What do you do when you have so much money you don’t really know what to do with it?
Well, if you’re Democrats in the New Mexico House of Representatives grappling with two years of billion-dollar SURPLUSES, you muscle through what some are calling the largest tax increase in state history – raising taxes on everything from auto purchases to personal income and raising an additional $350-million-plus in new revenue in the process. And then you cloak it in the ghost of positive, though failed, legislation past and call it “tax reform.”
First, let’s dispense with the notion this is tax reform – the kind sponsored regularly by Rep. Jason Harper, R-Rio Rancho, which would close hundreds of loopholes and lower the regressive gross receipts tax on goods and services. Because the majority of our lawmakers couldn’t muster up the appetite for that then or now. And while House Bill 6 does close a couple of important loopholes – primarily leveling the playing field for online retailers with brick-and-mortar businesses and nonprofit hospitals with their for-profit and government brethren – to pretend it’s tax reform would be an exceptional piece of political marketing.
Because the biggest thing it’s fixing is government’s insatiable need for more of your money.
It doesn’t stop there
While a good case can be made for responsible increases in spending on schools, state employees and reserves, lawmakers are also considering HB 548, aka House Bill Junior, in which lawmakers get additional money for capital outlay, aka pork. Remember, each lawmaker already gets funding for capital outlay to spend at their discretion. HB Junior would add $400,000 to each of the 70 House members’ pots.
No wonder the House wants those tax hikes.
A key piece of HB 6 is raising personal income tax on high earners from 4.9 percent to 6.5 percent, unwinding cuts under Democratic Gov. Bill Richardson and putting New Mexico further out of whack with its neighbors. The message HB 6 sends to doctors and other upper-income professionals: You are better off in Texas, Arizona, Utah or Colorado.
Then there’s an increase in the motor vehicle excise tax – giving N.M. car buyers another financial incentive to purchase vehicles out of state. To add insult to injury, this new money would incredibly not be designated for the road fund; it would go into the pot for general spending.
Supporters of the House tax package – it’s sponsored by Democratic Reps. Jim Trujillo of Santa Fe; Sheryl Williams Stapleton, Javier Martínez and Antonio “Moe” Maestas of Albuquerque; and Susan Herrera of Embudo – point out the state has been through some tough times. State government had to tighten its belt a few notches. State coffers will continue to grapple with the up-and-down nature of the oil and gas industry (which N.M. relies heavily on, along with federal spending). But rather than fashion a system designed to grow an economy that in turn would generate tax revenue by attracting private-sector businesses, professionals and workforce, they prefer to lock in tax hikes so future government spending is more insulated from the real economy.
Meanwhile, other states with the same kind of fiscal surplus “problem” are making smarter investments. According to the Wall Street Journal, Arkansas lowered its top personal income tax rate, South Carolina proposed an income tax rebate, and Florida is looking at lowering property and sales taxes. It’s also worth noting Arkansas, South Carolina and Florida are pushing for more education funding.
Delete the anti-NM parts
The Journal is not opposed to everything in HB 6 or tax-increase related. We have advocated for imposition of gross receipts on internet sales as a matter of equity and for a higher gasoline tax earmarked for roads. Nor do we oppose the increase on nonprofit hospitals or the tax on e-cigarettes.
But the Journal is opposed to telling residents and visitors alike their money goes further across the state line.
This behemoth of a tax package is in the Senate, now the land of fiscal sanity in state government. The state will be much better off if senators jettison the economic poison pills in this raid on residents’ pocketbooks.
Because under HB 6, N.M. government wants to do everything but learn to live within its means. And that will lead to fewer people living in New Mexico.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.