The omnibus tax bill (HB 547) passed over the weekend. It is no longer the disaster it was when introduced. In fact, it has moved from “-8” to “+1” in our Freedom Index vote tracking. Because of its complexity and numerous pluses and minuses, it is a very difficult bill to rate and for members to vote on. Hopefully the bill is improved in the Senate, but as it stands it remains a missed opportunity.
- The bill cuts gross receipts tax rates significantly;
- It reduces personal income tax rates at lower income levels (which earners at all levels will benefit from somewhat);
- Social security tax cuts from 2022 are indexed to inflation;
- Military pension tax reduction is extended for another 5 years;
- Motor vehicle excise taxes would be directed to roads and more alcohol taxes would be allocated to alcohol treatment.,
- The unprecedented $3.6 billion surplus SHOULD have been an opportunity to end New Mexico’s tax pyramiding on business services.This was not done. Until it is New Mexico’s economy will continue to suffer.
- Numerous subsidies are tucked in the bill for EV’s, charging stations, and energy storage projects.
- Corporate income taxes are increased slightly (by removing a lower 4.8% rate on small corporations and taxing them all at 5.9%;
- Capital gains taxes are increased due to a less generous exemption;
- Alcohol taxes and taxes on cigars are increased.
Overall, the bill remains a mess of conflicting economic priorities. The only coherent strategy is that it attempts to remove taxes from those with lower incomes.