Bill Jordan
Tax cuts. Really? At a time when the state is barely beginning to recover from having slashed hundreds of millions of dollars from the budget, Governor Martinez wants to cut revenue even deeper by cutting taxes?
Tax cuts can actually have the effect of taking money out of the economy. This can happen a couple of ways. When tax cuts go to the very wealthy, those folks may decide to park that money in the bank instead of spending it. Also, when the state foregoes the revenue that it would have gotten without the tax cut, it has less money to spend.
This is money that would go to pay doctors to care for sick children. It would train and pay our first responders, keep our courts open, and keep our classrooms small enough that kids can learn. When the state spends money on employee paychecks, to hire contractors, and to purchase goods and services, that money goes back into the economy because most of it is then spent by those employees, contractors and suppliers.
We’ve been hearing for the last 30 years that cutting taxes creates jobs. That’s only partly true. No business uses their tax cuts to hire new employees unless there is demand for the goods those employees create or the services they will render. Similarly, no venture capitalist will invest in a new industry if they aren’t very certain that there will be consumer demand for the new goods or services.
Simply put, consumer spending is what really creates jobs. And the less money the state spends on personnel, goods and services, the less consumer spending there will be.
Other, more pressing needs
So the $55 million that the governor wants to give away in tax breaks will mean the state has $55 million less to spend on health care, education, and public safety — unless those tax cuts are made up by raising taxes elsewhere. Given the current political climate, that is very unlikely to happen. Simply put, we can’t afford these tax cuts and we have many other, more pressing needs.
New Mexico’s budget is a moral statement about our priorities — what’s important to us and what’s not. Jobs are of great importance to New Mexicans these days, but tax-cutting schemes like this are not proven job creators. In fact, the Martinez administration will not even track these tax cuts to see if they create one single job.
There are better ways to create jobs — ways that are proven to work. The $55 million in tax breaks, for example, is enough money to provide health care to every child in New Mexico who is eligible for New Mexikids coverage but is not enrolled. That’s some 50,000 kids who can’t see a doctor if they get sick or injured. New Mexico is second last in the nation in the rate of uninsured children. That is simply unacceptable. By spending the $55 million on health care we would also bring to our state $125 million in matching federal dollars, which would generate more than a thousand new jobs.
New Mexico families have other pressing needs that should take priority over giving away more tax breaks for special interests.
Child-care assistance for working parents has been cut back dramatically, putting dozens of child-care centers out of business. This has left people without jobs and parents scrambling to find affordable child care so they can keep their own jobs.
Teachers and other state employees have been laid off, furloughed, forced to pay more into their retirement funds, and have gone without a pay increase since 2008. Class sizes have expanded, kids have been told there are no school books, and college students have seen record hikes in tuition.
‘You’d better be real careful…’
Senator John Arthur Smith, chairman of the Senate Finance Committee, got it right when he said, “You’d better be real careful when you’re looking at the state revenues and trying to operate government without the cash flows that are needed.” We agree that the Legislature should use caution when the cash is needed for other priorities. Now is not the time to cut revenue.
We urge you to contact your lawmakers and ask them to put New Mexico’s children and families above special interests. Tell them not to pass the governor’s tax-cut scheme.
Bill Jordan is policy director at New Mexico Voices for Children.