Economy

It's time to fix a flawed tax shift

This op-ed ran in The (Farmington) Daily Times on March 1, 2015. 

On January 1, 2005, food bought at New Mexico's grocery stores was excluded from the gross receipts tax, or GRT. In exchange for the break, the GRT was hiked on all other purchases.

A decade later, it's clear that the tax shift was a mistake.

With several proposals before the legislature to reinstate the GRT on food, it's time for an honest examination of how and why the well-meaning exemption failed.

Many of the state's liberal activists and organizations opposed ending the food tax. In 2003, New Mexico Voices for Children argued that the "very poorest people will not receive the benefits," because most "use food stamps, which are not subject to gross receipts taxes." (A staggering 21.5 percent of our citizens participate in the federal program.) In addition, many household essentials such as soap, paper products, and toothpaste remained taxable. Utility and motor-fuels taxes were not touched, either.

Right to Work and Purchasing Power: Just the Facts Real-World Data Debunks ‘The Right to Work for Less’

(Albuquerque, NM) – New research by New Mexico’s free-market think tank finds that a dollar goes much further in right-to-work (RTW) states.

Legislators in Santa Fe are debating whether to adopt a RTW law for New Mexico. Opponents of the measure charge that residents of right-to-work states are poorer, and that if enacted in The Land of Enchantment, there will be “greater expenditures for subsidized food, housing and health care for newly hired workers who will never make a living wage.”

The Rio Grande Foundation’s research debunks such claims.

The issue brief “Purchasing Power and the Right to Work” finds that once adjusted for the the Bureau of Economic Analysis’s estimate of the cost of living, disposable income, per capita, is equal in the two types of states. Using an alternate calculation developed by the Missouri Economic Research and Information Center, income in RTW states is 8.5 percent higher.

Many ways that life’s basic necessities are costlier in non-RTW states, including:

  • The list price of a single-family home is 26.5 percent lower in RTW states.
  • Energy is more affordable in RTW states – for example, electricity is a whopping 27.7 percent cheaper.
  • Healthcare is more affordable in RTW states, as are eldercare expenses such as home-healthcare aides and assisted living.
  • RTW is associated with lighter local-and-state tax burdens and residents of non-RTW states labor more than 10 days longer to pay their annual local, state, and federal tax bill.

“These statistics show that union bosses’ favorite argument against RTW is hollow,” said Dowd Muska, research director with the Rio Grande Foundation and author of the new report. “When adjusted for purchasing power, RTW states are at least as wealthy as their compulsory-unionism competitors – and in all likelihood, wealthier.”

“Contrary to the allegations of Big Labor’s well-funded lobbyists and activists,” concluded Muska, “RTW is not a ticket to impoverishment. Life is good where unions must earn their members’ financial support. Little wonder why so many RTW states have strong economies and growing populations.”

RGF comments on license plate proliferation/legislation

The various issue-oriented license plates offered were discussed recently on KRQE Channel 13 and Rio Grande Foundation was asked to weigh in. In the grand scheme of things, there are many more wasteful government programs, but it is hard to see how New Mexico taxpayers come out ahead on the license plate deal. Full story below:

Recent KNME Discussion of Obama "Free" Community College Proposal

I recently sat down with Gwyneth Doland at KNME and CNM President Katherine Winograd to discuss the Obama Administration's proposal for "free" community college. Needless to say, we are not big fans of Obama's proposal. Even Winograd doesn't seem to be fully-convinced that the program is the best use of taxpayer dollars.

And, while RGF opposes the Obama proposal, we do value the educational value of community colleges and emphasized their importance in a 2014 paper outlining needed reforms for New Mexico's lottery scholarship program. Community colleges (like CNM) are one way to get more "bang" for lottery scholarship bucks.

The full interview is below with a "web extra" below that.

Viewpoint: our right-to-work math is not 'kindergarten'


It pleases me to no end that a report published by my organization back in July of 2012 has recently become an object of such criticism and outrage among left-wing critics of “right to work.” It shows that our efforts to put “right to work” at the top of the Legislature’s policy agenda have paid off and that New Mexico may finally be on the verge of adopting some long-overdue reforms that will shake our economy out of its torpor.

Both the union-funded, Washington-based Economic Policy Institute and University of New Mexico sociology professor Tamara Kay made news recently by giving the report an “F-grade” and calling it “kindergarden math.”

To be clear, truly conclusive data are hard to come by in the social sciences. The statistical tool known as regression is useful and it was used in our 2012 report, but the ideal method would be to have two or more experiments running with New Mexico moving forward with or without a “right to work” law in place. After a given period of time you compare notes and draw conclusions. That is impossible in the real world so “proof” is elusive and debates (and name calling, apparently) continue.

Paul Gessing discusses 2015 legislative session on Las Cruces KRWG

There have been so many things going on during the 2015 legislative session, that keeping up has been a real challenge. The interview below was done with Fred Martino of KRWG TV in Las Cruces at the beginning of the legislative session in January. A lot has happened since then, but the discussion remains extremely relevant.

Grover Norquist's remarks at Rio Grande Foundation event in Albuquerque

Anti-tax, limited government activist Grover Norquist of Americans for Tax Reform recently visited New Mexico to speak to supporters of the Rio Grande Foundation. His remarks can be seen below:

RGF president Paul Gessing appears on Morning Brew to discuss NM's economy/Right to Work

The local daily morning tv show "Morning Brew" has been revamped with ABQ Biz First's Dan Mayfield as the host. It is a very professional show and Mayfield does a great job keeping the show moving and asking probing questions. I was honored to be on the show on Wednesday, Feb. 4 with a true "all star" cast that included the Lt. Gov. John Sanchez and Bernalillo County Sheriff Manny Gonzales and Undersheriff Rudy Mora. As you can see below, the discussion tackled a wide array of issues.

First, Lt. Gov. John Sanchez and I discuss "right to work" and other economic issues facing New Mexico with host Dan Mayfield

Then, Sanchez and I are joined by Bernalillo County Sheriff Manny Gonzales and Undersheriff Rudy Mora explore the impact of poverty on crime and crime on our State's economic situation and what can be done about it (including education reform and school choice).

A third segment included a discussion of "double dipping" and vocational education:

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