Demographics and Employment in New Mexico

New Mexico has a population of approximately 2.1 million people, making it the most ethnically diverse state in the region. The Hispanic population is the majority, and Native Americans constitute the third-largest ethnic group in the United States.

In 2022, around 776,000 individuals in New Mexico received W-2 forms, indicating earned income and tax withholdings. Of this workforce, approximately 183,000 were employed by city, county, state, or federal governments, while 150,000 worked in healthcare and about 55,000 in education. This totals around 388,000 individuals—approximately 49% of those with reported income—who work in sectors heavily reliant on tax revenue.

New Mexico also has about 850,000 residents enrolled in Medicaid, which represents nearly 40% of the population, one of the highest rates in the nation. In contrast, around 413,000 individuals qualify for Medicare, primarily those aged 65 and older. Together, these groups account for approximately 60% of New Mexico’s population.

Comparative Economic Landscape with Utah

When comparing New Mexico’s economic indicators with those of Utah, we find significant disparities. Utah’s GDP was approximately $248 billion in 2022, while New Mexico’s was about $122 billion.

In Utah, with a population of 3.2 million, approximately 458,000 are enrolled in Medicaid—about 14% of the state’s population—compared to New Mexico’s 40%. Utah’s workforce is dominated by sectors such as technology, finance, and construction, employing 236,000 in professional services and 151,000 in leisure and hospitality. Government employment in Utah includes around 176,000 individuals, which represents a smaller percentage of total employment compared to New Mexico.

Legislative Composition and Professional Backgrounds

A look at the occupational backgrounds of the legislators in both states further illustrates the differences in governance:

New Mexico State Legislature (2023)

• • Total Members: 112 (42 Senators, 70 House Members)
  • Occupational Backgrounds:
    • Retired Individuals: 30%
    • Legal Profession: 23%
    • Education: 15%
    • Healthcare: 10%
    • Business: 10%
    • Public Service: 5%
    • Other Professions: 7%

Utah State Legislature (2023)

• • Total Members: 104 (29 Senators, 75 House Members)
  • Occupational Backgrounds:
    • Business and Finance: 30%
    • Education: 25%
    • Healthcare: 15%
    • Law: 15%
    • Public Service: 5%
    • Other Professions: 10%

Overview of Gross Receipts Tax in New Mexico

Gross Receipts Tax Structure:

New Mexico employs a gross receipts tax instead of a traditional sales tax. This tax is applied at multiple points in the supply chain, which is known as “pyramiding.” As a result, the same transaction can be taxed multiple times as goods or services pass through different stages of production and distribution (NM Economic Dev).

Economic Impact:

This GRT structure tends to disproportionately affect low- and middle-income families, as it is a regressive tax. The tax burden is higher on those with lower incomes, making it less favorable compared to states that rely more on income tax systems (Stacker).

Comparison with Neighboring States

• • Arizona:
    Arizona has a sales tax that is generally lower than New Mexico’s GRT when considering the total effective tax rate, which minimizes pyramiding. Arizona also allows cities to impose their own sales taxes, leading to variable rates depending on the locality, but it typically avoids the complications associated with a GRT system (World Population Review).
    
    
  • Utah:
    Utah uses a sales tax as well, which also avoids the issues of pyramiding present in New Mexico’s GRT. Utah’s tax structure is considered more business-friendly, encouraging economic growth and attracting businesses. Utah has a lower overall state tax burden compared to New Mexico​(Stacker)​(World Population Review).
    
    
  • Colorado:
    Colorado also operates under a sales tax model with lower rates than New Mexico’s GRT. The state also emphasizes corporate income tax, which diversifies its revenue sources and reduces reliance on consumption-based taxes​(NM Economic Dev)​(World Population Review).
    
    
  • Oklahoma:
    Oklahoma has a combination of sales taxes and income taxes. Like New Mexico, it has a GRT, but it is structured differently and not as heavily relied upon for revenue. The overall tax burden is generally lower than in New Mexico​(Stacker)​(NM Economic Dev).
    
    
  • Texas:
    Texas does not have a state income tax and relies heavily on property taxes and sales taxes. Texas’s effective tax rates are often lower than those in New Mexico, making it an attractive destination for businesses and individuals (NM Economic Dev).

How Can We Build A Sustainable Economic Future for New Mexico?

New Mexico faces significant economic challenges that necessitate a shift in focus toward enhancing economic development.

• The current legislature, regardless of party affiliation, appears underrepresented in terms of diverse occupational backgrounds, particularly in sectors that drive economic growth.
• New Mexico’s overreliance on gross receipts tax revenue is regressive and burdensome for its predominantly low-income population.

This heavy reliance makes the state less attractive for professional services, construction, and manufacturing compared to neighboring states like Arizona, Utah, Colorado, Oklahoma, and Texas, which utilize corporate income tax systems. Additionally, the high cost of housing in New Mexico, exacerbated by gross receipts tax pyramiding, further complicates the economic landscape.

Addressing these challenges through legislative reform and a reevaluation of tax structures could pave the way for a more sustainable economic future for New Mexico.