Comment: Social Security has done a remarkable job of keeping the vast majority of older people out of poverty. Seniors who are still living in poverty should receive more help from federal and state governments. But exempting all Social Security income from tax will not provide a penny of help to our low-income seniors. This will mean the state will have less money to support the programs and services that matter most to our communities.
Most low-income seniors — and even many middle-income people — are already exempt from paying income tax on their Social Security benefits. The vast majority of the benefits from this proposed tax cut would go to seniors earning $50,000 and above, more than the state’s median income. More than half of the benefit would go to those in the top 20% of the income scale. And even for those at the top, the portion of their Social Security benefit that they already paid taxes on while they were working is exempt from that tax.
And in addition to failing to help members of our communities who need it most, this proposed tax cut would be expensive – costing at least $120 million every year. That’s a recurring revenue loss in New Mexico every year — $120 million that could be invested in classrooms, parks, meal programs, hospitals and basic infrastructure. And that $120 million is two and a half times the budget of the Department of Aging and Long-Term Services, which provides many services to seniors. When we underfund these essentials, we not only hurt the families and communities that depend on them, but we also hurt our economy. We are losing jobs and with them we are losing the revenue they inject into our businesses. We are also losing young people who must go elsewhere to find jobs that pay enough to support themselves and their families.
I know it is tempting to enact tax cuts when the state coffers are full. But as we know all too well, while our families’ needs for good schools, safe roads and quality health care remain constant, the money we take in can vary dramatically from year to year. because we are so dependent on a volatile source like oil and gas. The tax cuts go on forever, but the fiscal situation the state finds itself in right now could change in a few years when federal subsidies go down and the oil and gas industry takes a downturn again. The programs we support – education, health care, public safety and our service of aging and long-term services – need strong, consistent funding from year to year if they are to deliver the same level and the same quality of services to our families, our neighborhoods, and other members of the community.
If we want to help our low-income seniors – or any of our low-income residents, for that matter – the best way to do that is to increase tax credits and rebates specifically for them. and to ensure we have enough revenue to invest in the programs and services that matter most to them. When we direct our efforts in this direction, we not only help those of us most in need, but we also build a better future for the entire state.