Governor surprises with sweeping line-item vetoes in tax bill
On Thursday, Democrat Gov. Michelle Lujan Grisham delivered New Mexicans a major surprise by vetoing major portions of the Democrats’ tax package, H.B. 547, which is seen as a big win for fiscally responsible legislators.
According to one report, Lujan Grisham “struck from the bill a phased-in reduction of the tax New Mexico consumers pay on most goods and services, a 20% alcohol tax increase, an electric vehicle tax credit and changes to the state’s personal income tax system aimed at benefiting low-income residents.”
The far-left enviro-Marxist group the Rio Grande Sierra Club whined on Twitter following the veto of the electric vehicle tax credits, “We are incredibly disappointed to see the [governor] line item veto the climate tax credits in the comprehensive package. This is a climate emergency and merits emergency action.”
The governor also vetoed a 25% tax on cigars, which lawmakers argued would make a $10.00 cigar $12.50, creating a “black market” for the products by bringing them in from other states, as Rep. John Block (R-Alamogordo) noted.
Portions of the bill that remain intact include $500 one-time tax rebates for single filers and $1,000 for married, as well as an expanded child income tax credit of up to $600 per child.
A fiscally irresponsible measure left in the bill includes additional film production tax credits, which critics argue will mostly benefit large production houses out-of-state that will hire temporary workers in New Mexico while continuing to keep post-production out-of-state in the Los Angeles area.
Another bad portion of the bill that she vetoed is a reduction of capital gains deductions. According to KRQE 13, “Currently, New Mexico allows taxpayers to claim a deduction of up to $1,000 or 40% of the profit of a long-term asset sold. In other words, if you sell stock and make a profit of $10,000 on it, you only have to pay state income tax on 60% (or $6,000) of that profit,” The outlet added that “the capital gains deduction for non-business-related personal sales would be capped at $2,500. In other words, if you sold the same amount of stock as given in the example above, you would have to pay state income tax on 75% (or $7,500) of the profit.”
“And for business-related sales, capital gains deductions would be capped at 20% of the profit, rather than the current 40%. With a lower cap, the change would presumably help the state generate more tax revenue, while potentially costing some businesses more money by limiting the dollar value of their deduction.” With the measure no longer being in the bill, it is a relief for New Mexico business owners and those who sell assets.
A provision Lujan Grisham struck from the bill, despite previously advocating for it, was a gross receipts tax deduction from 4.875% to 4.375%. She vetoed it.
The governor wrote in her veto message, “Given the unpredictable nature of the economy and our state’s reliance on oil and gas revenues, I am not confident this package is fiscally responsible.”
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