$70 million is how much tax revenue New Mexico could gain by implementing combined reporting, according to the Rio Grande Foundation.
91% is the portion of large, multistate corporations in New Mexico that already pay combined reporting taxes in other states, according to the national Center on Budget and Policy Priorities.
" No one’s going to raise their hand and say, ‘Tax me more!’—even if there’s room to do so. There’s always a little bit of partisan politics."—Richard Anklam, president of the New Mexico Tax Research Institute
Combined reporting, the system of corporate taxation that requires companies to report not just in-state income, but all income on their New Mexico tax returns, became a hot-button issue this election cycle. The basic question revolves around whether combined reporting actually constitutes a tax increase. Proponents claim it’s closing a loophole: Instead of being able to shift their incomes around and take advantage of the states with the lowest corporate income tax rates, companies have to report all their income, and each state gets to tax a portion of it.
Opponents, such as Paul Gessing, president of the conservative think tank Rio Grande Foundation, say implementing combined reporting constitutes a tax increase because, Gessing tells SFR, "It's increasing the taxes paid to the state of New Mexico."
One could argue that is precisely the point—to create a fairer tax scheme that also helps the cash-strapped state raise money. New Mexico is the only western state with a corporate income tax that hasn't implemented combined reporting—but Gessing says the state doesn't need it.
"I know we face a budget deficit, but the problem is not one of too little revenue," Gessing says. "We need to cut some of the spending we've done."
During the gubernatorial campaign, Republicans used Gessing's definition of combined reporting as a means of proving that Democratic candidate Diane Denish, despite promising not to raise taxes, really was in favor of a combined reporting "tax increase."
New Mexico legislators—notably state Sen. Peter Wirth, D-Santa Fe—have introduced combined reporting bills for the last five years and counting but, so far, to no avail. To Gessing, though, even a $260 million deficit doesn’t justify it.