$27 million is the estimated "economic impact" if every employed New Mexican drops $50 at locally owned businesses over the holidays, as Gov. Bill Richardson has encouraged...
$90 million is the estimated budgetary benefit if New Mexico kills the out-of-state corporate income tax loophole.
"One [caller] suggested corporate taxes on companies such as Lowes, Cost Co, and Sam’s.."—From a press release by Lt. Gov. Diane Denish’s office on suggestions made via her “government efficiency hotline.
With the state’s “$25 2 MainStreet” campaign, Gov. Bill Richardson has hopped on the buy local bandwagon. But he could do more to help small businesses.
According to a November analysis by the DC-based Institute on Taxation and Economic Policy, New Mexico’s reliance on the gross receipts tax reduces spending power for the people most affected by the current recession.
Middle-income earners, averaging $35,700 a year in income, pay 9.9 percent of their income in taxes; the state’s top 1 percent, who average $395,000 a year, pay only 4.5 percent. Middle earners would have an extra $900 a year to spend in local shops if their point-of-sale taxes were cut in half.
The state could make up lost revenue by closing a tax loophole that benefits big-box stores. A proposal by state Sen. Peter Wirth, D-Santa Fe, to require so-called “combined reporting” of business income, would close the out-of-state corporate tax loophole.
Michael Mazerov, an economist with the Center on Budget and Policy Priorities in Washington, DC, testified at the New Mexico Legislature last month in favor of Wirth’s proposal. On Nov. 30, Mazerov released a report rebutting critics of combined reporting, especially former Tax and Revenue Department Secretary Dick Minzner, now a corporate lobbyist.
In an Oct. 18 column in the Albuquerque Journal, Minzner said the “current corporate income tax system is not unfair to small local businesses.”
Mazerov says the lobbyist is wrong, and accuses Minzner of shilling for his clients.
“There’s no question that large, multi-state companies have opportunities and take advantage of them to reduce their income tax payments in ways that smaller businesses just can’t,” Mazerov tells SFR. Closing the loophole “is one small thing states can do to level that playing field a bit.”