Gov. Bill Richardson Issues Proclamation for Special Legislative Session

Governor Bill Richardson issued a press releasing announcing that he has signed a proclamation for the special session, which is now scheduled to start at 1:00 PM today – at the request of legislators.

Click for a copy of the proclamation and the legislation it specifies for the special session. Only measures to address the state's budget shortfall are included.

No doubt in response to widespread complaints about the regressive taxes being discussed, the proclamation includes legislation that includes a temporary tax amnesty program and an act increasing the low income comprehensive tax rebate. These proposals appear to be aimed at low-income workers, but not the struggling middle class.

Clearly, the Governor, as well as the Senate and House leadership, prefer to take the cowardly route and apply regressive gross receipts and "sin" taxes rather than disturb the tax rewards enjoyed by our wealthiest citizens and big-box corporations who pay no taxes in New Mexico on profits.

Our Democratic leaders seem to have abandoned their prior position as champions of the working and middle classes. Here's what the Institute on Taxation and Economic Policy proposes as progressive, fair taxes the Governor and our Dem-run Legislature should be advocating for:

Progressive Alternatives for Revenue Raising

• Repeal capital gains tax breaks. New Mexico currently allows a deduction for 50 percent of capital gains. Only a handful of states allow such a deduction, and the New Mexico deduction is among the largest. Virtually all of the benefits from this tax break go to the best-off twenty percent of New Mexicans.
• Repeal income tax rate reductions. Legislation enacted in 2003 gradually reduced the top income tax rate from 8.2 to 4.9 percent. The lion’s share of the benefits from these tax cuts go to upper-income families.
• Repeal itemized deductions for state taxes. Itemized deductions are upside-down tax subsidies, offering the biggest tax breaks to the best-off taxpayers. And New Mexico is one of only a handful of states that bizarrely offer a state income tax deduction for its own income tax. Repealing the itemized deduction for state and local taxes would enhance the fairness of New Mexico’s tax system without imposing higher tax rates.
• Combined Reporting of Corporate Income Taxes. Strengthening the corporate profits tax by eliminating this unjustified corporate tax giveaway would reduce the pressure on lawmakers to rely more heavily on sales and income tax hikes.
• Couple regressive tax hikes with low-income tax credits. New Mexico allows an Earned Income Tax Credit (EITC) based on federal rules that is designed to offset the regressive impact of sales, excise and property taxes. Increasing the value of the EITC from the current 10 percent rate to 20 percent would help mitigate the impact of the House and Senate tax plans on low-income families, at a relatively low cost.