Copyright © 2022 Albuquerque Journal
Republican Mark Ronchetti said Thursday that he would pursue personal income tax cuts for most New Mexicans and a reduction in the gross receipts tax every year if elected governor – a package he said would help address inflation.
The proposal, he estimated, would cost up to $2 billion if enacted in total.
The six-page plan comes as Ronchetti challenges Democratic Gov. Michelle Lujan Grisham, who is seeking reelection in the Nov. 8 election.
She, too, has pursued tax relief, including a 0.25 percentage point reduction in the gross receipts tax now being phased in and about $1 billion in one-time tax rebates this year.
But Ronchetti, a former television meteorologist, said the governor’s tax changes haven’t gone far enough while state spending has ballooned.
“Too many families right now – low income, middle income families in New Mexico – are struggling to just pay their bills while this government has never been richer,” he said.
Standing outside a Golden Pride eatery in Northeast Albuquerque, Ronchetti said he would push to reduce the gross receipts tax by 0.125 to 0.5 percentage points every year, depending on revenue levels.
He also proposed income tax cuts that he said would sharply reduce the tax burden on middle-class households. A married couple making less than $80,000 a year, for example, would pay 2.9% in income taxes rather than 4.9%.
He also proposed annual rebates of $100 per person for every $1 billion the state collects in oil and natural gas revenue; eliminating the gross receipts taxes on certain business-to-business transactions, known as “pyramiding”; and enacting a limit on how much government spending can increase every year.
The proposal would be almost certain to face skepticism in the Legislature, where the Democratic majorities have often preferred smaller-scale tax changes or “revenue neutral” plans that, say, raise taxes on the highest 1% of earners to help pay for tax cuts for lower-income families.
Lujan Grisham and state legislators this year also adopted budget and tax plans that call for issuing up to $1,500 in rebates to two-earner households. The rebates, however, aren’t a recurring program planned for future years.
Ronchetti said the state can afford more and that his plan is responsible and sustainable.
Lujan Grisham spokeswoman Kendall Witmer said Ronchetti is proposing to do what the governor “has already accomplished, clearly recognizing the governor’s record of success in growing the economy, creating jobs, recruiting companies to New Mexico, and cutting taxes” for families.
Rep. Christine Chandler, a Los Alamos Democrat and chairwoman of the House Taxation and Revenue Committee, said lawmakers must take to care to avoid income and gross receipts tax cuts that would make New Mexico even more reliant on revenue from the oil and gas industry.
Already, taxes and royalties collected from the industry make up about 31% of direct state revenue.
It would be “reckless,” Chandler said, to assume that a tax cut that’s affordable now will remain that way if there’s an oil and gas downturn.
“When you’re looking at a tax package,” Chandler said, “you need to prepare to answer the question of how you’re going to pay for it and, if you’re not going to pay for it, why?”
How to tackle inflation is emerging as an important issue in campaigns throughout the country, and New Mexico is no exception, said Brian Sanderoff, a political analyst and president of Research & Polling Inc.
“Inflation is obviously a big concern among New Mexico’s voters,” he said, “especially when considering our high poverty rate.”