Stimulating New Mexico’s Economy by Phasing out its Personal Income Tax

A few years ago New Mexico enacted significant rate cuts in the state’s personal income tax. Paul Gessing, the Foundation’s president discusses the success of these cuts and argues that in order to stimulate the state’s economy (unlike the Congressionally-passed stimulus), policymakers should consider phasing out the state’s personal income tax entirely.

Gessing’s paper, “Stimulating New Mexico’s Economy by Phasing out its Personal Income Tax,” which is available here discusses the economic benefits New Mexico has received from reducing the income tax rate from 8.2 percent to 4.9 percent. The paper also lays out a specific plan for restraining spending over the next four years in a way that will allow the state to eliminate the tax within four years.