The Carlsbad City Council is taking a symbolic stand against taxing Social Security income.
The City Council voted unanimously to repeal New Mexico’s income tax on Social Security, a move that has no legal force.
New Mexico is one of 13 states to tax Social Security income, and its tax is the second largest in the country, Carlsbad Mayor Dale Janway told The Center Square, citing an AARP report.
“People already pay a tax when Social Security benefits are set aside throughout their working lives,” Janway said. “Taxing Social Security benefits is an unfair double tax.”
The mayor cited a USA Today report that 13.3% of retirement-age New Mexicans live below poverty, which is the highest rate in the country.
“Only 32.2% of New Mexicans 65 or older have any type of additional retirement income, which is one of the lowest rates in the country,” he said. “The current tax on Social Security benefits only heightens this problem.”
Janway noted that the tight budget that seniors face even before having their benefit taxed.
“Social Security is sometimes the only income these seniors have, and the average benefit is a little less than $14,000, and if you take the average annual cost of food, housing, health care for older Americans, it’s about $28,000,” he said.
The council’s resolution may have no bite, but it provides plenty of bark.
“While this resolution has no formal authority, it will provide representative grounds and our legislators with additional evidence of community support during the upcoming legislative session,” Janway said.
According to Janway, six bills were introduced during 2020’s legislative session that attempted to address this, but they did not make it through the process.
The issue has a lot of residents’ attention, however. Think New Mexico reported 9,600 emails sent out in support of the repeal, Janway said.
“We’re going to work individually with the legislators and make sure they really understand the problem and what it does to seniors, and what it’s actually doing to all of New Mexico,” he said.
Rep. Cathrynn Brown, R-Carlsbad, promised to introduce a similar bill during the 2021 legislative session.
Fairness isn’t the only issue at stake here. Attracting senior citizens can also be an economic development tool, and New Mexico is missing out, Janway said.
“New Mexico’s climate is perfect for retirement,” Carlsbad Public Information Officer Kyle Marksteiner told The Center Square. “It’s a beautiful state, and it’s a warm climate, and logically, all other things aside, should be a wonderful place to retire, but this is looming over that, and we believe it is interfering with a lot of decisions when people are trying to decide where to retire, whether to come to New Mexico or go somewhere else.”
The Social Security income tax is hurting New Mexico’s standing on best states for retirement lists, Janway said.
“The need our seniors face is even greater this year due to the numerous financial stresses caused by COVID,” Janway said. “Repealing this unfair tax will allow more money to be circulated and also hopefully attract more retirees to New Mexico.”
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