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To conclude from the New Mexico Tax Research Legislative Outlook Conference that tax reform is in the air, as did one report, is to vastly overstate reality. A more grounded reaction to the legislator and interest group discussions is that conversation about conversation about tax reform might be in the air.
First, the speaker platitudes and obvious generalities.
Mark Lautman, economic development consultant to the interim Jobs Council committee: For economic development in New Mexico, “we need to make some big changes.” The biggest problem is “just defining the term…Ultimately economic development means to grow your economy a little faster than your population.” And best of all, “You can’t plan an economy. Everybody knows this. But you have to.”
Fred Nathan, Think New Mexico, about some proposals by his organization: “The focus ought to be on solutions rather than ideology. Broaden and strengthen the private sector economy. Create a climate for all businesses to be successful.”
Rep. Tom Taylor, R-Farmington, member of a panel of legislators: “Tax systems are just that, systems. We need to have a complete understanding of our economic system.”
Conversation about having a conversation about our tax system comes in the form of discussions about a study of the tax system. Such a study got a couple of snippets of mention in a friendly exchange between Sen. Carlos Cisneros, Questa Democrat who chairs the interim Revenue Stabilization and Tax Policy Committee, and Sen. John Arthur Smith, Deming Democrat who is vice chair of the Legislative Finance Committee and chairs the Senate Finance Committee during sessions.
The proposed study seems to take off from the truly and delightfully radical Senate Bill 368 and House Bill 369, introduced in the 2013 session by Taylor and fellow Farmington Republican Sen. Bill Sharer. The Sharer-Taylor bill followed the tax mantra of low rates, broad base and no exemptions, not even for Girl Scout cookies, and eliminating personal and corporate income taxes and others.
Girl Scout types have torn hair in anti-cookie tax tantrums over the years. My distant acquaintance with cookie sales suggests that troop leaders probably could deal with collecting gross receipts taxes and that exposing the girls to the issue would be useful. Cookies are not price-driven (within limits). Buyers go for the aura of Thin Mints and goodness of the girls.
The history of gross-receipts taxes is one of shrinking the base through a bazillion exemptions and raising rates, Sharer told the conference. Rates push 9 percent these days, led by Ruidoso (8.625 percent) and Gallup (8.3125 percent), followed by Logan, San Jon and Tucumcari, all at 8.125 percent. Of this group, only Ruidoso can claim a degree of prosperity.
Passing the bill wasn’t the point, Sharer said. Rather, it was to start the conversation. A number of committees heard presentations and were interested. Cisneros said he understood that money for a tax reform study would be in House Bill 2, the main budget bill. Smith agreed.
Meanwhile, back at the legislative exemption ranch, it’s business as usual, complete with Republican culprits.
House Bills 14 and 24, already introduced, would add holes in the gross-receipts tax base. HB 14, from Cisneros and Albuquerque Republican Rep. James White, would allow deduction of receipts from aircraft maintenance or selling aircraft parts. In HB 24, Rep. Bob Wooley, Roswell Republican, wants to exempt receipts from the sale of “commercial or military carrier(s)” weighing more than 10,000 pounds.
Tom Clifford, Secretary of the Department of Finance and Administration, and House Speaker Ken Martinez, both claimed that “partisan bickering” (Martinez’ phrase) consumes a small amount of legislative time. Take them at their word. But watch for the Girl Scouts.