Analysis: the Ronchetti rebate plan
New Mexico’s race for governor is, by all accounts, going to be extremely close. Generally-speaking the two candidates have VERY different visions for New Mexico, but on one thing their policies have a bit of overlap: rebating money from New Mexico’s booming oil and gas industry.
While having previously raised taxes despite record revenues, incumbent Gov. MLG called a special session of the Legislature to pass rebates of up to $1,500 for “New Mexicans.” The quotes are due to the fact that there is a pot of money specifically set aside in the Gov.’s rebate package for those who didn’t file tax returns which could include illegal immigrants.
Ronchetti’s plan is different from MLG’s in a few big ways: it would be only for New Mexicans (although details are unclear as to enforcement), it would potentially bigger with families with children benefitting the most providing up to $2,000 to a family of four (including children), and it would be a regular annual occurrence as long as revenues hold up.
Here are our takeaways on the Ronchetti plan:
- Putting money back in New Mexicans’ pockets is far superior to further increasing the size of New Mexico’s already bloated state government (and that includes the various permanent funds);
- Reforming New Mexico’s broken and anti-business gross receipts tax and THEN working to reduce or eliminate the income tax must be the top reform priorities, but there is nothing wrong with doing all of them;
- One challenge with rebates is that they don’t necessarily reward work. New Mexico still faces a huge gap in terms of its workforce participation rates. Government checks can negatively impact efforts to get more people to work.