Following is a guest commentary from Dave Coulie, Captain, USAF (Ret) and Max Johnson, Lt Colonel , NMNG (Ret):
As a 40+ year resident of our state I was saddened to read in the July 5, 2018 Albuquerque Journal that between 2011 and 2016 an unprecedented exodus of New Mexican’s left the Land of Enchantment in search of jobs and homes.
Economists estimate 42,000 more people exited the state then entered it. This includes military retirees and their families leaving for other states where their retired pay is not taxed. This is an alarming “brain drain” since the majority exiting the state were college educated including 17,000 with bachelor’s degrees.
It struck home to me because this number that left could have been significantly tempered had we years ago taken action to provide incentives to military retirees and their families to come to New Mexico.
I am writing well in advance of the 2019, 60 Day, session to ask your support to recommend legislation that will finally move New Mexico from the lowest ranks of best places for military retirees .A current (2018) “Wallet Hub” survey, link enclosed, ranks our state a dismal 47th? in this category. That’s a self-inflicted wound.
I retired from the Air Force in 1983 following a 23-year career. I remained in New Mexico and was employed here in the aerospace industry for an additional 23 years. I raised a family here and have two sons and three grandchildren living, working or attending school in New Mexico. Military retirees most often find good jobs, pay taxes, and contribute to the State’s economy in numerous ways.
Most of my colleagues leaving military service in New Mexico, including many who were from New Mexico, opted to retire in Florida or Texas or elsewhere for tax reasons. The benefits of keeping or bringing these retirees to New Mexico is evident.
Each year approximately 150,000 men and women leave military service. Approximately 50,000 are military retirees or qualify for retiree pay.
The average military retirement pay is $36k. Seventy-two percent of retirees are enlisted and 28 percent commissioned. They come to a state largely “unburdened” in that they have a decent pension, good health care benefits, great skills, and many are inclined to be entrepreneurs and business owners.
According to the US Small Business Administration one in 10 small businesses in the U.S. is veteran owned and retired service members are 45% more likely than those without any active duty military service to be self employed.
This annual retiree pay bundle amounts to $50 Billion dollars that is going to be spent where ever the retirees decide to settle. Many would like to come to NM but do not because of tax treatment.
These military retirees are seeking a place to settle, plant roots, buy homes, vehicles, appliances, etc… Many start a second career and, as noted, in many cases they will start a business. Uncle Sam will move them without cost to most places in the Country.
They bring unparalleled skills honed over a 20+ year career, Medical, Engineering, IT, Teachers, etc…. They are at the top of their experiential level. Most all are proven managers, supervisors, and leaders. Give them an incentive and they will remain in, or come to, New Mexico.
Eighteen States currently provide a 100% income tax exemption to military retirees. Nine other states have no income tax. That’s 27 states that many military retirees will look at before considering New Mexico.
Many military retirees want to come to, or stay in, New Mexico. Many have served at our military bases, and they know we have great quality of life, a super climate, new business assistance, a great veteran service organization and many other attractions. They also know that they can get in-state tuition rates at NM schools for their Post 9-11 GI Bill benefits that are valued at more than $55K per person.
New Mexico’s current 20,000 military retirees are responsible for approximately $1.5 billion dollars flowing in to the state’s economy (derived from pensions, second career jobs, social security, property and GRT taxes, health benefits, and new jobs created in the state).
It’s commonly accepted that every million dollars of Federal Transfer Funds coming to the state creates 10 – 12 new jobs. For every 2.4 new retirees one new job is created. Also consider that for every new job created, that’s one less person on the state’s unemployment (and maybe welfare) rolls. Another cogent plus is that attracting and retaining more military retirees could help ameliorate the financial peaks and valleys inherent in our oil and natural gas revenues.
I respectfully request your support to call for legislation to finally provide a Personal Income Tax (PIT) exemption to the pay of military retirees and their widowed spouses. Over the past 10 years both houses of the NM legislature have unanimously approved such legislation but never in the same session. Most often the reluctance to approve was attributed to the initial financial impact of the exemption.
Given the considerably brighter financial prospect for the coming year(s) the timing is right to approve this exemption and give it a chance to prove the ROI inherent in the initiative that has been proven in many other states.
Thank you for your consideration and your service to our State.
Dave Coulie, Captain, USAF (Ret)
Max Johnson, Lt Colonel , NMNG (Ret)
The arguments raised by these two retired military are points worth considering.
The one thing I cannot figure out is why does the federal government still tax Social Security retirement benefits as regular income when you start to receive them.
When you start to draw Social Security, they ask how much do you want to withhold for federal tax purposes and you can withhold as much as 13%.
The feds supposedly held on to all your money while you worked for 36 years having the benefit of the use of your money and then taxes you on it once you draw on it at retirement when you are suppose to be in a lower tax bracket.
And you wonder why no one saves that much for retirement.