![]() ![]() ![]() For example, imagine a proportional tax system in which everyone paid 10% of their income in taxes. This may sound like the most equitable option, but it does not take into account one’s ability to pay or minimize taxes on low-income households. Families with lower incomes spend a greater proportion of their income on sales taxes than do upper-income households, who can save or invest some of their earnings because they do not need to spend it all to make ends meet.Ī proportional system in one in which everyone pays the same percentage of their income in taxes. Sales and excise taxes tend to be regressive because the lower a person’s income, the higher the share that must be spent on day-to-day necessities – such as gas, utilities, and non-food groceries – most of which are taxed. But first, a brief explanation of the above terms:Ī regressive tax means those with lower incomes pay a higher share of their income in these taxes. These graphics divide New Mexico tax filers by income levels to show what share of their income each group pays in state and local taxes. Taxes can either be regressive, proportional or progressive depending on who they impact the most. However, the truth is that those with low and middle incomes do pay a higher share of their income in taxes than the rich in New Mexico. Most people agree that low-income households shouldn’t pay a higher percentage of their income in taxes than the rich. 2023 3 pages pdf)įor more on the state’s tax system see our Guide to New Mexico’s Tax System (updated March 2021) ![]()
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