As Expected, Martinez Signs Corporate Tax Cut; Report Says It Will Cost NM At Least $100 Million
New Mexico will lower taxes on corporations as an economic development incentive under a newly approved law.
A package of tax changes signed Gov. Susana Martinez on Thursday will reduce the corporate income tax rate from 7.6 percent to 5.9 percent over five years, and provide a tax break to manufacturers selling most of their goods and services outside of New Mexico.
Supporters say the tax reductions can help New Mexico in recruiting businesses or encouraging them to expand, potentially bringing more jobs to the state. The new law also expands tax incentives for television shows filmed in New Mexico, such as the award-winning series "Breaking Bad." Copyright 2013 The Associated Press.
New Mexico Voices for Children leader Veronica Garcia disagrees, saying tax cuts are ineffective at creating jobs.
Press Release from New Mexico Voices For Children:
The omnibus tax bill signed into law today will cost the state of New Mexico at least $100 million dollars by fiscal year 2017 and is not likely to create any jobs. That’s the conclusion of a report by New Mexico Voices for Children on HB-641, the bill that was haphazardly passed in the final minutes of the 2013 legislative session and signed into law today.
“HB-641 is bad for New Mexico,” said Veronica C García, Ed.D., Executive Director of New Mexico Voices for Children. “Giving tax breaks to corporations with no performance accountability attached to them will not serve the interests of New Mexico’s children and working families. These tax-cuts-for-jobs schemes are known to be ineffective at creating jobs and growing an economy that works for everyone.”
The most expensive provisions of HB-641 do not guarantee that companies will set up shop in New Mexico, and they give companies that are already here a tax break without requiring that they add a single job.
“What this bill does guarantee is that the state will have tens of millions of dollars less for education, public safety, and health care,” said Gerry Bradley, Senior Researcher and Policy Analyst for the child advocacy organization and author of the report. “Another provision in the bill will cost local governments $26 million by fiscal year 2017. Cities and counties will be either be forced to pass the cost along to working families, or cut services like fire and police protection,” he added.
“The signing of this bill—coupled with the Good Friday veto of a bill to raise the minimum wage—shows that out-of-state corporations are a higher priority with this administration than New Mexico’s own working families and their children,” said Dr. García. “New Mexico’s lowest-paid working families had their long-needed raise vetoed, while profitable corporations got big tax cuts. New Mexico’s lowest-income workers already pay a much higher percentage of their income in state and local taxes than those at the top, and this bill will make that inequity even worse.”
The report, “HB-641: Bad Bill, Flawed Process, Empty Promises,” is available online here: http://www.nmvoices.org/wp-content/uploads/2013/04/HB-641-policy-brief.pdf.