Do people who support combined reporting just not understand combined reporting?
That’s what big business lobbyist Richard Minzner claimed during Thursday’s meeting of the House Business and Industry Committee.
The committee met to discuss HB 62, which was sponsored by Rep. Ray Begaye and would require out-of-state businesses with more than 250 employees to report and pay taxes on the income they make in New Mexico. A similar measure, SB 90, is being sponsored by Sen. Peter Wirth.
Supporters of combined reporting believe the millions of dollars that would be generated by closing the tax loophole for out-of-state corporations and making them pay their fair share could go a long way toward closing New Mexico’s looming budget gap for 2011. Many of the corporations that do business in New Mexico already pay higher tax rates in other states.
The revenue raised would help New Mexico stave off the drastic cuts to education, healthcare and other state services some legislators are proposing now.
Opponents of combined reporting, including out-of-state-corporations and their New Mexico lobbyists, hang their hat on the absurd argument that implementing combined reporting would cause businesses like Wal Mart, Target, Bank of America and Comcast to leave the state or decline to do business here. That comes in the face of a report here from the Center of Budget and Policy Priorities that notes that most of companies who do business in New Mexico already do business in other states with combined reporting.
At Thursday’s meeting, a parade of those supporting the very biggest corporations spoke about how making them pay income taxes in New Mexico “demonizes” them simply for being large. That came from Art Hull, a lobbyist for the Association for Commerce and Industry.
Greater Albuquerque Chamber of Commerce president Terri Cole jumped on the jobs meme, saying that combined reporting would somehow discourage both small and large business from bringing jobs to New Mexico – even though the bill would in fact level the playing field for small, locally-owned businesses in the state.
And the list went on, with lobbyists from Chevron, Public Service Company of New Mexico, the oil and gas industry, retailers, manufacturers and more all opposing combined reporting or asking for “carve-outs” for their industry only.
Several legislators spoke against combined reporting, too, including Democratic Rep. Sandra Jeff of Crownpoint, Republican Rep. Tom Taylor of Farmington and particularly Republican Rep. Keith Gardner of Roswell, who said New Mexicans should be thanking companies like Wal Mart for doing business here.
Most interesting though, was former state Tax and Revenue Secretary Minzner, who is now a lobbyist and perhaps the most outspoken opponent of combined reporting.
Supporters of combined reporting just don’t understand it, he says. Making out-of-state corporations pay income taxes in New Mexico will just encourage them to give themselves a tax cut by reducing their investments in the state.
That’s not what’s happened in the many other states all around New Mexico that have combined reporting – here’s a report that directly refutes his claim – but that’s what Minzner keeps saying, to anyone who will listen.
Let’s hope the legislators don’t.
HB 62 will be heard again on Tuesday in the B and I committee.
Stay tuned to this spot to see what happens as it makes it way through the Legislature.