New Mexico has the Fifth Highest Tax Burden in the Nation for 2015

May 24, 2017

In Fiscal Year (FY) 2015, New Mexico collected $8.6 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average New Mexico taxpayer can afford this level of taxation.



Click here to view tax burden data by state, type of tax, and for years 1950 to 2015


As shown in Chart 1, New Mexico’s state and local tax burden (tax collections divided by private sector personal income) was the fifth highest in the nation for FY 2015 at 18.8 percent—or 31 percent above the national average of 14.4 percent.


Chart 1 New Mexico State and Local Tax Burden FY 2015.jpg


#NM #taxburden in FY 2015 was the 5th highest in nation at 18.8%— 31% above US average @keypolicydata #NMpol #NMleg (click to tweet)


As shown in Chart 2, New Mexico’s tax burden has increased over time by 65 percent to 18.8 percent in FY 2015 from 11.4 percent in FY 1950.


Chart 2 New Mexico Tax Burden by Type of Tax FY 1950 to 2015.JPG


#NM #taxburden has increased 65% between FY 1950 to 2015 to 18.8% from 11.4% @keypolicydata #NMpol #NMecon #NMleg (click to tweet)


Click here to view tax burden data by state, type of tax, and for years 1950 to 2015


As shown in Chart 3, New Mexico’s 18.8 percent tax burden is greater than these combined industries: retail trade (7.7 percent), construction (6.7 percent), manufacturing (3.4 percent), and utilities (1.1 percent).


Chart 3 New Mexico State and Local Tax Burden vs. Major Industry FY 2015.JPG


#NM #taxburden > combined industries: retail, construction, manufacturing, and utilities @keypolicydata #NMpol #NMleg (click to tweet)


New Mexico’s tax burden by type is one of extremes. One the positive side New Mexico has a low property tax burden (3.4 percent, 38th highest), individual income tax burden (3 percent, 34th highest). However, New Mexico has a very high sales tax burden (7.1 percent, 2nd highest), and all other taxes burden (4.8 percent, 6th highest).


New Mexico’s sales tax is actually a gross receipts tax meaning that it is levied on a very broad-based number of goods and services and that leads to tax pyramiding.  Tax pyramiding creates all kinds of very bad economic distortions (pdf) by imposing higher effective tax burdens on some industries, but not others—especially industries that are near the end of the value-added chain.


New Mexico does need to ditch the gross receipts tax, but at the same time increasing other taxes is not the answer either. The solution is to adopt a Business Flat Tax like the one I’ve proposed for New Hampshire (pdf).


Additionally, New Mexico allows their localities to levy an additional percentage over the state rate of 5.125 percent in 2017. According to the Tax Foundation, as of January 1, 2017, the combined state and local sales tax rate for New Mexico averages to 7.55 percent which is the 15th highest in the country.



Finally, New Mexico’s high all other taxes burden is due to the Severance Tax Permanent Fund which levies a 12.5 percent tax on coal, natural gas, oil, and other minerals. According to the New Mexico State Investment Council website:


“The Severance Tax Permanent Fund (STPF) was created by the New Mexico Legislature in 1973, as a way to save and invest the severance taxes not being used that year to bond capital projects.  The taxes originate from oil, gas and other natural resources as they were taken (severed) from the state.”


“Voters later approved constitutional protections for the STPF against legislative appropriation from the corpus of the fund, which coupled with investment returns, allowed the fund to grow.  The STPF annually distributes 4.7% of its 5-year average, or about $200 million per year to the state’s general fund.”


“Combined distributions from the Permanent Funds essentially deliver, on average, about $1000 in value annually for every household in New Mexico.  Without the distributions produced by these Funds every year, New Mexicans would face much higher taxes, a significant reduction in government services, or both.”


High severance taxes also pose another quandary in that they are generally considered by economist to be passed onto the consumer in the form of higher prices. As a result, much of the severance tax burden can be “exported” to the other 49 states. The tax burden analysis published by the Tax Foundation performs adjustments for this impact and ranks New Mexico as the 37th highest in the country with a tax burden of 8.7 percent of income in 2012.


