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NM income gap 12th largest in U.S.

ALBUQUERQUE, N.M. — A new report from the Center on Budget and Policy Priorities characterizes New Mexico as having one of the worst income inequality rates in the nation.

According to the report, the richest 5 percent of New Mexican households receive 19 percent of the state’s income, even when excluding capital gains. Those same households have average incomes five times as large as the middle 20 percent of households and 15 times as large as the bottom 20 percent of households.

The report ranks New Mexico as having the 12th highest income inequality rate in the nation.

The center is a nonpartisan think tank that analyzes policies from a progressive perspective.

“Income inequality is bad for the economy because it reduces opportunities for working people,” said Elizabeth McNichol, a senior fellow at the center and the author of the report. “If New Mexico wants to improve its economic situation, it will need to address the divide between the richest households and the rest of the state.”

McNichol said reforming the state’s tax code to increase the tax responsibility of wealthy residents would be “a good first step” toward closing the income gap.

Inequality has worsened across the nation over the past three-and-a-half decades. The report cites an analysis of IRS data that showed that nationally, the top 1 percent’s share of income doubled between 1979 and 2013, from 10 percent to 20 percent.

McNichol said the rise of income inequality nationally can be traced to a number of factors, including long periods of high unemployment, the growth in investment income as a share of overall income and minimum wages that don’t keep apace of the rest of the economy.

“Income gains have mostly gone to the richest, and most Americans haven’t shared in the nation’s growing prosperity,” she said. “That’s not the American way.”