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Even as New Mexico continues to get low rankings in all sorts of economic and social measures, it might make sense to take stock of our resources that have not been used in aiding the state’s economy.
Most readers do not realize that New Mexico has America’s third-largest sovereign wealth fund, according to the Sovereign Wealth Fund Institute, an organization that monitors these government managed investment funds.
Coming in at slightly more than $17 billion in size, it’s also the 31st largest such fund in the world.
The Institute also ranks fund managers on how much integrity and transparency they exhibit in their fiduciary duties; New Mexico actually scores pretty high in this category as well.
That’s the good news. The bad news is the New Mexico Permanent Fund can only be used to invest in public education. But what if there was an opportunity to take a one-time piece of the fund, say 15 percent of the principle, and apply it over a four- to five-year New Mexico budget cycle, with some additional changes in the gross receipts tax, and then cut all New Mexico income taxes to zero, and do so on a permanent, sustaining basis?
Then do it from that point forward.
Like Tennessee, where all earned income is state tax-free, New Mexico would still tax “portfolio income” (interest, dividends, etc.), and there would still be a tax on business income, but these two would be simplified into a single flat rate. The Tax Foundation rates Tennessee’s business tax code as the 15th best in America.
New Mexico seriously needs outside investment in a whole number of different categories.
Our workforce metrics, especially in Northern New Mexico, are badly skewed in low-wage, low value-added classifications like retail, tourism, lodging, government and tribal services, gambling and the building of trophy homes for absentee homeowners.
It’s high time to get realistic about our shortcomings; bright kids in the region will have to leave the area to realize their full potential unless something big and bold is not done.
Unfortunately, New Mexico was recently listed as the single worst, poverty-prone “Death Spiral State” by Forbes Magazine (Nov. 25, 2012), with a “taker-to-maker” ratio of over 150 percent, comprised of subsidy and welfare recipients, government employees and pensioners, measured to non-government workers paying the state taxes.
Throwing more state money and government programs at the endemic problem of New Mexico poverty is as fruitless as my conservative colleagues who have been repeating the “right-to-work” mantra for the last 30-plus years.
In as primitive an economy as New Mexico’s, that will do more harm than good.
We need a simplified, advanced pro-business tax system that will attract major outside investment to New Mexico, while preserving the current safeguards for our less fortunate.
Continuing the rigid rules about using America’s 3rd largest wealth fund in the midst of our widespread poverty is simply nuts.
William Sellers is a venture coach and vice-president of the Los Alamos Entrepreneurs Network. He is best reached via email at firstname.lastname@example.org.