It’s time to eliminate the social security tax

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Following Governor Michelle Lujan Grisham’s state of the state address, Republican Minority Leader Jim Townsend’s state representative said that during the speech, he thought the governor “was almost become a Republican. He’s not wrong.

After three full years and legislative sessions (not to mention multiple special sessions and the constant invocation of her “emergency” powers) of governing as a hard-left “progressive,” the governor seems to be veering to the center before his candidacy for re-election this fall. It can be both good politics and good policy.

Specifically, in her State of the State address, Lujan Grisham announced that she wants New Mexico to stop taxing Social Security. New Mexico is one of 13 states in the country to do so, and there have been bipartisan efforts in recent years to eliminate or significantly reduce the tax.

His support for repeal is welcome, but many “progressives” in his own party seem skeptical. As of this writing, a repeal of the Social Security tax failed on a tie vote in the House Labor Committee. Only one Democrat and three Republicans endorsed the idea. Thus, the repeal of the Social Security tax is by no means a “done deal.”

This is true even if the state has plenty of cash, as evidenced by the governor’s ambitious budget that contains a 13.5% increase in spending over last year. The roughly $80 million in “lost” revenue from the removal of the tax is a drop in the ocean compared to the flood of new revenue. This is a flood that looks likely to continue with high oil prices and record production in the Permian Basin. So New Mexico has plenty of money to cut taxes. In fact, the Governor and Legislature should look for ways to use this flood of new money to reduce and reform taxes in ways that diversify the economy.

While the move to eliminate the Social Security tax is welcome, it’s not the first time the governor has had a large surplus (or budget increase). In his first year in office (2019), the budget grew by 11% while raising several taxes, including taxes on car sales and hospitals. Bipartisan bills to eliminate Social Security taxes have been proposed several times since then. It certainly seems like the governor’s decision has a heavy dose of election-year politics. There’s nothing wrong with that, but it’s worth noting.

To his credit, the governor seems inclined to eliminate the Social Security tax without raising other taxes like a bill introduced this session would. With the kind of money available, it is difficult to justify raising taxes to compensate for the small loss of income. Worse still, a “revenue neutral” bill introduced by Sen. Bill Tallman would increase regressive tobacco taxes to make up for “lost” revenue.

The elimination of Social Security taxation should be a direct tax reduction for the benefit of New Mexico seniors and those who may be considering moving to New Mexico but who view our state as “unwelcoming” to pensioners because of our tax policies.

This legislative session is indeed an opportunity for the legislature to “be bold” in enacting transformative policy changes. Reforming the tax on broken gross income to eliminate taxation of services remains the best way to achieve this. However, eliminating an unnecessary tax that makes New Mexico unattractive as a retirement destination is a worthwhile goal and we hope for the best and stand ready to support supporters of the repeal of the security tax. social this session.

Paul Gessing is president of the Rio Grande Foundation of New Mexico. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting the prosperity of New Mexico based on the principles of limited government, economic freedom, and responsibility. individual.

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