In her June 29 column, "Apples and Activism," Sherry
Robinson dismissed a proposal to close a New Mexico tax loophole that only
benefits profitable out-of-state corporations. One of the main problems with
her column is that she demonstrates a basic lack of understanding regarding
what the proposal--called mandatory combined reporting (MCR)--actually does and
does not do. It does not allow New
Mexico to tax the profits a company makes in
another state. That would be illegal--and the legality of MCR, which has been
adopted by most other western states, has been upheld by the Supreme Court.
That said, it's hard to give much credence to the rest of her
assertions--particularly her argument that our state's corporate tax rate is too
high. An Ernst and Young study released earlier this year showed that New Mexico 's effective
tax rate was among the lowest in nine of our western state neighbors.
In addition, Winthrop Quigley, a business writer
for the Albuquerque Journal, recently pointed out that when studies take into
account the effect of New Mexico's
wide range of tax incentives, our state's effective tax rate shrinks by more
than 62 percent. The devastating impacts of so many unfair and ineffective
loopholes also mean cuts to essential programs and services like education.
When it comes to comparing our state budget to other
states, we found especially troubling a report on MSNBC a few weeks ago that
listed New Mexico as
#1 in the country for "states cutting the most to schools and cities."
Beggaring our schools and infrastructure undermines the foundation for future
These realities are re-igniting a conversation among New
Mexicans about our state's budget priorities. It has become increasingly hard
for defenders of trickle-down economics to justify loopholes and tax breaks
that only benefit the wealthiest and big, profitable corporations. That goes
for the 2003 state income tax cuts that gave a huge tax cut to New Mexicans in
the top income bracket, while providing New Mexicans in the bottom 40 percent
with no tax reduction.
The old trickle-down dogma has repeatedly failed. The
legacy of both the Bush and New
Mexico's failed tax cut polices for the top 1 percent
are plain to see. A sagging economy coupled with the increased transfer of
wealth to the richest New Mexicans leaves the rest of us to ponder the value of
those tax breaks as vital services are cut and teachers, police officers, and
firefighters are laid off.
How much bigger can New Mexico's class sizes get as teachers are
let go? How much longer can we stretch public safety response times due to
under-funding for police and firefighters? How much more disinvestment can Main
Street New Mexico handle before their small businesses close up shop? How many
more hungry children will be turned away from underfunded summer lunch
programs? How many more thousands of our toddlers will end up on a child care
The executive's refusal to close this tax loophole, along
with the veto of important transparency measures, only harms our ability to
make smart decisions regarding our state budget. New Mexicans deserve
transparency and hard data about the job creation effectiveness of tax breaks,
like those enjoyed by out-of-state corporations.
In tough times like these, New Mexico's wealthiest 1 percent should be
contributing their fair share. New Mexicans also deserve to know how
out-of-state corporations have gamed New Mexico's tax system while not being held
accountable for promised job creation that never happened.
At the end of the day, New Mexico needs a tax system that
exemplifies the values of fairness, transparency, and accountability.
Crossposted at democracyfornewmexico.com
Alicia Manzano is the Outreach Director at New Mexico Voices
for Children and also leads the New Mexico Fairness Project. Her work can be
found at democracyfornewmexico.com.