{"id":26988,"date":"2011-03-08T12:01:35","date_gmt":"2011-03-08T19:01:35","guid":{"rendered":"http:\/\/www.nmpolitics.net\/index\/?p=26988"},"modified":"2011-03-08T12:01:38","modified_gmt":"2011-03-08T19:01:38","slug":"economic-development-tax-policy-and-our-budget","status":"publish","type":"post","link":"https:\/\/nmpolitics.net\/index\/2011\/03\/economic-development-tax-policy-and-our-budget\/","title":{"rendered":"Economic development, tax policy and our budget"},"content":{"rendered":"
\"\"<\/a>

Tim Keller<\/p><\/div>\n

With only a few weeks left in the 50th\u00a0Legislature, the halls are filled with all kinds of aphorisms about our state\u2019s budget. The usual dichotomy is between those who want to cut spending and those who want to raise revenues. Underneath each option is a wide range of specific proposals, but there is another force at play driving our state\u2019s budget and our local economy that until recently has seen little attention.<\/p>\n

Tax expenditures, the tax subsidies, incentives, exemptions and deductions are all forms for tax carve-outs for various industries, special interests and population\u00a0segments. Together, all 107 of these make up an estimated $1 billion in annual taxes we choose not to collect each year.<\/p>\n

The architect of our state\u2019s tax code, Franklin Jones, established a \u201cthree-legged stool\u201d of\u00a0tax revenue\u00a0composed of gross receipts tax, income tax and property tax. However, over the last 30 years we have slowly whittled away at each leg, and now a better analogy for our tax code is \u201cSwiss cheese.\u201d<\/p>\n

We have 107 holes in our tax code. Looked at another way, each time we pay any kind of tax, we pay 20 percent extra to cover all the special interests that don\u2019t have to pay.<\/p>\n

Some examples of tax expenditures include boxing, cigarettes, trucking, low-income rebates, rock crushing, cultural property, helium, motor vehicles and electronic ID manufacturing. There are also 47 different subsidies for various extractive industries worth as much as $300 million.<\/p>\n

These tax carve-outs are so big we could cut them in half and have enough money to balance the budget and lower gross receipts by 50 cents for all New Mexicans!<\/p>\n

Beyond the dollars at stake there is also an issue of fairness and tax equity. We want our government to work for all New Mexicans. It doesn\u2019t sit right that 20 percent of our government works great for some groups and not for others.<\/p>\n

Our priorities<\/h3>\n

Our tax policy and budget is a reflection of our priorities. Right now we trade subsidies for line items in our budget. Mathematically, this is like choosing boxing incentives over education funding. Some of these tax expenditures play an important economic development role and some support vulnerable segments of the population.<\/p>\n

The challenge is that, right now, we don\u2019t know which ones are beneficial to our state and which ones aren\u2019t needed.<\/p>\n

Over the summer, the revenue stabilization and tax policy\u00a0interim committee\u00a0worked hard on legislation to establish an evaluation outlined in SB 47 \u2013 Tax Expenditure Budget<\/a>. The first step to a solid economic development, tax and budget policy in\u00a0New Mexico is getting serious about tracking all our tax expenditures.<\/p>\n

The bill would require the tracking of job incentives created, and the return on investment and incremental tax dollars generated. These are knowable quantities that 39 other states track for their programs.<\/p>\n

Rather than debating about these in concept, we should be\u00a0supporting incentives that create jobs and eliminating the ones that are redundant, ineffective or based on political favoritism.<\/p>\n

It\u2019s critical to not throw the \u201cbaby out with the bathwater\u201d for the tax expenditures that really do help our state\u2019s economy grow and our most vulnerable. But we have to balance the economic benefit of lowering taxes for all business with targeting specific, high-growth industries we want to develop in our state. The challenge is that no one wants their particular \u201cox gored.\u201d<\/p>\n

Economic development decisions should be made based on strategy that combines high-growth potential industries and our state\u2019s unique competitive advantages. It\u2019s time to start making budget and tax decisions based more on a long-term\u00a0economic development strategy\u00a0and less on scattershot initiatives.<\/p>\n

Keller<\/a>, a Democrat, is the state senator representing District 17.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

We have 107 holes in our tax code. Looked at another way, each time we pay any kind of tax, we pay 20 percent extra to cover all the special interests that don\u2019t have to pay.<\/p>\n","protected":false},"author":575,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1192,16],"tags":[118,107],"class_list":["post-26988","post","type-post","status-publish","format-standard","hentry","category-commentary","category-guest-columns","tag-economy","tag-roundhouse"],"_links":{"self":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/26988","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\/575"}],"replies":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/comments?post=26988"}],"version-history":[{"count":0,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/26988\/revisions"}],"wp:attachment":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media?parent=26988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/categories?post=26988"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/tags?post=26988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}