Lawmakers debate changes to NM’s tax code
SANTA FE – A group of influential lawmakers on Thursday launched ideas to reshape New Mexico’s tax code in a bid to improve the business environment while stabilizing government revenues.
Ideas ranged from reimposing a food tax, providing monthly tax credits to low-income families, increasing property and gas taxes, and reducing gross revenue taxes. .
Lawmakers also heard from domestic tax experts who offered mixed testimony on whether a 2003 change to the tax code – reducing the highest income tax bracket, passed under the government of the ‘era. Bill Richardson – had the desired impact of promoting economic growth.
Randall Bauer of Philadelphia-based PFM Group Consulting said the 2003 tax cut significantly reduced tax revenue, but there is little evidence that it changed economic outcomes.
“We are not seeing a corresponding increase in economic activity,” Bauer said. “It would suggest that it wasn’t necessarily a good decision on your part. “
In contrast, Jared Walczak, vice president of state projects at the Tax Foundation, said he would not draw firm conclusions about the impact of the tax cut due to the complexity of the economy and difficulty assigning credits or blaming for a particular policy change. Colorado, he said, cut taxes and experienced economic growth.
Parts of the New Mexico tax code, Walczak said, make it difficult for businesses, such as the high tax rate on gross receipts which increases the cost for a small business wishing to hire, say, a lawyer for s ‘take care of certain legal work.
“Unfortunately, you have a tax structure that can make it very difficult to invest or expand investments in New Mexico,” Walczak said.
The overhaul of the tax system is an eternal subject in Parliament. Diversifying the economy and reducing New Mexico’s dependence on oil and gas taxes – a volatile revenue stream – have been long-standing priorities of Democrats and Republicans.
Members of the Legislative Finance Committee spent about three hours Thursday morning making presentations and discussing tax policy. No consensus emerged.
Gallup Democrat Senator George Muñoz and LFC vice president suggested that the increase in New Mexico’s relatively low property taxes could generate revenue to offset the reduction in gross revenue taxes.
House Speaker Brian Egolf, D-Santa Fe, said he hoped future tax changes could help entrepreneurs and startups.
Representative Phelps Anderson, an independent from Roswell, said the influx of federal stimulus money was the right time to overhaul the tax code.
“The state is inundated with money,” Anderson said. “Now is the time to make a sensible look at” tax changes.