While “tax exporting” is an important economic consideration, policymakers need to be aware of the size of tax collections relative to the private sector economy. Tax exporting may mean lower tax burdens in the short-run, tax exporting is not a costless transaction as it creates economic distortions in the long-run. As such, tax burdens estimates shown here at Key Policy Data and those published by the Tax Foundation are both useful to policymakers.


Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in New Mexico—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.


The New Mexico counties with the highest local government tax burden include:


  • Harding County, NM (15 percent)
  • Guadalupe County, NM (11.1 percent)
  • San Miguel County, NM (9.6 percent)
  • Hidalgo County, NM (9.6 percent)
  • McKinley County, NM (9.4 percent)
  • Rio Arriba County, NM (9.1 percent)
  • Luna County, NM (8.8 percent)
  • Colfax County, NM (8.8 percent)
  • Lea County, NM (8.8 percent)
  • Lincoln County, NM (8.5 percent)


The New Mexico counties with the lowest local government tax burden include:


  • Mora County, NM (1.9 percent)
  • Chaves County, NM (3.1 percent)
  • Roosevelt County, NM (3.6 percent)
  • Sandoval County, NM (3.8 percent)
  • Santa Fe County, NM (4.2 percent)
  • Valencia County, NM (4.4 percent)
  • Socorro County, NM (4.5 percent)
  • Cibola County, NM (4.5 percent)
  • Otero County, NM (4.6 percent)
  • San Juan County, NM (4.7 percent)


Chart 4 New Mexico Local Tax Burden by County FY 2015.JPG


Click here to view tax burden data by state, type of tax, and for years 1950 to 2015



Finally, don’t forget to watch our exclusive time-lapse video of state and local tax burdens over the last 65 years! See if your state has been above or below the national average?



Category: Tax Burdens

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.

blog comments powered by Disqus

Stay Up-To-Date on Your State's Key Policy Data - Economics, Politics, Demographics - by Joining Our Mailing List Today!

Check Out Our Unique Apps:

U.S. Capitol.jpg

Government Workforce

Tax Squeeze.jpg

Tax Burden

Strings Attached to Federal Dollars.jpg

Federal Tax and Spend

Hundred Dollar Bill.jpg

Cost of Living (COLI)



Measuring a Dollar.jpg

Federal Tax & COLI


Federal Pension

United States Office of Personnel Management Seal.jpg

Federal Payroll

Check out more

Stories from our

Media Partner:

Check Out All Posts For Your State:

Alabama.jpg  Alabama

Alaska.jpg  Alaska   

Arizona.jpg   Arizona 

Arkansas.jpg  Arkansas

California.jpg  California

Colorado.jpg  Colorado

Connecticut.jpg  Connecticut

 Delaware.jpg  Delaware

Florida.jpg  Florida

 Georgia.jpg  Georgia

Hawaii.jpg  Hawaii

  Idaho.jpg  Idaho

   Illinois.jpg  Illinois

   Indiana.jpg  Indiana

  Iowa.jpg  Iowa

  Kansas.jpg  Kansas

  Kentucky.jpg  Kentucky

   Louisiana.jpg  Louisiana

   Maine.jpg  Maine

  Maryland.jpg  Maryland

Massachusetts.jpg  Massachusetts

Michigan.jpg  Michigan

Minnesota.jpg  Minnesota

  Mississippi.jpg  Mississippi

Missouri.jpg  Missouri

Montana.jpg  Montana

Nebraska.jpg  Nebraska

Nevada.jpg  Nevada

New Hampshire.jpg  New Hampshire

New Jersey.jpg  New Jersey

New Mexico.jpg  New Mexico

New York.jpg  New York

North Carolina.jpg  North Carolina

North Dakota.jpg  North Dakota

Ohio.jpg  Ohio

Oklahoma.jpg  Oklahoma

Oregon.jpg  Oregon

Pennsylvania.jpg  Pennsylvania

Rhode Island.jpg  Rhode Island

South Carolina.jpg  South Carolina

South Dakota.jpg  South Dakota

Tennessee.jpg  Tennessee

Texas.jpg  Texas

Utah.jpg  Utah

Vermont.jpg  Vermont

Virginia.jpg  Virginia

Washington.jpg  Washington

West Virginia.jpg  West Virginia

Wisconsin.jpg  Wisconsin

Wyoming.jpg  Wyoming