Why NM Legislators Should Vote for HB 6
Committee: Taxation & Revenue
Summary: New Mexico is highly dependent on the oil and gas industry for revenues, an industry that is extremely volatile. Numerous tax credits, deductions, and exemptions have narrowed the tax base, requiring higher rates to maintain revenue levels. This bill takes a comprehensive approach to broadening the tax base and using the revenues to lower the Gross Receipts Tax (GRT) rate by 0.5%, reducing the state’s revenue volatility.
History: Nothing this comprehensive has been presented in recent years.
Why This Bill Is Good for NM:
- It’s a comprehensive approach to tax reform, rather than a single tax tweak.
- It broadens the tax base by taxing internet sales, implementing combined reporting for corporations, and eliminating nearly 30 tax expenditures, among other things.
- It lowers the Gross Receipts Tax rate by 0.5%.
- It replaces the existing personal income tax structure with a truly progressive tax structure, increasing the top rate to 6.5%. This higher rate will apply to incomes over $200,000 for single filers and $300,000 for married couples filing jointly.
- Currently, the effective tax rate for individuals earning $17,000 and below is 10.6% while the tax rate for those earning over $338K is 4.6%, less than half the rate paid by our lowest income New Mexicans (NM Voices for Children).
- It reduces revenue volatility for the state.
- Revenues will be adequate to fund needed government services, according to the Legislative Finance Committee.
How This Bill Could Be Improved
HB 6 has some good elements described above, but it doesn’t do nearly enough to:
- Ensure NM has enough stable revenue over time to achieve an education moonshot.
- Support the programs that matter most to New Mexico families.
- Address past tax policy that has harmed New Mexicans at lower and middle incomes and for working families with kids.
Though HB 6 is a good start toward needed tax reform, the Legislative Finance Committee projection that the proposed tax changes would provide adequate revenue to fund needed government services is based on fiscal assumptions defined by a scarcity budget. After 8 years of regressive tax and revenue policy, our educational, health, social, criminal justice, and land management systems require significant investments. With amendments to this bill we feel that HB 6 would be a good start toward generating the revenue needed to move beyond scarcity assumptions and fund the investments needed to address critical funding needs by systems serving low-income children, working families, and our planet.
Supporting Organizations: New Mexico Voices for Children