January 30, 2023

Major tax reforms, including income tax bracket adjustments and gross receipts tax cuts, are expected to pass through the roundhouse this year with bipartisan support including Gov. Michelle Lujan Grisham. Bill Jordan, Government Relations Officer and Senior Policy Advisor for New Mexico Voices for Children, authored an article entitled “23 Roundhouse Resolutions for 2023,” which urges lawmakers to create a fairer tax law — not just on income levels . but also race and gender. He spoke to KUNM about why a child protection organization has tax reform so high on its list of priorities.

Bill Jordan: We realized pretty early on that we need to become experts at where we are getting the money from. And that meant taxes.

KUNM: And you are calling for tax reform that would create a fairer system. In what ways does the current New Mexico tax structure reinforce economic and even social inequalities?

JORDAN: The best example of this is how the gross receipts tax has evolved over the years. And of course that’s a very regressive tax, which means it hits low-income families hardest because they spend whatever they earn. Wealthy people make a lot of money, but they don’t spend it all. You invest a lot of it and stash a lot of it.

KUNM: Just last year, the gross income tax was reduced for the first time in 40 years. Is that something you would like to experience again?

JORDAN: Yes, I think there is room to do a bit of that. If they can lower the gross receipts tax for everyone, everyone wins.

KUNM: You write about what you call “New Mexico’s 2003 experiment in cutting income taxes on the wealthy.” What happened 20 years ago? And how does it still affect the state today?

JORDAN: The state has only roughly halved the top rate of personal income taxes. So that only applied to the very, very rich. Not only did that result in less revenue, but it also meant that low- and middle-income families took a much heavier burden.

KUNM: So both in terms of income tax and gross income tax, as you just explained.

JORDAN: Both. You know, the promise was, “If we cut taxes on the rich, we’re going to create a stronger economy and more jobs.” That didn’t happen. And then we eventually had to cut funding for education, healthcare, public safety, and infrastructure.

KUNM: The governor said in her state address that she supports a tax reform package. Here’s what she said: “Making our system more advanced so that every taxpayer gets a fair shot and a fair shake.” So, Bill, what the governor is talking about here is bringing the state closer to justice through the tax code, that you’re asking at New Mexico Voices for Children?

JORDAN: We have to see what is actually proposed. But I think most of the talk is about lowering the personal income tax rate for low- and middle-income families and raising the personal income tax rate for the very, very wealthy. It would put a fair bit of justice back on our tax code, yes.

KUNM: As a package of tax reforms moves through the legislature, you are demanding an analysis of the racial and gender implications of each bill. How would that look?

JORDAN: We need a debate about the tax system that involves ‘Who will pay? And who will benefit?” Not just by income category, but also by race and gender. We didn’t intend to create a tax code that would penalize families of color, but we eventually did. So when we make reforms, we just have to ask ourselves these questions so we don’t fall for them again.

KUNM: Does the New Mexico Legislature have the human capacity and expertise to do this work at this time?

JORDAN: Well no. I mean, that’s a whole different debate that’s going on that the legislature isn’t staffed to do that kind of work. I would say that our tax and finance department is very well equipped. They do that kind of analysis. And when they testify on accounts, if they have information related to equity, they share that information as part of the analysis.

KUNM: Last year, New Mexico enacted its own state child tax credit. Apparently that aligns with your mission at New Mexico Voices for Children. What do you all hope the legislature will be able to build on?

JORDAN: It’s a bit small, and we’re really confident that lawmakers will increase the loan amount per child and start getting serious about tackling child poverty.

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