Incentives help competitiveness

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By Harold Morgon

The recent talk of taxes in these columns has been an introduction to reviewing a study of what New Mexico’s taxes do to new investment.

Driven initially by Albuquerque Mayor Richard Berry, who recruited all sorts of help, the study is “New Mexico Business Tax Competitiveness and Simulations of Selected Tax Policy Changes.” Find it at the New Mexico Tax Research Institute, www.nmtri.org. The Ernst & Young accounting and consulting firm did the work.

The E&Y New Mexico report added specifics to a 50-state E&Y look at effective tax rates on business. A reference point was a 1997 study done by a unit of KPMG Peat Marwick comparing tax rates and incentives among New Mexico and eight other states. E&Y used the same states for comparison.

In a negative sense, New Mexico’s tax standing has “improved” since 1997 when we could claim only the third highest tax burden among the nine states. Now we are first. (No, the study factors were not quite equal. I’m ignoring that.) 

New Mexico’s business tax burden leads all states. Oregon, one of the eight states compared to New Mexico in the incentives analysis, has the nation’s second lowest business tax burden.