(The Center Square) – Republican state senators are looking to repeal New Mexico’s tax on Social Security income.
House Bill 49, sponsored by 13 senators including Cathrynn Brown, R-Carlsbad, and Rebecca Dow, R-Truth or Consequences, would remove New Mexico from the list of 13 states that tax Social Security benefits.
"We tax their Social Security income and therefore people leave our state to go to our neighboring states where that tax has been eliminated," Dow said, as reported by KOAT 7.
The neighboring state of Arizona does not tax Social Security income.
In an interview with The Center Square, president of The Rio Grande Foundation, Paul J. Gessing cites U.S. Census Bureau data to show just how unpopular New Mexico is as a state people want to live in.
Gessing said that between 2010 and 2019, all of New Mexico’s neighbors made substantial gains over New Mexico in population. Texas grew 15.3%, Arizona grew 14.5%, Utah grew 16%, and even Oklahoma grew by 5.5%, Gessing said. New Mexico, on the other hand, only expanded its population by 1.8%.
“There’s a variety of reasons why New Mexico is not as competitive economically as our neighbors are with regard to being an attractive place to live and work – taxes is one of them,” Gessing told The Center Square.
Exempting Social Security from income taxes is one way the state could make itself just a little bit more attractive, Gessing said.
New Mexico is home to more than 300,000 retirees. Democrats are concerned the state would miss out on tens of millions of dollars in revenue if Social Security is not taxed. Gessing doesn’t think the loss is big enough to outweigh the benefits.
“It’s not trivial, but within the scope of a $7.4 billion general fund, you’re talking maybe a couple hundred million dollars,” he said.
Gessing doesn’t have a lot of hope for the success of this bill, however, given the progressive lean of the state’s Legislature. Gessing said the best hope is that this, or a similar bill, has of passing would be within an omnibus bill, which would likely include more revenue-raising laws than tax-cutting ones in total.