SANTA FE — New Mexico’s corporate income tax revenues have sagged since lawmakers approved a high-profile 2013 tax package, though top-ranking Taxation and Revenue Department officials insisted it would be “disingenuous” to solely link the revenue decreases to tax cuts.
In the current budget year, the state is on pace to collect roughly $336 million in corporate income taxes, according to a TRD report released Tuesday. At the time the 2013 tax package was passed, that figure was estimated to be $450 million. Both estimates included the impact of the tax cut.
Corporate income tax revenues for other budget years have been similarly scaled back from estimates two years ago, the report found.
Taxation and Revenue Secretary Demesia Padilla told members of a legislative panel Tuesday that the agency does not know exactly how many jobs the tax package may have created but pointed out that New Mexico’s tax climate ranking has improved in recent national studies.
She also said a decrease in projected corporate income tax revenue of more than $70 million in the 2014 budget year — the one immediately following passage of the 2013 tax package — was largely due to businesses reporting operating losses and taking greater advantage of state tax breaks.
“I think it’s a little disingenuous to say the $70 million (decrease) is totally attributable to HB 641,” Padilla said, referring to the tax legislation.
However, some members of the interim Revenue Stabilization and Tax Policy Committee voiced concern about the downturn in state corporate income tax revenue since the tax package’s enactment.
Rep. Bill McCamley, D-Mesilla Park, said the bill was touted by supporters as a job-creation measure that would spur increased economic activity. He said there’s little evidence that has occurred.
“I hope that before we do something like this again, we take the time to really look at the effects of these tax policies,” McCamley said in Tuesday’s hearing.
The 2013 tax package — a compromise passed by lawmakers in the final minutes of that year’s legislative session — called for the state’s top corporate income-tax rate to be decreased from 7.6 percent to 5.9 percent over a five-year period.
It also included several other tax-related provisions, including an expansion of the state’s film tax credit for qualifying television shows filmed in New Mexico and a gradual phase-out of the “hold harmless” subsidies the state pays to cities and counties.
The report unveiled Tuesday by the Taxation and Revenue Department did not focus on all the tax package’s provisions and did not revisit overall budget estimates for the legislation.
Rep. James Strickler, R-Farmington, was among the legislators who defended the package during Tuesday’s hearing, saying it was needed to make the state more economically competitive with its neighbors.
“I think we’re going the right direction on this,” Strickler said.