OPINION: NM at risk of population loss if we don't lower our tax burden

Since the start of the pandemic, Americans from large cities have been moving into rural, western states like Montana, Idaho, and Utah. Other overlooked cities such as Phoenix, Denver, and Albuquerque are seeing increased interest from young professionals and families looking to find lower costs of living.

While this new migration has caused prices to rise, especially for housing, some states have found ways to incentivize more economic growth. New Mexico should pay attention.

Sadly, instead of incentivizing economic growth, the Land of Enchantment is raising taxes left and right. In 2023, the New Mexico Legislature considered raising its alcohol tax, and this past legislative session, state lawmakers passed a tax package that primarily focused on EV rebates. With a median household income of $48,283, most New Mexicans won’t be able to afford EVs at the low, low price of $50,000.

Meanwhile, the neighboring state of Colorado lowered taxes last year, and Arizona was seriously considering eliminating its income tax.

New Mexico is an attractive place to live, with blue skies, sunny days, friendly people, and affordable cost of living. It’s why I moved back to the state to attend law school and start my career and raise my family here.

But in order to continue attracting young professionals and families like mine, not to mention enticing businesses looking to set up shop, New Mexico will have to start following the lead of its western neighbors and find common sense ways to lower taxes for its residents. If it doesn’t, it will risk losing people to states with lower tax burdens.

According to the Tax Foundation, New Mexico ranks 23rd in their 2024 State Business Tax Survey. More specifically, the Tax Foundation ranks the state 13th in its corporate tax rate, 36th in its individual income tax rate, and 35th in its sales tax.

What significantly helps New Mexico’s overall rank is its property tax rate, which comes at No. 1.

The state also has a booming oil and gas industry that has provided generous revenues and a sizable rainy day fund in case of an emergency. Raising taxes or finding new ways to tax simply isn’t necessary.

Lawmakers should instead find ways to lower the tax burden to attract more businesses and individuals into the state to spur economic growth.

New Mexicans aren’t keen on new taxes either. Just look at the city of Santa Fe’s attempt in 2017 to levy a sugar tax, which would have increased the cost of a can of soda by 25 cents. City residents defeated the proposed tax by a 15-point margin.

New Mexicans understand that taxes like the sugar tax would have hurt lower-income families and wouldn’t have fulfilled its purpose such as decreasing soda consumption.

Former New Mexico Gov. Bill Richardson understood this including his Republican colleagues. In an op-ed, Gov. Richardson pleaded that the state Legislature leave aside its attempts to tax state investment and savings and raise the income tax. Unfortunately, too many state lawmakers think that New Mexico needs to be California.

Like Gov. Richardson said, we want everyone of every class in this state. High-tax states like California have led to the erosion of the middle class, have submitted low-income residents to poverty, and have prompted businesses to relocate to states with lower tax burdens.

New Mexico policymakers ought to take note. If we over-tax, people will leave the state — which is about as bad for the state’s coffers as it is for the economy.

Hunter Thomas is a Brigham Young University political science graduate, a law student at the University of New Mexico, and a fellow at Young Voices.