How tax cuts for the powerful are behind the backlogs

by James Jimenez, executive director of New Mexico Voices for ChildrenAugust 30, 2016

To be safe, healthy, and financially secure is something we all want for ourselves, our children and our families. New Mexico can be a place where communities are safe, people are healthy and thriving, and everyone has the opportunity to build a secure future.

We know what it takes to create strong communities―good schools, roads, libraries, and so forth. Unfortunately, New Mexico has not been making the public investments necessary for this to happen. Instead, we’ve been following the long-discredited trickle-down policy of cutting taxes for the powerful few at the expense of the common good. Worse yet, even as these tax cuts drain the pool of money needed for public investments, some lawmakers are insisting that we need to continue down this counterproductive path.

It seems that every week there is a new story in the newspaper showing the consequences of choosing tax cuts for the powerful over public investment. One of the most egregious, which has a huge impact on public safety, is the backlog of thousands of rape kits with DNA evidence that have not been processed. Each of these kits represents a violent crime, a victim, and a perpetrator. Until we process the DNA evidence the police and district attorneys cannot find, arrest, prosecute, and convict sex offenders. This backlog undoubtedly represents hundreds—if not thousands—of sexual predators who have not only escaped justice, but who have been free to roam our neighborhoods and communities. The Legislature recently set aside some money to address part of this backlog, but lawmakers said there wasn’t enough revenue to do them all.

Another example has serious financial consequences for families trying to make ends meet. The state’s tax department has a backlog of tax refund checks that have not been sent out because the returns have been flagged for more scrutiny. But that scrutiny is slow in coming because, apparently, the department doesn’t have the staff it needs to move these rebates along.

Then there’s the backlog of applications and renewals for the ID cards that patients need in order to purchase medical marijuana. Most patients needing medical marijuana have chronic health problems such as cancer, debilitating pain, or epilepsy. Some are veterans suffering from post-traumatic stress disorder. These patients are willing to spend their own money for a medicinal product that offers them relief, but they can only do so if they have an up-to-date ID. Department of Health officials say they have doubled the number of staff who process these cards—from four workers to eight—and even brought on three temporary workers, but this is clearly not enough. They recently extended expired ID cards, but this is just a temporary fix.

The state’s Income Support Division also suffers from a staff shortage, which had made it impossible for the department to process applications for food and health care assistance in a timely manner. We’ve even recently learned that managers have been falsifying applications for emergency food assistance so the department looks like its meeting its deadline. This has delayed food assistance to some of the hungriest and neediest kids and families in New Mexico.

New Mexico communities cannot thrive if our state lacks the revenue it takes to make these investments―and others―in our well-being. The way forward is for lawmakers to repeal the tax cuts and end the practice of letting the most powerful manipulate the tax code to their benefit. It’s time to focus on what helps all New Mexicans.

James Jimenez, MPA, is executive director of New Mexico Voices for Children and has worked with state and city budgets for many years.

Originally published at NM Voices for Children

What’s really behind New Mexico’s budget woes

By Bill Jordan, senior policy adviser and government relations officer for NM Voices for Children.

Most complex systems — like airplanes, for example — have built-in redundancies. So for a catastrophic failure to occur — such as falling from the sky — there generally have to be several things going wrong. Usually all at once. The state budget is a complex system, too. Sadly, it’s plunging toward disaster. To fix it, we need to look at all the things that are going wrong.

Most news outlets and the pundits they quote have only been focusing on one problem: low oil and gas prices. If we’re going to be successful in fixing this thing before it crashes and burns, we need to look at the other failing pieces. Namely, that the state hasn’t been collecting enough money to cover all of its important expenses like education, health care and public safety.

We’ve been passing big tax cuts since 2003. Tax cuts have been thrown at profitable corporations and the people earning the most money. These tax cuts were supposed to create jobs. They didn’t. Back in 2003, before the recession, this wasn’t so much of a problem. Oil and gas prices were steady and the economy was strong. Today, however, New Mexico’s economic recovery crawls along, we’re still waiting on those promised jobs to materialize, and bargain-basement oil and gas prices don’t look like they’re going back up any time soon. It’s time to take a second look at all those tax cuts.

Let’s start with the personal income tax rate cut for those at the very top of the scale. Since 2003, the wealthiest New Mexicans have seen their income tax rate cut almost in half. These days, for all practical purposes, we have just one income tax rate, and it’s the same whether you earn $16,000 or $16 million. Then there’s the very generous deduction for capital gains income. Capital gains is the money people make on the stock market and in real estate deals. People with capital gains income get to deduct half of that income for tax purposes. When was the last time you got to subtract half of every paycheck from your income tax bill? I’ll tell you when: never.

