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Zane's World

Wrong Tax, Right Tax

January 13, 2010, 12:00 am

As the Jan. 19 start of the legislative session looms over us like an ugly, unstoppable avalanche, lawmakers appear to have signaled their distaste for at least one unappetizing budget fix: reinstating a tax on food.

But why were working-class shopping carts a target to begin with?

New Mexico repealed its regressive tax on groceries just a few short years ago, long after the rest of civilization had realized that it was more of a punishment to the poor than a boon to state coffers. But with the state budget dissolving faster than Tiger Woods’ marriage, many parties began advocating a return to the tax, lockstep with the American Way, aka, let’s have the poor subsidize the wealthy.

The Greater Albuquerque Chamber of Commerce, aware that taxing food is unpopular, aggressively called for a “temporary” reinstatement of the food tax.

In a Jan. 6 press release, Think New Mexico counters by pointing out that the last food tax was temporary as well. It was an emergency measure during the Great Depression that inexplicably stuck around for 72 years as it casually doubled and then some.

On Jan. 11, Think New Mexico announced that an email campaign to legislators had been effective: At least 35 representatives have pledged to oppose reinstatement—enough to kill the GACC’s regressive dreams.

There are better ways to climb toward a balanced budget: We need to permanently nix Gov. Bill Richardson’s income tax cuts, which were a steady and painful source of bleeding even before the economy took a vacation. We need to shut the door on corporate tax loopholes that are siphoning up to $90 million annually out of New Mexico. We should institute a “soda tax,” similar to the so-called sin taxes on alcohol and tobacco, that puts a premium on obesity-epidemic items that are technically edible but lack the nutrients to truly be called food.

Unfortunately, we have a governor who insists that even minor income tax increases will be “temporary”—a blip on the radar of the wealthy. We have a Legislature that has consistently ignored Santa Fe Democratic Sen. Peter Wirth’s ongoing crusade to make our tax code equitable by ensuring that corporations with branches in other states have to pay taxes just like the rest of us.

Not so strangely, the GACC and other organizations that pushed for penalizing the poor in the checkout line happen to oppose increasing income tax rates and closing corporate tax loopholes. This is in keeping with the radical protectionism of outdated bottom-line thinking that has led to the vilification of the US Chamber of Commerce as an institution over the past year, especially in relation to its stance on alternative energy.

The Santa Fe Chamber of Commerce, by virtue of operating in a relatively progressive city, has typically had more nuanced views than the US chamber or the GACC. Simon Brackley, president and CEO of Santa Fe’s chamber, says his organization has no formal position on the food tax and “at this time” remains neutral regarding closing corporate loopholes.

The GACC declined to return phone calls regarding the justification of its positions.

We know, however, from previous statements that the GACC believes low income taxes and a loophole-riddled tax code are an effective strategy for attracting new businesses and high-wage jobs to the state. What the GACC apparently does not know is that its theory of economic development has been dead for many years now. In other words, it has yet to come to terms with the “temporary” nature of the knee-jerk chamber positions. Tax the poor and fatten the rich is no longer an appropriate leadership position for a business advocacy organization to take.

More and more businesses are realizing that it pays to be progressive members of the community, and that long-term profits and growth will be maximized by empowering the welfare of the many. How long will it be before the GACC’s members realize that the organization isn’t really helping them at all? If lobbyists bent on maintaining the last century’s business practices—like the GACC—don’t wake up to the new era, they’re going to find out that they, too, are temporary.

The only other Western state that hasn’t raised income taxes during the recession is Alaska. The only other states that gouge the populace with a full food tax are Alabama and Mississippi.

Is New Mexico going to lose new jobs and businesses to Alaska if we raise taxes and close loopholes? Doubtful. Are New Mexico businesses happy with the leadership of an organization that looks to Alabama and Mississippi for intelligent, effective public policy?

I would expect a business advocacy organization to know that most economists predict a 3 to 5 percent increase in the cost of food over the next year. Doubling that to avoid tax increases for the wealthiest New Mexicans wouldn’t have protected businesses; it would have crippled spending.

Now that we’ve managed to tell our legislators where we don’t want them to look for revenue, it’s time to make sure they’re aware of where we do want them to find it.

 

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