The Associated Press
SANTA FE — A proposal to speed up the phase-in of personal income tax cuts was derailed Thursday by a House committee on a party-line vote.
The measure by Rep. Justine Fox-Young, R-Albuquerque, would lower the top marginal tax rate to 4.9 percent this year rather than waiting until 2008 under the schedule in current law.
New Mexico is enjoying a large revenue windfall and Fox-Young said surplus money should be used to provide faster tax relief for New Mexicans. The reductions will cost about $30 million in the current fiscal year and $60 million in the next budget year.
“It’s an opportunity to put the money back into the hands of taxpayers,” Fox-Young told the Consumer and Public Affairs Committee.
Rep. Al Parks, D-Albuquerque, said he favored the current phase-in schedule, contending it was fiscally prudent to gradually cut the income tax.
The committee scuttled the legislation on a 4-3 vote, with Democrats voting to “table” the bill.
Lawmakers can effectively kill a measure by setting it aside, which is a procedural move called tabling.
Under current law, the top income tax rate is 5.3 percent and will remain there in 2007 and then drop to 4.9 percent in 2008.
The top rate applies to taxable income over $24,000 for married couples filing joint returns and taxable income over $16,000 for single tax filers.
In 2003, Gov. Bill Richardson and lawmakers agreed on a five-year, $360 million tax cut package to lower the top marginal tax rate from 8.2 percent to 4.9 percent and provide a 50 percent deduction for capital gains.
The top tax rate originally was to drop to 4.9 percent in the 2007 tax year, but a law enacted last year delayed that to 2008.
The tax cut acceleration measure is HB85.