{"id":15931,"date":"2010-04-14T20:42:03","date_gmt":"2010-04-15T02:42:03","guid":{"rendered":"http:\/\/www.nmpolitics.net\/index\/?p=15931"},"modified":"2010-07-12T16:12:34","modified_gmt":"2010-07-12T22:12:34","slug":"send-me-to-reform-school-tax-reform-that-is","status":"publish","type":"post","link":"https:\/\/nmpolitics.net\/index\/2010\/04\/send-me-to-reform-school-tax-reform-that-is\/","title":{"rendered":"Send me to reform school – tax reform, that is"},"content":{"rendered":"
\"\"<\/a>

Thomas Molitor<\/p><\/div>\n

When government revenues drop during economic downturns such as today\u2019s, a state or a municipality has only three choices to balance the budget.<\/p>\n

Unfortunately, one of those choices isn\u2019t to print money. New Mexico doesn\u2019t have a printing press like the federal government does \u2013 a printing press manned by a Bernanke and a Geithner, working late into the night printing money to fill the \u201coutput gap\u201d of the economy.<\/p>\n

A state like New Mexico, or a municipality like Albuquerque, is left with three arrows in its quiver to balance the budget: Reduce spending, raise taxes or borrow (issue debt).<\/p>\n

Take Mayor R.J. Berry\u2019s proposed budget for Fiscal Year 2011 for the city of Albuquerque, for instance. I think it shoots the right arrows to achieve a balanced budget. The mayor\u2019s budget reduces the size and structural cost of government, permanently eliminating 160 vacant positions. This prevents a position from laying dormant, ready to be filled as a future political favor.<\/p>\n

\"\"<\/a><\/p>\n

The budget does not raise taxes and minimizes cuts in services. It proposes salary reductions across the board, with a higher-percentage reduction on employees with higher salaries. It asks police and firefighters to forgo a pay increase later this year that was promised to them by the former mayor, which would still leave them with higher pay than last year.<\/p>\n

This makes bottom-line sense for a city or a state charged by charter with balancing the budget.<\/p>\n

Reforming the tax system<\/h3>\n

But what about the top-line.? How does a state create revenue without raising taxes? It does it by creating a business-friendly climate.<\/p>\n

One way for a state to create a more business-friendly climate and create jobs is to look for ways to reform its tax system. I believe that New Mexico must reform its tax system to give our state a strong foundation for economic growth.<\/p>\n

According to the Tax Foundation\u2019s annual State Business Tax Climate Index<\/a>, New Mexico\u2019s corporate tax rate ranks 32nd, meaning there are 31 states with lower corporate tax rates than us.<\/p>\n

High corporate taxes put New Mexico at a lesser competitive advantage in new-business creation, keeping existing businesses, or attracting out-of-state businesses looking to relocate. After all, economic growth in the states with the highest tax burdens consistently lags economic growth in the states with the lowest tax burdens.<\/p>\n

From a national perspective, New Mexico\u2019s corporate tax rate is currently at a competitive disadvantage.<\/p>\n

If New Mexico moves toward lowering its corporate tax rate, say at a rate that moves it from 32nd to the top 20 of state rankings, entrepreneurs will decide to incorporate in the now-more-competitive state of New Mexico, rather than in Arizona or Texas or Colorado.<\/p>\n

At the moment, corporations have a greater incentive to locate in Nevada, where there is no corporate income tax, or in Texas and Colorado, where the tax bite is smaller, than in New Mexico, where nearly $8 of every $100 in profit is paid to the government.<\/p>\n

Much more work to be done<\/h3>\n

In summary, New Mexico had embarked on successful tax-cutting efforts before this economy crashed; however, much more work needs to be done to position New Mexico to be a beneficiary when this train-wreck economy turns around.<\/p>\n

New Mexico\u2019s tax policy matters because the state must compete with other states for tomorrow\u2019s growth industries. Economists in general acknowledge that reduced tax rates have long-run beneficial effects because of their improved economic incentives.<\/p>\n

I, for one, am ready to enroll in tax-reform school and enact legislation that makes this state\u2019s economy more competitive and creates new industries and new jobs for New Mexicans. Even if I have to work weekends.<\/p>\n

Molitor<\/em><\/a> is a Republican candidate for the state House of Representatives, District 23.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

If New Mexico moves toward lowering its corporate tax rate, say at a rate that moves it from 32nd to the top 20 of state rankings, entrepreneurs will decide to incorporate in the now-more-competitive state of New Mexico, rather than in Arizona or Texas or Colorado.<\/p>\n","protected":false},"author":84,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1192,16,182],"tags":[108,118,107],"class_list":["post-15931","post","type-post","status-publish","format-standard","hentry","category-commentary","category-guest-columns","category-molitor-columns","tag-2010-election","tag-economy","tag-roundhouse"],"_links":{"self":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/15931","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/users\/84"}],"replies":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/comments?post=15931"}],"version-history":[{"count":0,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/15931\/revisions"}],"wp:attachment":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media?parent=15931"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/categories?post=15931"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/tags?post=15931"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}