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Sometimes my friends on the right get a little tiresome with the continuing litany that government is bad. That isn’t entirely true. Government does do some good stuff beyond the basic missions of education, health care, public safety and infrastructure.
Nor is it true that when government does something good, such as cut taxes, all is sweetness and light. Here I’m referring to the current argument from Paul Gessing of the Rio Grande Foundation that the Richardson tax cuts explain New Mexico’s climb in state per capita income ranks the past few years.
(Disclosure: A grant obtained by the Rio Grande Foundation paid for operating the now-defunct print version of Capital Report New Mexico in 2009 and 2010. I was editor and publisher of Capitol Report and appreciate the support.)
Nationally, I buy the argument that if taxes are cut, the economy grows and even more tax revenue results. For New Mexico, I don’t think it’s quite that simple.
To start, after three legislative sessions, according to analysis at the time from the Legislative Council Service and my arithmetic, Richardson raised taxes (or withdrew promises to lower them) by a cumulative tune $762 million. Tax cuts totaled $567.6 million, making Richardson’s overall tax record one of increases with a three-year $194.5 million total.
Richardson also did some clever things that pulled money from municipalities.
The offset of the food tax cut was one. Escalation of local gross receipts taxes resulted. Eight percent rates are found throughout the state.
In any case, taxes aren’t part of personal income. Given that per capita income is personal income divided by population, I don’t see tax changes affecting per capita income rankings. Gessing reports a correlation, I believe. Nationally, gross domestic product, the total of economic activity, measures tax change effects. For states, the measure might be gross state product.
As for the evils of government, some huge pieces of the state’s “basic industry” (in economic developer’s jargon) come from the government.
These institutions get buried in the continuing rhetoric about “depending” on “The Government,” as if “The Government” is one thing and one check is written to New Mexico to pay for everything.
While our Air Force bases — Cannon and Holloman — are one thing, so far as I know, our research institutions are not. Kirtland Air Force Base is a highly unusual beast, a multi-mission facility with everything from aerospace studies, para-rescue training and special operations. That’s a bunch of checks.
Sure the core mission of our large research institutions — Sandia, Los Alamos and White Sands — is national defense with emphasis on nuclear. But there is much more.
In Santa Fe, the various Museums of New Mexico are a central element in making Santa Fe a world-class destination. State government operates the museums.
The History Museum, the Palace of the Governors, the Art Museum, the Folk Art Museum, and the Indian Arts Museum reek of excellence.
Finally there is this whole notion that we “depend” on government. Think about it.
An image develops: the New Mexico civic and economic polity lying back, stoned out of its collective gourd with an IV directly injecting those government dollars.
These institutions are a rich environment littered with world-class people.
Former LANL director Siegfried Hecker is today’s headline-grabbing example. Hecker, a really smart and enormously decent man (from my limited acquaintance some years ago), is the world’s expert on North Korean nuclear activity.
On the museum side, the Art Museum is an important player in photography, one art area about which I know a little.
These institutions draw other top-level entities such as the O’Keeffe Museum and the Santa Fe Institute.
It just so happens the government pays the bills.
NM News Services