Close New Mexico’s Tax Loophole For Out-Of-State Corporations

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.

What Combined Reporting Really Means For New Mexico

Fat CatThe New Mexico Independent just got its hands on a newly-released report that puts the lie to the tired old argument that large corporations won’t come to or stay in states that make them pay higher corporate income taxes.

In a story today, NMI senior reporter Trip Jennings reports that Intel and many other companies who do business in New Mexico also choose to operate in states with higher corporate income tax rates.

From the story, based on a report compiled by the Washington-based Center for Budget and Policy Priorities:

At least 71 of the 78 multi-state corporations that have 250 or more employees in New Mexico have a facility in at least one state that mandates combined reporting.

Under combined reporting, a corporation’s nationwide profits are combined – that is, added together – and the state then taxes a share of that combined income, according to the Center.

So what companies are we talking about here? A quick look at the report shows that Comcast, Conoco Phillips, JC Penney Co., Bank of America, ABF Freight System, Wal Mart, Target, Whole Foods and Southwest Airlines are among the many corporations who pay more to do business elsewhere than they do in New Mexico.

You can read the full report here.

I find this report particularly important today, as the House Committee on Business and Industry meets to discuss HB 62, which would institute combined reporting and close the loopholes that currently let corporations shift their New Mexico profits out of state and avoid paying income taxes on them.

Many groups, including a coalition of lawmakers and a diverse group of health, education, social service and religious advocates say that New Mexico must act now to make corporations who do business in our state pay their fair share.

They’ll be at today’s hearing, as will lobbyists from the business community, still attempting to hold up the ridiculous argument that implementing combined reporting will make companies stay away from our state.

Keep checking back here for updates on what happens at today’s hearing and how HB 62 fares in the session.

The economic future of our state could depend on it!

A Lesson To New Mexico Legislators, From Oregon

Let’s hope New Mexico legislators weren’t too busy carting each other around in wheelbarrows yesterday to notice the news out of Oregon, where voters handily approved tax hikes for corporations and the rich.

Here’s the analysis from Newser, who called the move a “stunning about-face for voters historically hostile to taxes of all sorts:”

Don’t be too quick to extrapolate from the Massachusetts election that the country’s populist surge swings to the right: Oregon voters yesterday approved tax hikes for corporations and the rich. The referendum, which reversed more than two decades of Oregon voters shooting down tax increases, came as the cash-strapped state faced school closings, teacher layoffs and cuts in health benefits, the Los Angeles Times reports.

In a stunning about-face for voters historically hostile to taxes of all sorts, measures to raise the state’s corporate income tax as well as income taxes on households earning more than $250,000 a year and individuals earning more than $125,000 appeared to have won readily. Other state legislatures facing similar budget crises watched the Oregon vote closely, and may now consider crafting similar measures. (Emphasis mine.)

As this Los Angeles Times story reports, Oregonians have shown no special love for taxes in the past. But, like New Mexico and virtually every other state, Oregon faced fiscal problems that threatened to cripple vital state functions and place the burden on the state’s poorest and neediest.

Will New Mexico legislators take heed and have the courage to make corporations and wealthy New Mexicans pay their fair share? There are some who are championing that exact message right now (ie: The Working Families Caucus).

But brave legislators like these face the usual opposition from those who oppose taxes at all costs and say their constituents would never approve. The victory in Oregon takes the thunder out of that argument.

From the Los Angeles Times story:

Kevin Looper, who ran the campaign to pass the measures, said the vote was a signal that predictions of a general conservative retrenchment following the Republican victory in this month’s Senate race in Massachusetts were premature.

“I think this is firmly a progressive, populist moment. It just takes leaders to stand up and say what we’re about, and make sure things are clear to voters,” he said. “Because when the choice gets made clear like that, voters will almost always make the right decision.”

Looper said the credit goes to Democratic leaders in the Legislature, who passed the tax increases against nearly unanimous Republican opposition.

“It was an amazingly courageous thing for the Legislature to say, ‘We’re going to both protect schools and make a case for tax fairness by keeping the burden off middle-class families,’ ” he said.

We can only pray that New Mexico’s legislative power brokers aren’t too busy clowning around to pay attention to the possibilities and have the courage to ask New Mexicans to do what Oregonians did yesterday.

PNM Revises Its Solar Incentive Program

While I usually take the critical role when writing about PNM, I do have to give them kudos for working recently with local solar and business advocates to refine their solar procurement plan to expand their solar incentive program instead of capping it off like they had originally sought to do.

