‘Flat tax’ would hurt low-income New Mexicans, group says

The state's poorest residents would be hit hardest by a proposed two-percent flat tax which may be considered New Mexico's next legislative session, according to New Mexico Voices for Children. (Photo courtesy of New Mexico Legislature.)

The state’s poorest residents would be hit hardest by a proposed two-percent flat tax which may be considered New Mexico’s next legislative session, according to New Mexico Voices for Children. (Photo courtesy of New Mexico Legislature.)

Troy Wilde | Public News Service

The state’s poorest residents would be hit hardest by a proposed 2-percent flat tax, according to Gerry Bradley, policy analyst, New Mexico Voices for Children. Bradley’s nonprofit organization is lobbying against the effort to replace personal and corporate state income taxes with the flat tax. 

The New Mexico Legislature will consider the 2 percent tax to replace all other taxes, including gross receipts tax. The proposal also would end tax exemptions for churches and other non-profit organizations.

Bradley said it would also end refundable tax credits and other exemptions and benefits for low-income families. Under the plan, he said, higher-income people would likely pay less tax and those at the bottom of the economic ladder would pay more.

“If the flat tax came in, they would probably be paying a few hundred dollars in taxes instead of getting a few hundred dollars in rebates,” he predicted.

Bradley said he expects the flat-tax legislation to be introduced in the 2014 Legislative session in January. The same type of legislation was introduced last year but did not get approved.

The state already taxes lower-income individuals at a much higher rate than those earning more money, he noted.

“Low-income people pay about 10 to 11 percent of their income in state and local taxes, and high-income people pay around 4 or 5 percent of their income in state and local taxes,” Bradley said.

The proposed flat tax would also eliminate taxes on capital gains and other unearned income, he said, adding that there is no way of knowing if a flat tax would generate enough money to fund education and other vital programs.

 

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