LOCAL COLUMN
OPINION: Schardin Clarke is wrong about the income tax
Recently, Stephanie Schardin Clarke, secretary of the New Mexico of Taxation and Revenue Department, wrote a column slamming Republican efforts to eliminate New Mexico鈥檚 personal income tax. She makes numerous points, but they boil down to two:
We simply should not cut taxes, especially for the wealthy.
New Mexico cannot afford to do bold things to improve its economy and instead must be content with 鈥渟maller鈥� policies like targeted tax credits.
Schardin Clark touts small, targeted policies that have been implemented over the past eight years but fails to note that the only thing truly propping up New Mexico鈥檚 economy is the ongoing oil and gas boom in the Permian Basin. That money has contributed to 75% spending growth under the current administration, not to mention new entitlements like 鈥渇ree鈥� college, 鈥渇ree鈥� universal childcare, and 鈥渇ree鈥� universal pre-K that will continue to drive spending in the future with questionable and unproven outcomes.
The economic impact of these programs is unknown. Spending is happening, but will these policies result in a better trained workforce, overall job creation, or anything that will make New Mexico and New Mexicans more successful? It is impossible to say.
But, in terms of Schardin Clarke鈥檚 approach to taxes, the fact is that even at a time of record oil and gas revenues, Gov. Michelle Lujan Grisham has raised taxes more than she鈥檚 cut them. Yes, reducing New Mexico鈥檚 gross receipts tax by 0.25% was a 鈥渨in,鈥� but she also signed an income tax hike, levied taxes on online sales and increased corporate income taxes. Just this year the governor signed legislation increasing vehicle registration fees by 25%.
All of this at a time when Senate Finance Committee Chair George Mu帽oz, D-Gallup, says, 鈥淲e have more money than we know what to do with.鈥� Mu帽oz appears to have figured things out and recently wrote an opinion piece in support of eliminating the personal income tax.
The point is that under Lujan Grisham and Schardin Clark, New Mexico has not seized the opportunity to truly diversify and grow its economy. They tout very narrow and short-term statistics, but ignore the fact that New Mexico remains the third-most impoverished state in the union and people are 鈥渧oting with their feet,鈥� making New Mexico鈥檚 population stagnant and aging dramatically relative to our neighbors.
Eliminating New Mexico鈥檚 personal income tax would lead to economic growth in New Mexico and would likely stanch the outward migration of our young, educated population. In fact, 鈥� Zero-income tax Florida and Texas were the top two destinations for interstate movers, gaining 819,000 and 656,000 net residents respectively,鈥� according to a 2025 Heritage Foundation report.
This isn鈥檛 an abstract issue.
New Mexico lost population last year according to the U.S. Census Bureau. If you want your kids and grandkids to stay in New Mexico you need to do something big to make the state more attractive to people and business.
So, what should be done? Rather than eliminating the $2.1 billion generated by the income tax in one fell swoop, I recommend phasing out the income tax over a span of a few years. Already for the next session analysts expect no less than $850 million in 鈥渦nforeseen鈥� revenue thanks to rising oil prices. This number is likely closer to $1 billion given continued high oil prices. No other taxes should be raised to eliminate the income tax.
So, reduce the income tax by approximately $1 billion. If revenues don鈥檛 keep up (say oil prices drop dramatically or the U.S. goes into a recession) those tax cuts can be reversed or put on hold.
There鈥檚 no need to cut necessary programs, although it is true that New Mexico government is far too bloated and many of these programs (like 鈥渇ree鈥� childcare and 鈥渇ree鈥� pre-K) should be targeted at those with lower incomes, not the wealthy.
For too long New Mexico has relied on oil and gas and federal spending. While we shouldn鈥檛 kill off oil and gas we do need to diversify our economy. Eliminating the income tax would do that by bringing new businesses and taxpayers to New Mexico. It is high time to do something bold to improve our state.
Paul Gessing is president of the Rio Grande Foundation, an Albuquerque-based think tank focused on the importance of individual freedom, limited government and economic opportunity.