PNM seemingly was forced to come up with a better solution to their solar incentive program as they moved to cap the program off, yet were met with a large pushback from a variety of renewable energy advocates.  And from the looks of it, the solution PNM has come up with will allow them to continue on with their customer-owned solar program.

Not only now will it continue, but the program now has an opportunity to expand from 2 megawatts to up to 24 megawatts now.  To allow them to continue on with the program it seems PNM had to make some changes to the way they distribute the renewable energy credits (REC) back to their customers who produce more energy than they use from their renewable energy system.

Before customers would be given a ranged credit (dependent on the size of their system) for the energy they gave back to the grid, but now that has changed.  From an Albuquerque Journal Business Outlook article:

The new program would dispense with the REC and net metering credits. It would place the small and large PV programs under a newly named Solar Performance Program that will offer a customer a one-price credit for energy production.

Initially, credits would vary from 22 cents to 26 cents per kilowatt hour, based on the size of the system, with smaller systems in general receiving larger credits. Residential systems, typically under 10 kilowatts, would qualify the owner for a credit of 26 cents per kilowatt hour.

As customer participation levels are met, the credits would decline over time to no lower than 16 cents for new participants in the program.

“The declining payments help control the overall cost impact of the program and reflect expectations that the cost of installing solar power will continue to decline,” said PNM spokeswoman Cathy Garber.

This is indeed a much better solution for both PNM’s customers and the many hardworking renewable energy based businesses in the state.  The program will still allow customers to gain credits from their renewable energy system that they have on their home or business and gives solar installation companies confidence in the deal as it aims to be sustained for many years to come.

I’m glad to be able to give kudos to PNM making moves in the right direction in regards to helping make renewable energy use more accessible to their customers.  Now if I can only convince them to consider hiring local solar installers for their newly proposed solar generating plant. . . .

Great Info from the 2009 NM KIDS COUNT Book

New Mexico is still one of the lowest-ranked states in the nation in terms of child well-being – and it will only get worse if the state cuts funding for early childhood care and development, quality K-12 education, health care coverage and family supports.

That’s according to the 2009 New Mexico KIDS COUNT book released last week by New Mexico Voices for Children, a nonpartisan, nonprofit organization advocating for policies to improve the health and well-being of New Mexico’s children, families and communities.

The New Mexico KIDS COUNT is a program of New Mexico Voices for Children and is made possible by grants from the Annie E. Casey Foundation.

Taking good care of the state’s children is important for kids, but it also has an effect on the state’s economic base and everyone’s quality of life, the report concluded.

That’s important information right now, as the state Legislature meets to decide how to close a gaping budget gap for the fiscal year 2011.  Some legislators say the state should cut its way to solvency, while others say the state is losing millions in revenue though tax breaks and incentives for corporations.

According to the 2009 New Mexico KIDS COUNT book, New Mexico has the fourth highest rate of children without health insurance, more than one-quarter of its children live in poverty, and only four other states have a higher percentage of families who are hungry or “food insecure.”

Though quality childcare is critical for parents to work or train for jobs, state funding to help low-income families afford childcare has been severely cut back, the report said. Despite the fact that high-quality early childhood education programs provide the stimulation needed for healthy growth and brain development, New Mexico only allocates about 1.8 percent of its budget to support this.

“Research shows that good quality early childhood programs not only prepare children for success in school and life, but also give society a return on investment of up to $16 for each $1 spent,” said Gerry Bradley, Research Director for New Mexico Voices. “It’s one of the most cost-effective things we can do, since we’ll lower dropout rates, reduce crime, and improve employment rates over time.”

Christine Hollis, New Mexico Voices for Children’s KIDS COUNT Director, said, “Long-term studies show that high quality early childhood care and development; a first-rate K-12 educational system that graduates all students; quality health care with affordable health insurance; and effective family support systems provide social and economic benefits for all residents by reducing crime, dependence on welfare, and the other ills associated with poverty.”

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New Mexico Pueblos One Step Closer to Gaining Water Rights

The Santa Fe New Mexican released a great story yesterday detailing the passage of the Pueblo Indian Water Rights Settlement Act and the Aamodt Litigation Settlement Act within the Unite States House.  Both these bills aim to help settle water rights claims within New Mexican pueblos (Taos, Teseque, San Ildefonso, Nambe and Pojoaque).

