Protecting Social Security used to be a bedrock principle of the Democratic party. As recently as 2010, on the 75th anniversary of the signing of the Social Security Act by President Franklin Delano Roosevelt, President Obama said, “We have an obligation to keep that promise, to safeguard Social Security for our seniors, people with disabilities, and all Americans – today, tomorrow, and forever.”
But for New Mexico Democrats in 2020, Social Security is just one more thing to continue to tax.
All of the undersigned senators wish to express our support for repealing New Mexico’s tax on Social Security income, as proposed in House Bill 29 (Representative Cathrynn Brown), House Bill 130 (Representative Gail Armstrong) , and Senate Bill 81 (Senator Jim White).
We are extremely disappointed that Senate Bill 81 has been sitting in the Senate Corporations Committee since the first day of the session without receiving a hearing. We are equally disappointed that the Speaker of the House voted to kill House Bill 29 in the House Taxation and Revenue Committee after expressing his “100% support” in a press conference only a week earlier. If Republicans held the majority, these bills would already be on your desk.
The excuse that we don’t have the money to repeal this tax rings especially hollow in a year where there was nearly $800 million of new money, and after increasing state government spending last year by around $700 million last year while also raising taxes.
New Mexico continues to be out of step with the tax policy of the vast majority of other states. Only 13 states tax Social Security benefits at all. Of those 13, New Mexico’s tax is the second harshest. This tax puts our state at the bottom of lists of “best states to retire” and drives away seniors who might otherwise retire here and help expand our job base. (As Yahoo Finance put it in telling retirees to steer clear of New Mexico, “Though retirement represents the end of one’s career, it doesn’t have to be the end of financial security, nor should it mean a lower quality of life.”)
This tax is particularly egregious because Social Security is taxed twice. State income tax is levied on the amount contributed to an individual’s Social Security account, and then income tax is levied on the benefit received years later. Imagine that after you paid all your bills for the month you had some money left and it was placed into a savings account. Later, you take it out of savings and are told you must pay income tax on the interest and also on the amount you put in years earlier. This double taxation is wrong and should end.
No other retirement program is taxed twice. Contributions to voluntary plans such as a Traditional IRA, an SEP IRA, a ROTH IRA, or a 401k, PERA or ERB are all taxed just once. They are exempt from income tax when the contribution is made – except for ROTH- and taxed when the benefit is received – except for ROTH. They are all taxed just once, either when the money goes in or the money goes out. Similarly, contributions to Medicare are taxed before being deducted from total pay, but not taxed when you receive the benefit. Other public benefits, like Medicaid, SNAP, and TANF are not taxed at all.
More than 55,000 children are being raised by their grandparents in New Mexico. These seniors must balance providing for their grandchildren against outliving their savings. We can reduce that burden and enhance the lives of those children by repealing this tax that never should have been enacted in the first place.
Senate Minority Leader Stuart Ingle
Senate Minority Whip Bill Payne
Sen. Greg Baca
Sen. Craig Brandt
Sen. Bill Burt
Sen. Greg Fulfer
Sen. Candance Gould
Sen. Ron Griggs
Sen. Gay Kernan
Sen. Mark Moores
Sen. Steven Neville
Sen. Cliff Pirtle
Sen. Sander Rue
Sen. Bill Sharer
Sen. Jim White
Sen. Pat Woods
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