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Rio Grande Foundation
P.O. Box 2015 Tijeras, NM 87059


Tax Policy Briefing: Why Does New Mexico's Economy Underperform Compared To Its Neighbors?

"It's your taxes. They're the highest in the region and everyone knows it ."
Governor Bill Owens of Colorado

By Harry Messenheimer, Ph.D.
President, Rio Grande Foundation

September 24, 2002


Taxes are being featured prominently in this year's gubernatorial campaign. While promising lower taxes for New Mexico, major party candidates appear to be taking positions that outdo one another. What wonderful news!

New Mexico needs lower taxes. We have an anemic economy, and high taxes are one of the main reasons. This study begins by documenting just how anemic our economy is. Then we present evidence that too much government interference in the economy, including too high taxes, is the reason for our malaise.

Next we go to discussion of specific taxes and their harms. New Mexico is compared to other states, with emphasis on the region, for each of the major tax bases. In this section we also discuss the harm imposed by the somewhat disguised tax on welfare recipients.

Finally, in the context of interstate comparison of tax harms, we discuss specific tax reduction proposals and estimate their effects on job creation, wealth creation and tax revenues. Also, in the context of recommended reform we assess specific proposals to exempt groceries and medical services from the gross receipts tax, lower the capital gains tax and lower the corporate income tax.

Download Adobe Acrobat document of full report