From the New Mexican story:

“The Taos Pueblo bill authorizes federal appropriations to build and rehabilitate water systems in the Taos Valley and establishes a trust fund for the pueblo to buy water rights and allows the pueblo to market the rights. The Congressional Budget Office estimates the bill will require $25 million in federal funds from 2010 to 2014 and $114 million after 2017.

The Aamodt settlement act settles the four pueblos’ claims to water and authorizes the appropriations of funds to build a regional water system. It also establishes a fund for the pueblos to maintain the system. The Congressional Budget Office estimates the act will cost $71 million in federal funds from 2010 to 2014 and $128 million after 2014.”

The bills are now moving onto the Senate Indian Affairs Committee, where state Congressmen Udall and Bingaman have been working to get enough Senate votes to pass the bills within the Senate.

And it could not come soon enough.  Throughout my searches on these bills, I recognized that both of these bills have been introduced (in one form or another) throughout the years, yet they have never been able to obtain full passage.

From a press release from Congressman Ben Ray Lujan:

“For decades, the people of New Mexico have worked to settle these water claims which have been in court since the 1960s. It has taken over 40 years for these bills to come to fruition, and they address important issues from a water management and conservation perspective. Similar legislation was introduced in the 110th Congress and was subject to legislative hearings in both the House and the Senate. Early in the 111th Congress, both Senators Bingaman and Udall introduced the Taos Pueblo Indian Water Rights Settlement Act (S. 965) and the Aamodt Litigation Settlement Act (S.1105) in the Senate with important revisions that have improved both settlements.”

While it does seem that there is still some contention about the bill amongst some well owners in the areas of the Pueblos, the bills appear to be able to definitely help with securing water rights for populations that have resided within our state for generations and deserve to have better and more organized access to water.  Living in the desert forces all of us to acknowledge to importance of water and water management, and thus why I’m glad these water settlements are moving forward.

I appreciate all the hard work by our state Representatives and Congressmen who have worked to again bring this issue to light.  Let’s hope that after decades of work, these water settlements get pushed through so that these Pueblos can begin working on managing their water via the water rights they gained.

Supreme Mockery: Mr. Goldman and Mr. Sachs are people too!

In a post today reacting to the Supreme Court’s campaign finance decision, New Mexican Steve Cobble laid it on the line:

    The U.S. Supreme Court this morning took a big step away from the Constitution, away from one-person, one-vote, away from precedent, away from the original intent of the First Amendment, away from free speech for people… It is horrible for the legal system — the right wing on the Court has once again shown, as they did in Bush v. Gore less than a decade ago, that it will not allow legal niceties to stand in the way of naked political grabs.

So the distinction the Founders made between the rights of individuals and corporations has been swept away by the five members of the Supreme Court. They’ve essentially amended the preamble to read, “We the People and Corporations of the United States…”.

Also today, coincidentally, the Wall Street investment bank, Goldman Sachs Inc., announced its 2009 earnings – a record $13 billion profit. Moreover, this “corporate person” is paying $16 billion in executive bonuses – roughly 38% of its total earnings.

Now, with today’s Court decision, Mr. Goldman and Mr. Sachs can pour billions more into election campaigns. The only problem is that Marcus Goldman died in 1904 and his son-in-law, Samuel Sachs, died in 1935. Nonetheless the corporate person named Goldman Sachs has the same free speech rights as mere mortal persons like you and me – along with the billions to buy an infinitely bigger microphone.

This is not what James Madison had in mind when he wrote: “[A] charter of incorporation . . . creates an artificial person not existing in law.”

The freedoms enshrined in the Bill of Rights were intended for living – not artificial –  persons.

Watch this video from FreeSpeechForPeople.org

Planning To Not Plan Is NOT A Plan

I rode the RailRunner up to the Roundhouse in snowy Santa Fe yesterday for the State of the State address. I guess I just wanted to see for myself how the legislative and executive branches would apply themselves to one of the most daunting financial crises ever facing New Mexico.

Gov. Bill Richardson’s speech was too vague for those who were looking for him to present a clear roadmap leading out of the financial abyss. At the same time, it was apparently much too clear for those who said they disagreed with what Richardson specified as off limits, such as cuts to teacher salaries or classroom spending and further layoffs of state employees.

In real time, Richardson’s talk was fairly well-received. His address drew some polite applause and even a bit of laughter – and nobody yelled, “You lie!”

