For baby boomers involved in homebuilding, legislation to eliminate double-taxing Social Security payments is personal.

For many, if not most, those Social Security checks may be all we get.

Social Security was never intended as a sole source of retirement income. When unions were strong and people stayed with one company their entire working lives, generous pensions were topped off by Social Security. For government workers, a huge employment sector in New Mexico, it’s still that way.

Homes built in Santa Fe and New Mexico are typically worked on by companies from more than a dozen different trades, almost all with fewer than 10 employees. There are no unions. There are no pensions. It’s reality for the entry-level laborer and often true for the general contractor at the top of the multibusiness pyramid that is modern homebuilding.

You won’t hear many builders whining about the raw deal they got. They all made their choices, even if they felt they didn’t have a lot of choices to begin with. Most wait to collect until they hit 67 because they can get their full allotment and keep working, if they’re lucky. There are many general contractors well north of 67 still working in Santa Fe because they have no choice.

Sooner or later, they’ll either drop dead on a job site or be physically or mentally unable to earn income, and all that will be left will be Social Security. Today, New Mexico is one of only 13 states taxing Social Security entitlements with the second-most draconian rules of any of the 13.

One of the poorest states in the nation imposing a tax on the pittance that is Social Security. A state with more seniors trying to exist on Social Security, and therefore living in poverty, than any other besides Mississippi.

What are we thinking?

Everyone in New Mexico gets taxed on their income by the feds and the state before Social Security is deducted from our paychecks, which means when New Mexico taxes Social Security as income, it is double-taxing what we already paid into, which is why only 13 states still have this unfair practice.

That is why Think New Mexico Executive Director Fred Nathan and his local think tank are focusing on retirement security in this 30-day session. Think New Mexico is the rare lobbying entity that has no constituency other than ideas.

With very few exceptions, what Think New Mexico puts it bipartisan mind to achieving, it achieves. But it always comes down to the votes in the Roundhouse.

Multiple bills were introduced this session to end the unfair taxation — two in the House (both were tabled Friday) and at least two in the Senate. All have the backing of Think New Mexico, but the best one is Senate Bill 81, introduced by two Republicans and two Democrats, including Liz Stefanics, D-Cerrillos. It simply abolishes the tax altogether — no exceptions, no exemptions.

Sen. John Arthur Smith, chairman of the Senate Finance Committee, is likely to see the price tag of foregone income to the state to the tune of $75 million. But our state needs to do the right thing. The tax also keeps our state from attracting high-net-worth retirees, something that keeps we aging boomer builders in the business of building until we no longer can.

Kim Shanahan is a longtime Santa Fe builder and former executive officer of the Santa Fe Area Home Builders Association.

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(4) comments

Dagg Nabbitt

I didn't start working for the government until I was 35 years old, so my retirement includes federal pension and a small Social Security check. The government already takes a huge chunk out of my Social Security check due to the "Windfall" provision on top of the income tax they levy against it. Most federal employees retiring in the near future will be on the FERS retirement system which is based on Social Security and TSP savings instead of the old CSRS pension I'm on. Your tax on Social Security is a horrible idea. We are looking for a place to move to. Santa Fe looks gorgeous, but I can't imagine paying Medicare, federal income taxes, and state income taxes on my tiny Social Security check. The taxes might be enough to wipe out the whole check. That check represents 18 years of paying into the system, and I didn't start withdrawing until I was 70 years old. It's just not right that all of it would go to taxes. Hopefully, you will get this figured out before too long.

Frank Chambers

I enjoy your columns, but there is an error today. Like my wife, who spent her career with the Cooperative Extension Service, many Federal government employees have Civil Service Retirement, not Social Security.

Richard Reinders

70% of the employed in the state work for some form of government or another, and the builders have never been protected from tax or even the burden of affordable housing at a loss to their income . I am not sure what is a harsher tax SS or affordable housing on a builder.

Dagg Nabbitt

I recently retired. I was one of the rare ones who refused to switch to FERS when it was first offered. Everyone I know who has recently retired and who will retire in the next few years are on FERS, which is mostly Social Security augmented by a savings program called TSP.

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