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2016 New Mexico Landscape Survey

The Center for Civic Policy (CCP) commissioned a statewide poll in early December of 2015 for the purpose of getting a reading of public opinion regarding some key public policy issues as New Mexico prepares for another legislative session.

Here are some key takeaways:

Issues Environment

Voters were asked, “Of all the issues facing New Mexico, what is the single most important one to you that the state government in Santa Fe can do something about? And what is the next most important issue?” Voters overwhelmingly care most about two issues – schools and education (34% top two issue) and the economy and jobs (28% top two issue). Concerns about crime/drugs/DUI (12% top two issue) lag far behind.

Economic Justice

We tested two statements describing the relationship between the economic challenges facing working families and the power dynamics in New Mexico. These were adapted from the “Everyone Economics” polling conducted by Americans United for Change and other national groups. Voters were asked whether they agree or disagree with the following:

Statement #1

“In New Mexico today, too many politicians have handed power over to corporate lobbyists and changed the rules, giving out big tax breaks and favors to the wealthy and to out-of-state corporations while wages have stayed low, middle class incomes have flat-lined, jobs have disappeared and working families and small businesses struggle just to stay afloat.”

 Among active voters an overwhelming 75% agreed with this critique of New Mexico today with 16% disagreeing for a net agreement of +59%. Those who strongly agreed (59%) surpassed those who strongly disagreed (7%). There was hardly any daylight between agreement among Hispanics (76%) and Anglos (75%).

Statement #2

“The same-old trickle-down policies simply aren’t working. Out-of-state corporate CEOs and the well-connected keep getting tax breaks, while ordinary New Mexicans struggle living paycheck to paycheck. We need to reform state government so that it works for working families, not just wealthy special interests.”

Agreement with the second statement was even stronger. Among active voters, 77% agreed with 16% disagreeing for a net agreement of +65%. Those who strongly agreed (63%) surpassed those who strongly disagreed (8%). Hispanic agreement was even higher (88%) compared to Anglos (72%).

Voters in every age, education, ethnicity, income, and political and ideological group share the overall critique about the economy and government. Hispanic women are literally universal in their agreement that the economy isn’t working for average people and needs fundamental reform.

Automatic Voter Registration

A majority of voters (58%) support automatically registering voters when they turn 18 or move to New Mexico, and allowing them to remain registered when they move anywhere in the state. Just a third (35%) oppose it.

Religious Refusal Laws

A majority (51%) of voters oppose new religious refusal laws that would expand the ways in which people could be exempt from laws and regulations that conflict with their religious beliefs. Only 28% support this while a fifth (20%) cannot offer an opinion.

Planned Parenthood

Despite the efforts of anti-choice zealots to smear and destroy Planned Parenthood, those already favorable towards the organization have become more so. 45% New Mexico voters had a favorable opinion of Planned Parenthood. Now, while the overall opinion has stayed the same (46%), intense favorability – those giving it a rating of ‘9’ or ‘10’ – have increased by 11 points. Those choosing lower favorable scores, between ‘6’ and ‘8’, have fallen by a similar share of 11 points. Unfavorable opinion of the group has also increased (from 30% in January to 36% in December) overall but not in intensity. Those without an opinion, either a neutral rating of ‘5’ or unawareness of the organization, fell from 25% to 19%.

While the state of New Mexico doesn’t directly provide funding to Planned Parenthood, voters oppose efforts to permanently block it. Overall, 57% oppose the state blocking funding while just around a third (35%) support it. Only 8% fail to offer an opinion. Hispanics oppose this ban at the same rate as Anglos. A significant gender gap emerges among Anglos based on education. Anglo men who didn’t graduate college split on this while non-college graduate women oppose it by almost a two-to-one margin. Among Anglos who did graduate from college, men and women oppose it similarly.

“Right to Work”

When asked to say which issues they find more important for the New Mexico government to deal with, just two people volunteer anything about passing a “right to work” law while 30% of all voters say they want the state to address the economy, jobs, and raising wages. After this open-ended question, we gave voters a choice five issue to pick as the top priority for the Governor and state legislature to address next year:

  • Growing New Mexico jobs
  • Funding for public schools
  • Public safety, crime and prison reform
  • Restoring trust to state elections, and
  • Right to work legislation

Just 5% selected “right to work.” Jobs (33%) and public schools (32%) were the overwhelming choices, followed by public safety (18%). A similar share (6%) pick restoring trust to state elections.

