By Carter Bundy
New Mexico is in the full throes of recession/depression. While things are worse elsewhere, it’s bad here and not looking good for the next few years.
One of the most common phrases heard around the Roundhouse this year is “shared sacrifice.” Problem is, that sharing is limited to working families.
Good times, bad times
During good times, everyone did well. The wealthiest New Mexicans saw their tax rate nearly cut in half. Corporations enjoyed nearly a billion dollars in tax cuts. We continued to turn a blind eye to the tax-avoidance schemes of big interstate companies, including Wal-Mart. (A corporate lobbyist who I like very much asked me to have the courage to name specific companies if I’m going to allude to them in my articles, and, hey, I do take requests!)
Teachers and police deservedly got decent raises. State employees didn’t do quite as well, but at least kept pace with inflation and in some years saw a real increase.
One thing that didn’t happen during the good times was a growth of state employees. Unfortunately, House Minority Leader Taylor has, on this blog and in the Albuquerque Journal, recited the deceptive statistic that there are 5,700 new state employees over the last six years. True, but deceptive. The reader is left thinking that there are about 30 percent more employees than there were six years ago.
Rep. Taylor’s a smart and honorable man, and I hope the false impression he left was accidental: State government hasn’t grown by nearly the amount he implies, because there’s significant turnover in state employment. The NET gain in classified employees has been about 240 out of nearly 20,000, or about 1.1 percent, while the population grew by about 10 percent. That means a real reduction in state classified employees per capita of about 9 percent.
Articles such as Rep. Taylor’s are misused at the Roundhouse to push the idea that the pain of the recession/depression should be put on the backs of state and education employees alone now that we’re in bad times.
Where’s the sharing?
Last week, about 25 corporate lobbyists helped kill a bill that would have largely leveled the playing field between out-of-state companies and New Mexico companies. Granted, advocates of fair taxation made a strategic mistake by abandoning a pure combined reporting plan (described in a previous column here) and adopting a plan that also contained the corporate equivalent of the alternative minimum tax.
That part, called a franchise tax, drew by far the most criticism, and to be fair, they have a point that taxing activity where there’s no profit seems less fair than equal application of taxes on profits, which is what combined reporting does.
So maybe fiscally responsible legislators and advocates should tweak or scrap franchise tax plans, but there’s no rational excuse for the Legislature to allow interstate tax avoidance and profit-shifting schemes to continue. State employees, university employees and public school employees are all being asked to sacrifice. And New Mexico companies pay taxes on their profits.
Asking New Mexico families to pay $42 million takes that money directly out of the economy, where every dollar spent has a multiplier effect and helps business and other workers. Asking out-of-state companies to pay their fair share to us like they do in every other state west of the Mississippi except Oklahoma will be a boon to our economy. We shouldn’t allow ourselves to be a doormat any longer.
It’s long past time that national companies pay taxes on profits made here as well, and I hope many of those who criticized the franchise tax this week will stand in support of leveling the playing field for New Mexico companies and support combined reporting if/when it comes up in the special session.
If times are tough enough that the Legislature is going to ask New Mexico working families to sacrifice $600 for every $40,000 earned, they surely can at least ask multinational corporations to start paying the same percentage our New Mexico companies do.
Bundy is the political and legislative director for AFSCME in New Mexico. The opinions in his column are personal and do not necessarily reflect any official AFSCME position. You can learn more about him by clicking here. Contact him at carterbundy@yahoo.com.