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Sen. Sher pitches sweeping '2% tax' to replace hundreds of credits and simplify New Mexico tax code
Summary
Sen. Sher presented a comprehensive tax‑reform plan that would replace many exemptions, credits and deductions with a uniform 2% tax on transactions (excluding gifts). He argued the change simplifies the code while being revenue neutral; staff flagged uncertainty in the fiscal estimate (±$300M) and committee members asked for more analysis and local‑impact clarifications.
Sen. Sher delivered an extended presentation arguing for a fundamental simplification of New Mexico’s tax system by adopting a uniform 2% tax on taxable transactions and eliminating hundreds of special provisions.
Sher framed the proposal as a revenue‑neutral reshuffle rather than a tax increase: under his design, nearly all transactions would be taxed at 2% (gifts excepted), and many current credits, exemptions and deductions would be repealed. He said the state currently has roughly 356 credits, exemptions and deductions, which complicate the code and create opportunities for targeted carve‑outs. “If a dollar changes hands, 2 pennies comes to the state,” Sher said when describing the basic mechanism.
Sher and staff described the approach as simplifying compliance and making New Mexico more transparent and easier to analyze for businesses considering investment. They estimated the plan could be roughly revenue neutral but cautioned staff uncertainty; an adviser cited a possible plus/minus $300 million range because exemptions (particularly agricultural exemptions) and special‑treatment items are hard to map precisely.
Committee members welcomed the ambition but asked pointed questions about local government impacts, SNAP recipients and how the plan interacts with existing municipal taxing authority. Sher acknowledged local governments could still impose local taxes and that cities with high local rates might respond differently. Several members said the plan would require substantial fiscal modeling and public messaging.
No formal motion was offered; the presentation was taken as a policy proposal to be further studied and modeled.
Next steps: committee staff and sponsors flagged the need for a far more detailed fiscal impact report and modeling of distributional effects before any bill is filed.