Food Tax

While New Mexicans are divided on many issues, they come together in opposition to imposing a sales tax on food. Four-fifths (80%) oppose it and just 15% support it. When couched as part of a broader effort to lower the sales tax on all goods, opposition stays strong (62%) while support comes in at just 29%. Voters in all income groups oppose it similarly.

Best Approach to Address Crime: Tougher Penalties vs. Treatment Programs

When it comes to reducing crime, more voters in New Mexico believe in to focusing more resources on programs like early-education, drug abuse treatment, mental health services, and family crisis intervention (49%) than mandating life sentences for anyone who commits three violent crimes (35%). Partisanship, age, and educational attainment split voters on this question. Hispanics and Anglos, men and women, prefer treatment over tougher penalties.

The 2016 Landscape Poll was conducted by Third Eye Strategies. This was a survey of 602 active voters in the state of New Mexico. Respondents were interviewed between 6:00 and 9:00 pm on December 4th through 7th, 2015. 51.5% (310) of interviews were conducted on cell phones. The data were adjusted slightly by gender, age, and ethnicity by region to best represent the distribution of active likely voters and those recently registered.

All polls are subject to errors caused by interviewing a sample of persons, rather than the entire population. In 95 cases out of 100, the responses to this survey should be within plus or minus 4.28 percentage points of those that would have been obtained from interviewing the entire population of likely voters.

 

 

 

 

How Corporate Tax Loopholes Compromise Our Future

By Donald Simonson, Ph.D. 

The notion of “paying it forward” is a popular one, and while we may not think about our income taxes as a form of paying it forward, that’s exactly what we’re doing. The public works that we all depend upon today—roads and highways, schools and parks, telecommunications and electrical grids, even courts and prisons—were made possible in part by taxes paid by past generations. And the taxes we pay today won’t just go toward keeping these systems and infrastructure in good repair, they will also be needed to plan for our future and address unexpected issues and opportunities. This kind of long-term vision is the foundation upon which the United States was built.

Our public works and infrastructure don’t just improve our quality of life, they also make our modern economy possible. Savvy American corporations understand that they depend on this infrastructure and that they bear responsibility for helping to pay for it. As the new report Burning Our Bridges (Center for Effective Government) shows, much of our nation’s infrastructure needs could be covered simply by collecting income tax on the profits that several corporations have retained overseas.

Over the last several decades, U.S. corporations have been paying a much smaller share of the nation’s taxes. In the 1950s, corporate income taxes made up more than 25 percent of the tax money collected by the federal government. It has now shriveled to just over 10 percent. Here in New Mexico, corporate income tax revenue is expected to decline by 60 percent.

While their tax bills are down, corporate profits are at record highs. Tax breaks, loopholes, and creative accounting practices are at record highs, as well. The Burning Our Bridges report looks at the loophole that allows U.S. corporations to transfer their profits to other countries that have low tax rates (or no taxes at all). The report juxtaposes the rapid rise of the offshoring of American corporate profits with the plunge in federal funding for infrastructure.

Among some of the report’s disturbing findings:

  • Corporate offshoring tax abuse costs the U.S. Treasury an estimated $90 billion annually.
  • Bringing our nation’s aging infrastructure up to 21st century standards will cost $3.6 trillion over the next five years.
  • Our failure to make these investments will cost us $1.8 trillion a year in travel delays, water leaks and power outages.

Individuals and American businesses must bear the $1.8 trillion cost of inaction together if we allow our infrastructure to continue crumbling and failing. No business wants to lose money because of failing transportation or undependable power, but that is what will happen. Businesses understand it takes investment to ensure future profits and that includes investment in infrastructure. Infrastructure projects are appreciated by economists on the left as well as the right. The question remains: how do we pay for infrastructure, particularly when we’re collecting fewer dollars in income taxes?

New Mexico is facing this same conundrum. Despite the fact that New Mexico has granted hundreds of millions of dollars in corporate tax cuts over the last few years, special interests continue to lobby for more. In fact, in the just-concluded legislative session, a bill that would have cut business taxes passed the House, but not the Senate. The special interests want the Governor to call the Legislature back into a special session to pass those tax cuts. But that’s not all. They also want a capital outlay bill to fund public works projects passed as well.

