New Mexico House Democrats Advance Largest Tax Hike in State History

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Posted by Griffin Namin on Friday, March 8th, 2019, 4:42 PM PERMALINK

Despite being in a billion-dollar budget surplus, lawmakers in the State House approved the largest tax increases in state history. The tax hike, House Bill 6, was approved largely along party lines, with two Conservative Democrats joining the Republican caucus in voting against the bill.    

Among other things, House Bill 6 would increase the cigarette tax by 10 cents a cigarette, increase the vehicle excise tax to 4.2 percent from 3 percent, and impose taxes on internet sales. HB 6 would also increase the state's top personal income tax to 6.5 percent from 4.9 percent.   

Currently, New Mexico already has the 15th top marginal personal income tax rate in the country and 3rd highest among its neighbors. Under HB 6, New Mexico would be even less competitive, with the highest income tax in the region. The chart below offers a comparison. Rate proposed by HB 6 is in red:     

State

Income Tax Rates

New Mexico

4.9% / 6.5%

Arizona

4.54

Utah

5%

Colorado

4.63%

Oklahoma

5%

Texas

None

Nevada

None

 

*Chart compares top marginal individual income tax rates.

Source: https://www.thebalance.com/state-income-tax-rates-3193320

Raising the income tax, and the other tax hikes included in HB 6, for that matter, would be a huge mistake. In addition to inflicting a great deal of harm on the hardworking individual taxpayers and families across New Mexico, HB 6 would also hurt small businesses, which typically file their taxes under the individual code. Forcing small businesses to fork over more money to the government to fund bloated spending programs would leave them with less resources to invest in jobs, wages, and business operations.    

Adding insult to injury, HB 6 would also deter investment from the state, as income taxes are commonly cited by business owners and CEOs as a key determinant of business location: the higher the income tax, the less attractive the state.

Tax increases are always counterproductive to economic growth and are never justified. Implementing HB 6 in New Mexico would be especially ridiculous since the state is experiencing a massive budget surplus.

Photo Credit: Flickr - Wolfgang Staudt

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