Senate panel OKs corporate tax reform package

SANTA FE – A key Senate committee voted 10-0 late Monday to approve a tax package that includes several tax breaks sought by Gov. Susana Martinez.

However, while a corporate income tax cut backed by Martinez is included in the package, it is smaller than what the Republican governor proposed.

In addition, new restrictions on two existing tax incentives are included in the omnibus bill – it contains five tax pieces – in an attempt to offset the tax cut and limit the total revenue hit to the state .

“The overall bill is a tax reduction, no ifs, ands or buts about it,” said Sen. John Arthur Smith, D-Deming, chairman of the Senate Finance Committee.

A Martinez spokesman said the Republican governor has been meeting with top-ranking lawmakers on the tax package but would not support the package in its current form.

“This is a gimmicky bill that does not make New Mexico more competitive with our neighboring states to help create jobs,” spokesman Enrique Knell said.

Finance and Administration Secretary Tom Clifford also spoke against the retooled tax package Monday

“I feel like we’ve come away sort of worse off than when we started,” Clifford said.

In her State of the State address in January, Martinez called on lawmakers to approve targeted tax breaks during the 60-day session to make New Mexico more economically competitive with its neighbors.

Specifically, she has pushed for the state’s top-end corporate income tax rate to be lowered from 7.6 percent to 4.9 percent and for small businesses to receive a $1,000 tax credit for each job they fill and retain over the next two years.

In addition, the governor has pushed for legislation that would allow companies to base their income taxes entirely on their New Mexico sales.

The tax package approved Monday in the Senate Finance Committee includes those pieces, though the corporate income tax would be lowered only slightly – to 6.9 percent next year and then to 6.4 percent in the next budget year.

GOP committee members attempted unsuccessfully to amend the bill to lower the tax rate even more.

Meanwhile, the bill would tighten the qualifications for a high-wage jobs tax credit and a tax deduction for manufacturers that are already in place. The price tag of those incentives has exceeded expectations, with the high-wage jobs credit alone predicted to cost $45 million more than originally projected in the coming budget year, according to the Legislative Finance Committee.

The final piece of the tax package is a provision that would change the way some big out-of-state companies file their corporate taxes. Martinez vetoed a similar bill last year.
— This article appeared on page A4 of the Albuquerque Journal