Think New Mexico news:
Think New Mexico news:
sen. Bill Tallman (D-Albuquerque) has a pre account to repeal state taxes on Social Security income for 90 percent of seniors in New Mexico and make up for the cut in state revenues by raising taxes on cigarettes, e-cigarettes and other tobacco products.
The bill was developed by the impartial think tank Think New Mexico, which recommends this reform in a 2019 policy report.
The pre-filed bill is intended to be revenue neutral for the state and to align taxes for seniors in New Mexico with those of other states while reducing youth tobacco consumption.
New Mexico is one of only 13 states to tax Social Security income. It is a form of double taxation, as New Mexicans pay income tax on the money they pay to Social Security while they work, and then they are taxed again on the benefits they receive after they retire. No other government benefits, such as Medicare, Medicaid, TANF, or food stamps, are taxed.
In the past decade, eight of the 13 states that tax Social Security benefits have cut those taxes significantly, making New Mexico the second-heaviest tax on Social Security benefits in the nation. The tax on Social Security income costs the average senior in New Mexico nearly $700 a year.
Senator Tallman’s bill would exempt Social Security income from tax for all seniors with total incomes less than $72,000, or $124,000 for a married couple. Based on recent IRS data, this exemption would cover all but about the top 10 percent of the wealthiest seniors in New Mexico.
The pre-filed bill taxes Social Security income in a revenue-neutral manner by raising taxes on cigarettes, e-cigarettes, and other tobacco products. Raising those taxes would help reduce youth vaping, which has soared in recent years, according to the New Mexico Department of Health, rising 42 percent since 2015.
New Mexico currently ranks third in the nation for teen e-cigarette use, with one in three high school students vaping. New Mexico also ranks fifth in the nation for youth smoking. Raising the cost of tobacco products is one of the most effective ways to curb teen smoking, as young people generally have lower disposable incomes than adults.
The tobacco tax increases included in the pre-filed bill are similar to the recommendations approved by the legislature’s Interim Committee on Health and Human Services.
“This legislation is a win-win package that will put money back into the pockets of middle-class seniors while improving the long-term health of New Mexico’s youth,” Senator Tallman said.
“The double tax on Social Security income is particularly taxing on the more than 55,000 grandparents in New Mexico who raise their grandchildren, often on fixed incomes, as they try not to survive their retirement savings,” said Fred Nathan, executive director. from Think New Mexico.
More information is available at: www.thinknewmexico.org.