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In New Mexico, innovation is literally moving at the speed of light. Over the last several decades, laboratories, working with private industry, have led the way in developing new “directed energy” technologies. My own company, Fiore Industries, has built microwave systems that can disable the engine of a speeding car and neutralize Anthrax in packages. We’re turning science fiction into science fact.
As directed energy technologies take off over the next two or three decades, New Mexico stands to create hundreds of new high-skill jobs and billions of dollars in new investment when the manufacturing starts.
The only thing standing in the way of this enormous economic growth is New Mexico’s sales tax, which makes it too expensive for the government to award the contracts to local companies. Known as a gross receipts tax, New Mexico’s sales tax adds a seven percent charge to all directed energy manufacturing.
That’s unusual because states are technically forbidden from taxing the federal government directly. A gross receipts tax skates past this rule by taxing the contractor, not the government.
I’ve seen the impact firsthand. Several years ago, my company won a contract to develop the early modeling for a new directed energy system.
Our customer was happy with our work, but they weren’t happy with New Mexico’s gross receipts tax, which cut into the budget for the project. When they held a competition for the follow-on contract to continue the work, they awarded it to a company out of New York that didn’t have to pay any tax. It was a simple business decision.
If the state allowed for a deduction for federal directed energy contracts – as the legislature is now considering – local companies could compete on a level playing field with companies in other states. With so much expertise already in the state, I have every confidence that we would be positioned favorably to win many of the new directed energy contracts, potentially bringing billions in new investment to the state, creating hundreds of high-skill jobs and keeping jobs from moving away.
If we stick with the status quo, I am certain that directed energy work will continue to be awarded to companies in other states without similar taxes.
Without the deduction, everyone loses: local companies will lose contracts and tax revenues will decrease.
With the deduction, local companies could secure the lion’s share of new directed energy contracts as the technology matures, creating jobs and boosting income, property, and other tax revenues: everyone wins.
But we must act quickly. The contracts to build the future of directed energy are being awarded now, and New Mexico needs these jobs.
We have the knowledge, experience and determination; all that’s standing in our way is this seven percent tax.
Bill Miera is the founder and CEO of Fiore Industries, Inc., a small, minority-owned business headquartered in Albuquerque that provides high-tech services and products – including advanced directed energy systems – to National Laboratories, military and government customers.