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New Analysis Finds New Mexico is the 41st Freest State in America

Commentary: Today the Cato Institute released the latest edition of Freedom in the 50 States, which ranks each U.S. state by how its public policies promote freedom in the fiscal, regulatory, and personal freedom spheres. To determine these rankings, authors William Ruger and Jason Sorens examine state and local government intervention across a range of more than 230 policy variables — from taxation to debt, eminent domain laws to occupational licensing, and drug policy to educational choice.

Ruger and Sorens score all 50 states on their overall respect for individual freedom, and also on their respect for three separate dimensions of freedom: fiscal policy and regulatory policy (which are combined to create the economic freedom score) and personal freedom. The index ranks New Mexico as the 41st freest in the nation in the overall rankings. By individual category, New Mexico scores 48th in fiscal policy, 34th in regulatory policy, and 3rd in personal freedom. You can view the state's full rankings, a descriptive analysis of its freedom situation, and policy recommendations to increase its freedom rankings at www.freedominthe50states.org/overall/new-mexico.

New Mexico has long had far more personal freedom than economic freedom, but it has started to do a little better on economic freedom as well, despite its move from being a “purple” state to a “blue” one. If it would get a serious grip on government spending, New Mexico could be among the freest states in the country.

New Mexico’s overall tax burden is right at the national average of 5.8 percent of adjusted personal income. The report shows significant declines in state-level taxes over time, from 6.7 percent of income in FY 2008. Local taxes have risen, but not as much, from 2.7 percent of income in FY 2000 to 3.5 percent in FY 2015. New Mexico’s big problems are government consumption and employment, each of which is two standard deviations higher than national norms.

New Mexico is about average on land-use freedom. Zoning regulations have tightened over time, and the state has implemented relatively strict renewable portfolio standards. The state has long had a minimum wage, but it is not extremely high. Health insurance freedom is low because of costly mandates and bans on managed-care gatekeeping models. The extent of occupational licensing skyrocketed between 2006 and 2009 but has been almost steady since.

New Mexico’s criminal justice policies stand out from the pack. Victimless crime arrests, drug and nondrug, are low, as are incarceration rates. The state’s asset forfeiture law is the best in the country, since 2015 putting limits on equitable sharing. However, students are required to go to school for 13 years, the most in the country, and there are no choice programs apart from public school open enrollment. 

To improve on its freedom rankings, the authors suggest several remedies, including:

  • trimming spending on police and fire, corrections, education, general administration, public buildings, health and hospitals, parks and recreation, public welfare, sanitation and sewerage, and employee retirement, which are all much higher than the national average, as a share of income;
     
  • cutting the gross receipts tax;
     
  • rolling back occupational licenses, such as those for sign language interpreters, dietitians, dietetic technicians, pharmacy technicians, veterinary technicians, athletic trainers, massage therapists, private detectives, security guard companies, funeral attendants, collection and repossession agencies and managers, emergency dispatchers, construction contractors, well-drilling contractors, security and fire alarm installers, boiler operators, and crane operators;
     
  • enacting a generous private scholarship tax credit program.

“Measuring freedom is important because freedom is valuable to people,” write Ruger and Sorens. “State and local governments ought to respect basic rights and liberties, such as the right to practice an honest trade or the right to make lifetime partnership contracts, whether or not respecting these rights ‘maximizes utility.’ Even minor infringements on freedom can erode the respect for fundamental principles that underlie our liberties. This index measures the extent to which states respect or disrespect these basic rights and liberties; in doing so, it captures a range of policies that threaten to chip away at the liberties we enjoy.”
Nationally, Florida, New Hampshire, Indiana, Colorado, and Nevada sit at the top of the rankings. New York again has the dishonor of being the least free state, preceded by Hawaii, California, New Jersey, and Vermont. 

Freedom in the 50 States was the first index to measure both economic and personal freedom and remains the only index to do so at the state level. In addition to providing the latest rankings for 2016, this edition for the first time provides freedom scores for all years since 2000. You can view overall rankings and see how each state performs in a variety of categories at www.Freedominthe50States.org