Thursday, February 13, 2003
Half of Filers Will Benefit in Gov.'s Tax Plan After 4 Years
By Barry Massey
The Associated Press
SANTA FE Upper income taxpayers are big winners under Gov. Bill Richardson's tax cut proposal.
The largest reductions more than 30 percent will go to New Mexicans currently in the top income brackets, such as married couples with taxable incomes of more than $100,000 or single filers with income of more than $65,000.
However, when the governor's proposal is fully implemented in four years, about half of tax filers will receive some benefit, according to the Taxation and Revenue Department.
A married couple filing a joint return with more than $100,000 in taxable income will have an average reduction of $5,219, or 34 percent, after the top marginal rate falls to 5 percent, according to the department. About 23,000 tax filers are in that income bracket.
For a married couple with income between $24,001 and $40,000, the reduction would average $84, or nearly 7 percent. The reduction would average $402, or 16 percent, for those with income between $40,001 and $64,000, and $1,233, or 25 percent, for those with income from $64,001 to $100,000.
A single tax filer with taxable income of more than $65,000 will have an average reduction of $3,882, a 35 percent reduction. About 7,000 tax filers are in that income bracket, according to the department.
For a single tax filer with income of $16,000 to $26,000, the reduction will average $49, or 6 percent; $248, 15 percent, for those between $26,001 and $42,000; $843, 25 percent, for those from $42,001 to $65,000.
Actual reductions will vary according to a taxpayer's income and filing status.
The governor proposes to lower the top marginal rate from 8.2 percent to 5 percent over four years. Income brackets will collapse as the rate drops.
Richardson contends the current top rate is too high and it discourages businesses with high-paying jobs from relocating to New Mexico. Texas and Nevada, for example, has no income tax. Colorado has a top rate of 4.63 percent and Arizona, 5.04 percent.
"Cutting taxes is the cornerstone of my plan to create a high wage economy for New Mexico," Richardson said recently.
Administration officials say the tax proposal benefits upper income taxpayers because the proposal is aimed at lowering the top tax rates as an economic development tool.
"As a matter of public policy, the goal here is different than it is to simply provide tax relief," said James Jimenez, secretary of the Department of Finance and Administration.