The chairwoman of the New Mexico Legislative Finance Committee wants the state’s lawmakers to consider greatly reducing or eliminating taxes on personal income.
State Rep. Patricia Lundstrom (D-Gallup) revealed her proposal in a newsletter distributed by the legislature, according to KOB 4. Lundstrom noted the state government receives nearly $2 billion annually in taxes on personal income, which equates to almost one-quarter of general spending fund obligations.
Income tax is on the rise in New Mexico, with a new rate of 5.9% for top earners and a rate of 1.7% for low-income residents.
“The idea of reducing or eliminating personal income taxes is not without its challenges,” Lundstrom said, as reported by KOB 4. “The state can't eliminate the tax without making up at least some of the revenue somewhere else.”
“Lawmakers this year increased spending, cut taxes, and approved payments of up to $1,500 per household to offset rising consumer prices, amid a financial windfall in federal pandemic aid and income linked to record-setting oil production,” KOB 4 said.
The proposal to cut or eliminate taxes was met with concern from Democrats. They fear that New Mexico's overall tax burden might be shifted toward lower-income residents if there is an increased reliance on income from the oil and natural gas industry, according to KOB 4.
“We do have record incomes coming through, but that also means those are still coming from oil and gas,” Rep. Andrea Romero (D-Santa Fe) said. “We're in a boom cycle right now. But, what follows the boom? It's inevitable ... We have to be really smart.”
Lundstrom listed several states in the southeastern U.S. that have recently proposed or enacted reductions in personal income tax rates, KOB 4 reported.