but right wing, would support making our state's income tax system more progressive in its function.
Even if they supported cutting income taxes at the lower rate, most would fight like hell against making well-off and wealthy people pay a higher rate on the margins, which, if they blocked the increase on the well-off and wealthy, would recklessly leave less revenue coming into the state overall.
And maybe we can do the same for corporate tax, as that tax starts at 4.8% for the smallest of businesses and all the way up to $500,000 net income. That is really a flat tax. The tax only rises to 6.9% for the biggest companies. I can definitely see some room for progressive tax rate improvement in state corporate income taxation, too.
The other thing NM should consider, since oil production output is not lessening, is to go the Alaska route, and give each New Mexican, 18 or over, $2,000 a year from the oil revenue. Universal basic income (UBI) here we come!
And who knows, maybe a Republican who claims to be a populist may join this Bernie Sanders Democrats in supporting a truly progressive income tax and corporate tax--and UBI. I dare to dream!
MORE TAX TALK
Reader Maurreen Skowran, a BernCo Dem party ward chair, comes with this:
Joe, the idea of eliminating state income taxes for people earning less than $45,000 a year would be a great boon to New Mexico’s lower-income residents. But the state can do even more. I propose to accompany that tax cut with a refundable Cost-of-Living Credit to target those with the greatest need.
This plan would support both working families and those who can’t work, such as new mothers and people with disabilities. The Cost-of-Living Credit would provide up to $1,000 for those making less than $25,000, $750 for those between $25,000 and $35,000, and $500 for those earning between $35,000 and $45,000.
Together, these measures would cost around $250 million annually — a manageable figure given New Mexico’s surplus from oil and gas revenue.
This is the Home of New Mexico Politics.
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