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Thursday, October 01, 2009

Cut Wasteful Spending, Add Revenue Generators

By Rep. Miguel P. Garcia
Albuquerque Democrat
      One New Mexico government dollar invested in food stamps has a multiplier effect of $1.73. The same $1 investment in infrastructure like roads, storm drains, bridges, sewer and potable water systems, has a multiplier effect of $1.59. Gov. Bill Richardson's personal income tax break reform to the wealthy, that the Legislature passed in 2003, has a multiplier effect of 29 cents. That's right, 29 cents. Our one New Mexico government dollar invested in the personal income tax breaks for the wealthiest of New Mexicans is a negative investment. A dud. Una desgracia.
       According to a fiscal impact teport prepared by the Legislative Finance Committee in the 2009 legislative regular session, the 2003 tax breaks are costing New Mexico $460 million a year. Why did the Legislature agree to such a scheme? We didn't initially.
       In 2003, Richardson's first year, he asked the Legislature to provide him some “tools” in order to get New Mexico moving again, and to bury the bickering and stalemate of the past eight years under Gov. Gary Johnson. A governor willing to work, collaborate and cooperate with the Legislature was truly a breath of fresh air. Richardson gets an “A” for doing exactly that.
       Back to the tax breaks.
       At that time, I shared with the governor that his tax break reform did nothing for my legislative district in the South Valley and Barelas. Only 3 percent of my constituents would benefit by the reform, three out of 100 people. This sentiment was shared by many legislators. The governor contested that the tax reform “tool” would bring more wealth to New Mexico. Millionaires and corporations would move to and settle in our state. It made sense then, but it doesn't make sense now in a down economy.
       And where are all the millionaires and multinational corporations? Everywhere I go in New Mexico I hope to run into one of these transplants. No luck yet. Any New Mexico economists will tell you that we have a flat line in the increase of millionaires in our state from 2003 to the present.
       Where were the compromises on the 2003 tax reform measure? There were none. The most fiscally responsible legislators urged the governor to place a “circuit breaker,” a “cut-off” switch on the tax breaks in order to delay their implementation in years when expenditures outdistance revenues, like in today's economy. The “circuit breaker” amendment was never adopted, or agreed to by the governor.
       I ask myself, “Representative García, what is most egregious about the 2003 personal income tax reform package?”
       This is a no brainer. A head of household earning $25,000 a year pays the same income tax rate as a head of household making $25 million a year. Sorry if you choked on your bizcochito when I said this. Just like Gov. Bruce King used to say, “Liars lie, but numbers don't lie.”
       What a discrepancy. My family of five construction worker constituent at a 100 percent of poverty making $25,000 a year is in the same personal income tax boat as my family of three CEO constituent of Telaclavo Corp. who makes $25 million a year. Wow! This is truly a Grand Canyon-wide phenomena.
       This brings us to the upcoming special session of the Legislature that so far looks like a slashing, cutting, freezing and burning ordeal. Sounds like a Nazi concentration camp. I, for one, will not vote on any legislation in the special session that relies only on spending cuts at the expense of our school kids, the elderly and frail, the working poor and the disabled.
       Our state would be well-served if, in the special session, we looked at cutting wasteful spending, AND implemented revenue generators like restoring the 2003 personal income tax breaks for the wealthy ($460 million), require combined reporting of multi-state corporations ($70 million), roll back capital gains for $200,000 plus earners ($40 million), add 1 percent surtax on $200,000 plus earners ($80 million), close a personal income tax loophole for high-income filers ($75 million), and increase “sin” taxes on cigarettes at $.50 per pack ($16 million) and a nickel-a-drink on alcohol ($40 million).
       These very focused suggestions would put New Mexico in the driver's seat versus the back seat, which is currently where we find ourselves. Most important, it is going to take every New Mexico resident who believes in a fair and responsible tax policy to contact the governor and emphasize the need to include a balanced approach of wasteful spending cuts and revenue generators in solving our state budget needs.
       

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