The best time to save for a rainy day is when it’s sunny out. And, in New Mexico, our budget is certainly looking sunny, with a record-setting surplus this year.
But, like changing weather patterns, our economic atmosphere is due for a bust cycle at some point. Now is the time to prepare for stormy weather ahead by making important changes to our tax code that are 20 years overdue.
There are four strategies needed to bring tax fairness to New Mexican families and small businesses.
• First, we need to ensure that big, out-of-state corporations pay the same tax rate as homegrown New Mexico small businesses. These out-of-state corporations have been getting a handout for too long, putting local businesses at a competitive disadvantage. New Mexico’s businesses should be able to compete fairly with out-of-state corporations, and our state general fund should see the benefits of national corporations who seek to do business here.
• Second, we need to make sure the wealthiest people in our state are pulling their weight in taxes so that working families can keep more of their hard-earned paychecks in their pockets. Twenty years ago, the wealthiest New Mexicans received a state income tax cut. Now, it’s time to level the playing field. That’s why we are creating a new higher income tax bracket for individuals making more than $250,000 and married couples making more than $500,000 per year. While raising taxes on the wealthy, this reform actually gives a tax decrease to single filers with income less than $110,000 per year and joint filers with income less than $170,000 per year. Overall, this tax code revision will reduce the disproportionate burden on New Mexico’s working families who deserve respect and fair treatment for the hard work they do.
• Third, we need to right another wrong made 20 years ago when our state cut the capital gains tax, which benefits only wealthy New Mexicans who are able to buy and sell large quantities of stock or real estate. This year, we seek to limit the tax deduction for capital gains on sales of stocks and similar financial products to a maximum deduction of $2,500, so these transactions no longer receive preferential treatment.
• Fourth, we want to invest in New Mexican families who are building the future of our great state. As our economy continues to recover from the COVID-19 pandemic and national inflation, we want to acknowledge the New Mexicans who are laboring tirelessly to put food in their fridges and gas in their tanks.
By extending last year’s cash rebates into this 2023 tax season and increasing the Child Tax Credit, we will put money directly back into the pockets of hard-working parents and caregivers.
Working families are the engines of our economy and communities. Our tax code should reflect our state’s values of investing in children and families, ensuring everyone contributes fairly, and respecting hard work. This legislative session, let’s enjoy the sunshine, prepare for stormy weather and bring New Mexico’s tax code into the 21st century.
