Opinion: Tax reform should include doing away with Social Security tax
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Six bucks a month.
With state revenues projected to exceed $9 billion, a paltry $6 a month, about the price of a pound of premium bacon. That’s how much a family would save under the latest “tax cut” package limping along with a week left in the Legislature’s 30-day session.
The tax cut backed by Gov. Michelle Lujan Grisham would reduce the state’s GRT base rate by 0.25 percentage points — from 5.125% to 4.875% — and only if state revenue levels remain high. But as state Rep. Jason Harper notes, this GRT cut would amount to $6 in savings per month for his family.
Meanwhile, the House Taxation & Revenue Committee “temporarily tabled” meaningful tax reform bills last week that would end the state’s taxation of Social Security benefits, limit tax “pyramiding” and reward companies for investing in New Mexico. That’s not uncommon for tax bills until lawmakers come up with a broader tax proposal, and these three deserve to be in the final package.
New Mexico seniors have for years been crying out for the elimination of taxes on their Social Security benefits, making strong cases that doing so would encourage retiring seniors to stay in the state and attract others. Unfortunately, false class-warfare arguments are being made by progressive groups and leaders who say exempting state income taxes on Social Security would primarily help wealthier state residents. Yes, if you consider an annual income of $18,000 “wealthy.”
Taxpayers 65 and older in New Mexico with incomes up to $18,000, or $30,000 for married couples, are eligible to exempt $8,000 from their total income, including Social Security benefits. But the tax exemption is then phased out as a senior’s income increases: Individuals with annual incomes of $28,501, or $50,001 for a married couple, receive no tax exemption for any of their income, including Social Security benefits.
That is shameful, ageist and must end. It sends a terrible message to seniors, especially the many who are raising their grandchildren, that New Mexico does not value them and will grub every dollar it can from a nest egg.
Opponents say reinstating the state’s exemption of Social Security taxes would cost the state $118.1 million in foregone revenue. But that static thinking doesn’t factor in how much the state’s economy and tax revenues will grow if we attract more seniors and leave more money in their budgets to spend.
— Albuquerque Journal
