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Child tax credits and state refunds remain central to New Mexico's anti-poverty strategy, advocates say
Summary
New Mexico Voices for Children briefed lawmakers on how refundable child and earned-income tax credits and other progressive revenue options have driven declines in child poverty measured by the SPM and recommended boosting state credits and progressive revenue tools as federal support changes.
Jacob Behill, chief legislative officer at New Mexico Voices for Children, told the Revenue Stabilization & Tax Policy interim committee that refundable tax credits remain among the most effective state tools to reduce child poverty and to stabilize family finances amid federal changes.
Behill outlined two poverty measures and their policy implications: the Official Poverty Measure (OPM), which is largely wage-based and used for program eligibility, and the Supplemental Poverty Measure (SPM), which accounts for taxes, noncash benefits and necessary expenses and better captures the effect of refundable credits and supports.
He said the temporary expansion of the federal child tax credit during the pandemic had a large effect: "Over 450,000 kids, that's 95% of the child population, benefited from the expansion, lifting an additional 32,000 children out of poverty," Behill said, and he argued state-level refundable credits helped New Mexico fare relatively better on the SPM than on the OPM.
Behill reviewed state progress: creation and enlargement of New Mexico's child tax credit and the working families tax credit (WFTC), roughly $350 million per year in targeted supports returned to families through tax changes, and about $1.7 billion in one-time rebates delivered in recent years. He said those measures improved effective tax rates across income quintiles and made the state's code more progressive.
Policy recommendations included increasing the state child tax credit amount (particularly for children under 6), raising the WFTC matching percentage above the current 25% of the federal EITC, exploring a higher bracket for very high earners, mandatory worldwide combined reporting for corporations, a real estate transfer tax on second/high-value homes, estate/inheritance taxes, reform of itemized deductions, and increasing royalty rates on state lands while ending oil and gas subsidies.
Committee members raised concerns and alternate emphases: several lawmakers emphasized job-training and education as long-term poverty remedies, some cautioned about cliff effects that can reduce work incentives when benefits phase out, and others queried the regressivity or business impacts of proposed revenue options. Behill said these recommendations are complementary and aimed to produce sustainable revenue to preserve and expand anti-poverty investments.
Next steps: Behill offered to provide fuller supporting data and reports to committee staff; no formal action was taken during the interim hearing.
