By Paul J. Gessing
Despite an oil and gas industry that keeps growing and pumping out more money year after year, New Mexico is economically stagnant. That's not my opinion; it's straight from the Legislative Finance Committee's chief economist Ismael Torres.
In August he told the LFC, "We're still seeing an economy that I would describe as either tepid or maybe stuttering. We're struggling to find our footing." He pointed to faltering wage growth and stubborn inflation.
Furthermore, Torres reported that New Mexico's job market is growing slowly. The state had 5,800 more jobs in June than it did a year earlier. Forecasters expect little improvement overall, projecting employment growth of 0.6% this fiscal year and just 0.2% the following year. Wage growth is also slowing.
You can blame Donald Trump if you want to and there's plenty of blame to go around, but to steal a Trumpian line, "New Mexico should be in a 'golden age'" right now. No other state its size is sitting on $75 billion in its sovereign wealth fund. New Mexico legislators will also have an unexpected $1 billion or more surplus available when the Legislature convenes in January.
Gubernatorial candidate Gregg Hull has put forth a bold plan to eliminate ,New Mexico's personal income tax. One can easily quibble with whether the income tax or the gross receipts tax should be reformed first, and the Democrat-controlled Legislature will ultimately determine what happens, but Hull has made it clear that he wants to do bold things with New Mexico's massive budget surplus.
He does have at least one powerful Democrat legislator, Senate Finance Committee Chair George Muñoz, on his side. Muñoz, more than anyone else in the Legislature, has a thorough understanding of New Mexico's finances and what can be done with the considerable resources available.
Deb Haaland's agenda is more of the same policies we've seen over the last eight years, except slightly further to the left. She wants to raise the minimum wage and expand various targeted tax credits, but beyond that her plans are vague and of questionable utility in growing New Mexico's economy or putting money back in families' pockets.
She has stated she'd push for a "public option" in New Mexico health care. The economic impacts and costs associated with such a plan, not to mention how New Mexico would recruit enough doctors and nurses to treat all the new patients if such a plan came to fruition, has not been discussed.
Eliminating New Mexico's income tax will, by definition, make life more affordable for all New Mexicans. It will also help keep more New Mexicans home, especially our children and grandchildren who oftentimes must leave the state for higher wages and better opportunities.
States without a personal income tax (such as Florida, Texas, and Tennessee) have historically attracted a net influx of residents and high-income earners leaving high-tax states like California and New York.
Furthermore, removing taxes on individual or pass-through business income can encourage entrepreneurship, startup activity (projected by some models to rise by 16% to 19%), and incentives to work, save, and invest. This means better-paying jobs and more diverse opportunities for New Mexicans.
Whatever you think of the oil and gas industry, the money it generates should be used to benefit New Mexicans. It is time for bold action to improve New Mexico's economy. Eliminating New Mexico's personal income tax would do just that.
Paul Gessing is president of the Rio Grande Foundation, an Albuquerque-based think tank focused on the importance of individual freedom, limited government and economic opportunity.
