This is the fourth in a series of guest columns debating whether Doña Ana County voters should approve a 1/4 percent gross-receipts tax increase to help fund Spaceport America. Public officials and other readers are invited to participate in this debate. To submit a guest column for publication, e-mail me at heath@haussamen.com. Baseless personal attacks will not be published.
By Greg Lennes
Every Doña Ana County resident should vote against an increase in the local gross receipts tax for Spaceport America on April 3 because it is unfair. If the governor and the wealthy spaceport tax proponents have their way, the increase of 1/4 percent for the spaceport will result in new tax rates of 7.375 percent for Las Cruces, 7.5 percent for Truth and Consequences and 7.5 percent for Alamogordo. Albuquerque has only a 6.875 percent rate.
The new spaceport will benefit all of New Mexico – especially Albuquerque. Although this regressive tax is imposed on persons engaged in business, the tax burden is passed directly to consumers and residents on fixed income. The severe flaws of gross receipts taxes are well-known and well-documented in economic literature.
The Institute on Taxation and Economic Policy, a research and education organization, did a study on New Mexico that showed that low- and middle-income taxpayers in New Mexico pay a considerably higher share of their income in state and local taxes than do the richest New Mexicans. For instance, the poorest residents who make less than $13,000 pay 9.7 percent of their income in gross receipts tax, while the wealthiest, who make $243,000 or more, pay 1.6 percent.
Now the governor and legislature want to increase the gross receipts tax in Doña Ana, Sierra and Otero counties even though the spaceport will benefit all of New Mexico. To build a spaceport on an unfair, regressive tax system is wrong. As the study concluded: “Taxes ought to be based on a person’s ability to pay them. It means that the share of income paid in taxes should rise as income grows, not fall as is the case in New Mexico.”
It is clear that the proposed increase in the destructive gross receipts tax should be defeated by the voters. Why should our poorest residents have to pay in taxes such a higher rate compared to the richest New Mexicans? Of the 10 proposed spaceports in the United States, only New Mexico is attempting to use the gross receipts tax to finance its facility’s infrastructure.
Another major reason residents should vote against the spaceport tax is that New Mexico is rated the worst state in the nation for infrastructure development, with a grade of D+, by the Government Performance Project, the nation’s only source for comprehensive and independent information about state management performance. As the project states about New Mexico, “Capital planning for non-transportation infrastructure is uncoordinated and haphazard, and it leaves the state unable to cope with some very serious infrastructure deficiencies.”
The project also indicated monitoring for facility construction is both weak and inadequate, leading to frequent cost overruns. For facility projects, there is no internal reporting. The time between detecting and correcting problems associated with construction of facility projects is 3-6 months.
With this poor track record, the state is going to build a $225 million spaceport. The risks are enormous for New Mexico’s taxpayers.
According to spaceport tax proponents, children will benefit from the establishment of space academies in schools. However, any fifth grader will tell you that taxing the poorest residents is the wrong answer. So why are we using our children to sell a $225 million spaceport with a regressive gross receipts tax increase for billionaire Sir Richard Branson?
The People for Aerospace and their wealthy supporters are totally ignoring all these factors and simplify both the spaceport construction and the effects of GRT. In a mailer to residents they claim the spaceport will create 2,300 jobs with a $300 million annual payroll. So if my math is right, each spaceport employee will, on average, receive a salary of $130,000. Something is wrong here.
In addition, the spaceport supporters are perpetuating a myth that if Doña Ana County voters don’t approve the regressive gross receipts tax increase, there will be no spaceport. Read the fiscal impact report for the Regional Spaceport District Act of 2006. It clearly states that if the tax is defeated, “other financial resources will have to be identified.” The act is an abomination. It is ill-conceived, poorly written and puts the unfair tax burden on three counties, while the spaceport benefits all the counties of New Mexico.
The spaceport will not be eliminated. Gov. Bill Richardson, who campaigns for president partly on the establishment of a spaceport in New Mexico, has to support a new financial package to build the spaceport infrastructure if we vote against this terrible tax. The Legislature can then approve prudent and fair financing.
Lennes is a Las Cruces resident.
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