New Mexico lawmakers pressed advisers this week on how changing the state’s tax system could help residents feeling the squeeze from higher prices at the pump and the grocery store, while weighing the potential cost to public coffers.
Affordability drives discussion as candidates lay out plans
The Legislature’s Revenue Stabilization and Tax Policy Committee received an overview from the Legislative Finance Committee (LFC) that mapped how the state’s taxes are distributed and sketched how several adjustments might affect different income groups and the state budget. The briefing came as gubernatorial hopefuls have made affordability a central campaign issue.
Republican candidate Gregg Hull has proposed phasing out New Mexico’s personal income tax, with a stated focus on prioritizing benefits for lower-income earners. Democratic candidate Deb Halaand has said she would tackle costs through measures such as raising the minimum wage and expanding the child tax credit.
Lawmakers said they faced a familiar trade-off: policies that simplify the tax code or cut rates can shift burdens or reduce the revenue needed to pay for state services.
"It's a constant balancing act, right, how do you prioritize the adequacy and simplicity with maybe the equity,"
Ismael Torres, chief economist for the LFC, made that observation during the committee presentation, emphasizing the competing goals of tax policy.
Who would benefit?
Republican Rep. Luis Terrazas of Silver City told the committee that rising costs are hitting fixed-income residents especially hard, invoking seniors who must choose between basic bills and small social activities.
"There's old ladies that are on fixed incomes, all they've got is their Social Security, Mr. Chair. And with all this inflation, they're choosing well I got to pay my light bill, I can't go out on Sunday to dinner, lunch and spend time with friends. And it's really impacting them the most,"
Other lawmakers pushed back on the notion that eliminating the personal income tax would mainly help those at the bottom of the income scale. House Taxation and Revenue Committee Chairman Derrick Lente, D-Sandia Pueblo, said proposals to repeal the income tax would not be targeted to the lowest-income earners.
Costs and trade-offs the committee examined
The LFC briefing outlined distributional effects and the likely fiscal cost of various changes, though committee members did not take up specific legislation at the hearing. Economists and staffers warned that proposals to cut or remove the personal income tax would require replacing lost revenue or trimming spending on services that many residents rely on.
Lawmakers on both sides said the challenge is finding measures that reduce pressure on households while preserving the funding that supports education, health care and infrastructure.
- Proposals to phase out the personal income tax raise questions about how to backfill revenue.
- Alternatives discussed include targeted tax credits, minimum-wage increases and child tax credit expansions.
- Analysts emphasized distributional impacts — who gains and who may lose under each option.
What comes next
With the general election weeks away, tax policy has become a campaign argument as well as a legislative priority. The LFC’s work provides lawmakers with modeled outcomes they can use to craft bills, but any significant change would require agreement within the Legislature and careful attention to implementation and cost.
Lawmakers indicated they will continue to scrutinize the LFC data as proposals are refined. For now, the committee hearing served mostly to frame the debate: whether to pursue broad tax reductions, which could shift the fiscal balance, or to adopt targeted measures intended to help the most vulnerable households.
| Proposal | Primary goal | Raised concerns |
|---|---|---|
| Phase out personal income tax (Gregg Hull) | Lower tax burden broadly; prioritize lower-income earners | Potential loss of state revenue; unclear distributional benefits for lowest-income residents |
| Raise minimum wage; expand child tax credit (Deb Halaand) | Increase income for low-wage workers and families with children | Cost to state budget depends on scale; affects employers and program eligibility |
As the Legislature and campaigns proceed, New Mexicans are likely to hear more detailed proposals and fiscal estimates. Lawmakers said they want to strike a balance: policies that help households now without undermining long-term state priorities.
Reported from the state Capitol.
