New Mexico lawmakers debate repeal of Social Security tax for seniors

In a recent meeting of the New Mexico Legislature's House Taxation and Revenue Committee, lawmakers engaged in a significant discussion regarding tax credits for families adopting special needs children and the potential repeal of the state tax on Social Security benefits. These topics reflect ongoing efforts to support vulnerable populations and stimulate economic growth in the state.

The committee reviewed an amendment aimed at reinstating the definition of "special needs child" in state law, which had been removed in earlier legislation. Representative Duncan, who was filling in for the bill's primary sponsor, emphasized the importance of this definition in ensuring that families are incentivized to adopt children with special needs. Jim Jackson from the Disability Coalition supported the amendment, highlighting concerns that previous changes could discourage adoptions. The amendment was ultimately passed, with lawmakers recognizing the fiscal implications of providing additional tax credits for families adopting special needs children, estimated to cost between $9.2 million and $19.2 million annually.

Representative Terrazas pointed out the pressing need for such measures, noting that approximately 2,000 children remain in foster care, with only about 300 adoptions occurring each year. The committee members expressed a shared commitment to finding ways to support these families, acknowledging that investing in adoption could reduce future costs associated with juvenile services and incarceration.

In a separate discussion, lawmakers considered a proposal to eliminate the state tax on Social Security benefits, a move that would align New Mexico with the majority of states that do not tax these benefits. Representative Sena Cortez and Representative Brown presented the bill, arguing that taxing Social Security is a form of double taxation on income that has already been taxed during a worker's career. They emphasized the financial strain on seniors and the potential economic benefits of allowing retirees to keep more of their income, which could stimulate local economies.

The fiscal impact of repealing the Social Security tax was estimated at approximately $33 million annually, a figure that some lawmakers argued is manageable within the state's overall budget of $13.6 billion. The discussion highlighted the need for New Mexico to remain competitive in attracting retirees, as many individuals consider tax policies when deciding where to settle in retirement.

As the committee concluded its discussions, the focus on supporting families and vulnerable populations through tax policy was clear. The amendments and proposals discussed reflect a broader commitment to fostering a supportive environment for adoption and ensuring that seniors can maintain their financial stability in retirement. The committee plans to revisit these topics in future sessions, indicating that the conversation around these critical issues will continue.