Tax deal can lead to compromise

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By Sherry Robinson

Bloggers and editorial writers have examined the Legislature’s love child — the surprise, last-second, tax package that looked like both parents — and hooted about transparency and back-room deals. 

But the tax deal was a compromise, fair and square, and it was refreshing to see legislators stop jawboning and hustle to get it done. 

It’s now being touted as “tax reform.” It’s not, and to be clear, it doesn’t raise all boats.

From the beginning of the session, lawmakers focused on the economy. 

The most serious proposals boiled down to a handful. Democrats wanted a minimum wage raise, a tax incentive for TV productions (the “Breaking Bad” bill) and capital outlay. 

Republicans wanted to ease the tax burden on some businesses by reducing corporate income taxes and implementing the single sales factor, which apportions corporate income on the percentage of sales made here.

All these measures got a thorough airing in committees, but by day 59 of the 60-day session, Dems had watered down the business tax bills until they were almost useless. 

The governor fired a warning shot over their heads by vetoing the “Breaking Bad” bill.  

It was clear that if none of her bills moved, none of theirs would either.

By that time Sen. John Arthur Smith, D-Deming, and members of his Senate Finance Committee were crafting a compromise that combined another “Breaking Bad” bill, the two business tax bills, plus the Dems’ combined income tax reporting for big-box stores. But how to pay for them? 

Smith & Co. removed the state’s payments to local governments for revenues lost when the gross receipts tax on food and medicine was repealed, but they phased in the change over 17 years and exempted the smallest governments. 

They also tightened up two tax credits, which will save money. Combined reporting for big-box stores will increase revenues. 

The most expensive and controversial piece of the package is the reduced corporate income tax, expected to cost upwards of $200 million. 

We have to be skeptical about promises of another tax reduction that will be good for us because that’s often not the case. 

I sat up and paid attention when economic developers testified that the reduced corporate income tax, coupled with single sales factor, would help them recruit new employers. 

Economic developers are on the front lines. They don’t make idle claims.

Albuquerque Economic Development Inc. said in a full-page advertisement that the current sales factor penalizes companies that expand here. “Surrounding states have lower tax rates and offer the Single Sales Factor, a powerful combination driving job growth outside New Mexico.”

Some lawmakers complained that they didn’t get to study the bill, and yet all the measures had been heard in committees and received a lot of publicity. 

As for the objection that nobody knew how they would work together, each bill could have passed separately, and it would still be up to the Senate Finance Committee to answer that question.

The real reason for debate was to kill the package, which the loudest of the protesting legislators would have done if they could, but proponents had marshaled the votes. 

The moment belonged to Smith and Sens. George Munoz, D-Gallup, and Stuart
Ingle, R-Portales, and to Speaker Ken Martinez,
D-Grants, and Rep. Moe Maestas, D-Albuquerque. Parliamentary maneuvers in the House were brilliant.

Another reason to not get too worked up: The bill is like a movie in slow-mo. 

Most of the provisions are phased in so gradually that it will be years before it’s all in place. 

I’ve learned from legislative veterans that some measures are a work in progress; the important thing is to get the big pieces in place and then tinker and adjust.

So the Legislature has cooked up a new pudding.

 Now we’ll see if there’s proof.