But I hit the ground zero of resistance to Richardson’s speech when I attended a press conference held immediately afterward by Republican leaders Sen. Minority Whip William Payne of Albuquerque and Sen. Minority Leader Stuart Ingle of Portales.

I don’t know what I was expecting, but what I heard surprised me. Not because there was plenty of criticism – I expected that – but because there was no alternative plan coming from the Republican leadership. No plan, except to call for more cuts and to oppose any new taxes.

Trip Jennings, senior writer for the New Mexico Independent, was at the same event and asked Ingle and Payne when the ultimatums might end and the real negotiating begin.

From his story, titled “A Lot of Speeches, But No Budget Plan on First Day of Session:”

It was the usual drawing of lines in the sand by state lawmakers before the serious budget negotiations commence. The state faces a shortfall variously estimated between $500 million to $900 million for next year, depending on whom you ask.

It’s the question I heard over and over from people at the Roundhouse who are sincerely worried about the practicality of legislators continuing to posture throughout the 30-day session.

The truth is, the legislature already cut millions from education and public safety when it met in October to close the gap for 2010. The budget gap that looms ahead for 2011 is too big to close by cuts alone. Legislators must come up with a responsible and fair plan to raise revenues- at looking at measures like reining in the tax incentives and breaks currently given to out of state corporations would be a start.

The sooner legislators get to working together on a workable plan that includes raising revenue for the state, the better off we will all be.

We’ve only got 29 days to wrap this up, guys – let’s skip the posturing and get started.

Serving Toward Equity

Guest Post by Anthony Fleg, Native Health Initiative

The Martin Luther King Day holiday serves as an annual reminder of two of this country’s highest ideals – serving others and the creation of an equitable society. This year, amidst the economic turmoil of our country and the suffering of our brother and sisters in Haiti, the lessons from Dr. King’s life and the message of this holiday provide timely reminders to each of us individually and to us as a larger society.

Serving Others

A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom. -MLK

I include this quote by Dr. King not only as a protest against our continued escalation in military spending nationally, but also to bring this closer to home. I had the opportunity to visit a local middle school last week and saw an environment that echoes more of militarism than of social uplift. Bathrooms locked, lockers taken away, field trips cancelled as the youth told me “all because of the crime here.”  This punitive environment is the best we can do to serve and empower our next generation of leaders?

And how many other elements of our society can we think of that fit with this theme – more resources poured into punishment and enforcement than in the social services that could prevent the former from being needed. We criminalize addictions, and instead of treating the addicts, we incarcerate them. We continue to see the hospitals in our city chase thousands of citizens into bankruptcy each year instead of creating a system that doesn’t punish people for getting sick. And on, and on…

When I think of the service to our community needed to dismantle such systems, it is something much more than “soup kitchen service” measured in volunteer hours logged. Using this analogy, what we need is about finding out why people are hungry, and why certain groups are disproportionately left without food, rather than simply serving up a hot meal. It requires service that makes us thermometers, not merely thermostats – we must be willing to change the temperature ourselves, facing the opposition and resistance that Status Quo and his cadre will bring.

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Inspiration from a Great Civil Rights Hero

As we move into a new decade, one only has to take a quick glance around to still see the profound effects that Martin Luther King Jr. has had and continues to have within our country.  Of course, most will say that the most obvious occurrence of that as of late comes from the election of our country’s first African-American president, Barack Obama.

Yet, I would say the more profound effect can be seen within the people who went through the Civil Rights Movement and the generations that have followed.  There is no doubt in my mind that the generations that have come after the Civil Rights Movement have adopted a much more integrated mind state.  Its not surprising that they would either since they did not have to see the horrible things that came from segregation and fight for racial equality.

But the struggle also continues as the fight for civil rights has moved into the realms of LGBT and immigration right’s issues.  I will also say a new struggle is also emerging for our brothers and sisters who hail from the Middle East and unfortunately being more and more ignorantly regarded as terrorists.

And we all see elements of Martin Luther King Jr.’s tactics being used as we see peaceful immigrant marches where everyone is dressed in white to LGBT marches where fiery speakers preach about equal rights for everyone in America.  While the struggle for equality has taken on a new dynamic, the fight still resides in advocating for equality and having love and understanding for everyone who crosses our path.

As Martin Luther King, Jr. once said:

“Like an unchecked cancer, hate corrodes the personality and eats away its vital unity. Hate destroys a man’s sense of values and his objectivity. It causes him to describe the beautiful as ugly and the ugly as beautiful, and to confuse the true with the false and the false with the true.”

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