Gov.’s Tax Plan Would Aid Big, Little Firms

Tom Clifford

Albuquerque Journal (Subscription) - The Martinez administration, hoping to improve the state’s economy, will once again ask the Legislature to reduce corporate income tax rates, eliminate gross receipts taxation of the state’s smallest businesses, reduce the tax burden on research and development companies and give personal income tax credits to military retirees. Finance and Administration Secretary Tom Clifford told a Legislative Finance Committee hearing Wednesday that the proposals, little changed from legislation it backed at this year’s session, have to be consistent with Gov. Susana Martinez’s top priority of “sustainable budgets that we can maintain over the long term” once they are enacted. “This (tax reform) package has to be whittled down to what can fit in the budget.” Some of Clifford's proposals:

• Lowering the top corporate income tax rate from 7.6 percent to a rate more competitive with neighboring states. He said Arizona will lower its top rate to 4.9 percent over the next five years.
•  Changing the way corporations calculate their income taxes to benefit companies that sell much of their products and services out of state.
• Allowing small businesses to deduct their gross receipts tax payments from income taxes if their receipts are less than $50,000 a year. “It’s an issue of trying to make life easier for our entrepreneurial businesses, our microbusinesses,” Clifford said.
• Reducing the GRT burden on companies that sell research and development services to the Defense Department and the department’s contractors or that sell satellite- or laser-related services. Clifford said New Mexico faces much more competition for R&D than it did decades ago when the state’s GRT was designed.
• Phasing in a personal income tax credit on veterans’ retirement income. Clifford said the measure would help attract skilled former military workers to New Mexico.
• Reforming the high-wage tax credit paid to employers. Clifford said the time companies have to claim the credit should be limited, and the credit should be targeted toward industries that will help the economy grow.

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Gov.’s Tax Plan Would Aid Big, Little Firms