Would Tax Relief Preserve Jobs?

Gov. Susana Martinez’s proposal to eliminate the gross receipts tax on businesses with less than $50,000 in annual sales has caused some head scratching in Santa Fe.

“How would that create jobs?” has been the question.

A large number of the businesses that would benefit from the tax break are one-man (or one-woman) shops. The maximum tax relief for a business would be $3,500 a year, and that by itself isn’t going to lead to the hiring of a full-time worker.

Well, the proposal isn’t so much about creating jobs, says Tom Clifford, the governor’s secretary for finance and administration. Maybe it should be called a job-preservation initiative, he says.

Clifford is the architect of the proposed tax cut, an idea he says has been floating around government for a few years.

The proposal would provide tax relief to a base of the New Mexico economy, he says. Also, the businesses would no longer be saddled with the trouble and cost of complying with the gross receipts tax, which are disproportionate to the state’s benefit.

“It’s not so much the tax but the aggravation” for businesses, Clifford says. His department is referring to the proposal as “small-business tax simplification.”

Not that some job creation isn’t possible, he says. The proposal would put more money in the hands of business owners, and in theory, that extra capital should lead to some job creation.

Martinez says the tax relief would help some businesses to survive and allow others to expand.

“Many of New Mexico’s successful businesses started at kitchen tables with not much more than a family’s savings and a dream,” the governor said in her State of the State address this month.

“We need to invest in a culture of entrepreneurship so more of these family businesses can make it — so they can grow and hire more New Mexicans,” Martinez added.

The administration says businesses with less than $50,000 in annual sales make up about half of all businesses but account for only 1 percent of the gross receipts taxes collected by the state.

Clifford this week released revised statistics for the proposed tax relief.

The administration says there are about 56,000 businesses on the books with annual receipts of less than $50,000, but an unknown number of those are dormant and have no sales. The previous number was about 40,000 for businesses with less than $50,000 in yearly sales.

The cost of the tax exemption is now estimated at $24 million annually for the state and $16 million a year for local governments.

The state and local governments share in the collection of the gross receipts tax, which is levied on the sales of most goods and services and usually passed on, at least in part, by businesses to consumers.

The businesses exempted from the gross receipts tax or their owners will still have to pay state income taxes. The proposed exemption would take effect next year.

Martinez also is pushing legislation to reduce so-called tax pyramiding — the imposition of taxes multiple times during the production of goods and services.

Senate Democrats have responded with their own ideas for tax relief, including breaks for businesses that expand their payrolls, pay employees more and increase sales.

Records lawsuit

Animal rights activist Marcy Britton of Albuquerque has brought an open-records lawsuit against the office of state Attorney General Gary King.

There is always a bit of irony in such lawsuits against the AG since the office has enforcement duties under the state Inspection of Public Records Act.

Britton’s lawsuit says the Attorney General’s Office hasn’t provided all the documents she requested in June 2009.

The requested documents relate to the Animal Cruelty Taskforce, which King created to help in the enforcement of animal cruelty laws. Its members include representatives of law enforcement and animal-care groups.

Britton has long been concerned about the legality of certain activities of the task force.

In her lawsuit filed this month in state District Court in Albuquerque, she seeks a court order requiring the Attorney General’s Office to produce further documents and pay monetary damages and attorney fees. She is represented by the prominent Albuquerque law firm of Freedman Boyd Hollander Goldberg Ives & Duncan.

The Attorney General’s Office had no comment on Britton’s lawsuit.

UpFront is a daily front-page news and opinion column. Comment directly to Thom Cole at tcole@abqjournal.com or 505-992-6280 in Santa Fe. Go to www.abqjournal.com/letters/new to submit a letter to the editor.
— This article appeared on page A1 of the Albuquerque Journal