We can’t have it both ways. If business groups want a state with reliable public works and infrastructure, they must be willing to make investments in it. We all have a duty to pay it forward for future generations. Forward thinking, profit-seeking businesses know they must pay their fair share to help keep our state’s and nation’s infrastructure sound.

Don Simonson is treasurer for the Board of Directors of New Mexico Voices for Children and an emeritus professor of finance at UNM.

This is post originally appeared at New Mexico Voices for Children

Corporate Tax Giveaway Update: Gov. Martinez’s budget wizard apologizes for misleading legislature

Back in mid-March during the closing minutes of the 2013 session, the New Mexico House passed a massive corporate tax cut package — with no floor debate and no questions permitted. And, in what most observers believe was an unprecedented breach of protocol, Department of Finance and Administration Secretary Tom Clifford was allowed to take the microphone on the House floor and speak. His budget wizardry was enlisted in a last-ditch attempt to calm the anxieties of legislators.

Why the heartburn? Well for one thing, hardly any of them had had a chance to read the so-called “compromise” bill that had sprung out of Finance Committee the night before. The House Taxation and Revenue hadn’t seen the bill — although it had previously rejected many of its key components earlier in the session. There were legitimate long-term concerns about fiscal impacts of such a far-reaching measure.

This was a bill that would slash the corporate tax rate and replace some of the lost state revenue by pushing the tax burden onto New Mexico counties and municipalities.

But never fear, they said! Tom Clifford is here.

And he won the day with his stand-up routine. The rules of the legislative process were stretched beyond the breaking point. Yet based on his confident assurances, the bill picked up enough Democrats to pass with time having expired on the clock.

Governor Martinez wasted no time in signing HB641 into law. Then her PR flacks kicked into overdrive, spinning the national news media with a tale of New Mexico’s bold Latina Republican governor whose consummate political skill brought an obstructionist Democratic legislature to its senses and got it to pass “her landmark tax reform.”  (Subtext: Don’t you know presidential timber when you see it!)

Out-of-state political fundraisers featuring the all-conquering Governor quickly ensued.

Well, the story doesn’t end there.

Yesterday, almost two months after that day of infamy in New Mexico legislative history, we got the rest of the story. From the Albuquerque Journal:

Apology given for tax bill information
By Dan Boyd on Wed, May 15, 2013

SANTA FE – The top budget official in Gov. Susana Martinez’s administration apologized to legislators Tuesday for claiming in March that a massive tax package would have a positive fiscal impact to the state during each of the next five years.

Finance and Administration Secretary Tom Clifford told members of an interim legislative committee Tuesday the information he provided on the House floor during the final hours of this year’s 60-day session was based on a different version of the bill.

“I apologize for that,” said Clifford, who testified on the tax package during the frantic final minutes of this year’s session.

In contrast to Clifford’s original claim, an estimate released after lawmakers approved the tax package calculates that the legislation will cost the state more than $70 million in forgone revenue in the 2017 fiscal year. It will provide the state with about $15 million in additional revenue during the next two budget years before the fiscal impact turns negative, according to the estimate, which does not factor in possible future economic development.

At least one Democratic lawmaker said Tuesday that he did not think the tax package would have been approved by the Legislature if Clifford had originally portrayed the budget hit as negative.

“If he would have told membership the truth, I don’t think they would have voted for it,” said Rep. Jim Trujillo, D-Santa Fe, who voted against the bill.

Read the rest of the story here… and weep.

If TED won’t talk, Sarah’s gonna sing about it! (MUSIC VIDEO)

Got those income inequality blues, dude.

You have no doubt watched, or at least heard of, the TED Talk videos. TED is a nonprofit, “devoted to Ideas Worth Spreading” and the TED.com website has compiled more than 900 short lectures — stimulating, provocative stuff from some creative, often quite brilliant, people.

Recently, however, the TEDnics in charge sparked considerable controversy, and some complaints of censorship, by refusing to post a talk by venture capitalist Nick Hanauer.

So what got Hanuer’s talk banned? Why it seems this very wealthy and hugely successful venture capitalist questioned what in 1 Per Cent circles is the holiest of holies — the proposition that, “If taxes on the rich go up, job creation will go down.” Hanuer doesn’t buy it. And he’s got charts and data to back his apostasy up.

You can read more about the brouhaha here and here and here and here, but first listen to the Sarah Kennedy’s original musical composition about the topic — her very first ukulele music video: