Tax burden affects location choices

In a recently released report by the Rio Grande Foundation, the 10 most populated cities of New Mexico were ranked according to their relative tax burdens.

The study focused primarily on the property tax and gross receipts tax rates for Albuquerque, Alamogordo, Carlsbad, Clovis, Farmington, Hobbs, Las Cruces, Rio Rancho, Roswell and Santa Fe.

The report provides a useful picture of the relative tax burden citizens experience in the various municipalities across New Mexico and the trends of those cities when compared to the other editions of the report the Foundation has released years before.

Municipalities are in constant competition with one another and it is important to take a step back and examine the tax environment of various localities to ensure one's city remains competitive.

Location decisions can dramatically impact what an individual pays to the government. The old adage that taxes redistribute people holds true when individuals begin voting with their feet.

The tax burdens of New Mexico's largest municipalities have been fairly consistent relative to one another over recent years, but the general trend is toward higher gross receipts taxes and fluctuating property tax rates.

According to the latest report, Clovis has the second-highest gross receipts tax rate among the major cities. The rate increased by .375 percentage points to 7.8125 percent from 7.4375 percent (2009).

However, property tax rates in Clovis did slightly decrease by .315 mills to 24.132 mills (or $24.132 per $1,000 of a property's net taxable value, which is one third of the total assessed value) from 24.447 mills (2009).

Largely due to an increase in per capita personal income and the slight reduction in property taxes, the city has a tax burden of 6.15 percent and is just behind Carlsbad and Hobbs as the third-most tax-friendly city of the report.

Overall, Clovis tax rates have remained fairly constant relative to the other major cities. Albuquerque still holds the title as the least tax-friendly city in New Mexico.

Albuquerque currently has the highest property tax rate among the largest cities of New Mexico at a mill rate of 41.203 ($41.203 per $1,000).

Albuquerque's tax burden as a percent of income is 10.23 percent. Comparatively, the city of Hobbs (a city with a similar per capita personal income as Albuquerque) has a much lighter tax burden of 5.80 percent.

The cities of Carlsbad and Hobbs continue to have the lowest burdens for the average taxpayer.

Albuquerque, Rio Rancho, Las Cruces and Santa Fe continue to have the heaviest tax burdens in New Mexico. They were the only cities to see rate increases for both gross receipts tax and property tax (not including statewide increases) since the 2009 edition of this report.

The other cities of the study have seen reductions in property tax rates since the earlier editions.

Regardless of what happens in Washington, D.C. or Santa Fe, local governments do have the power to stimulate their local economies by adopting leaner government and less burdensome tax policies.

The study can be found on the Rio Grande Foundation website at riograndefoundation.org.

Hopefully it can demonstrate how much of an impact local governments can have on creating a tax-friendly environment for their citizens.

Marcos Portillo is a policy analyst with New Mexico's Rio Grande Foundation. Contact him at:

marcosportillo@me.com

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