[LWVNM Action] Once again Senate Finance guts a great tax bill delivered by the House

[Richard Mason]

*The LWVNM will still support this because of the tax credits for low
income and families,*

But if you thought things would change with the new Senate Finance
leadership, think again,

In 2019 they gutted HB6 that sought to make the tax system more
progressive, but at least they approved some tax increases for the higher
earners. This time they stripped all the  taxes. That doesn't seem like
progress.

*Tax increases stripped out of Roundhouse tax package*

*By Dan Boyd / Journal Capitol Bureau Chief
<https://www.abqjournal.com/author/dboyd>*

*Thursday, March 18th, 2021 at 3:37pm*

A revised tax package nearing the Roundhouse finish line would expand two
New Mexico tax breaks for low-income state workers. (Eddie Moore/Journal)

SANTA FE — A key Senate committee removed tax hikes on New Mexico
corporations and higher-income residents from a House-approved tax package
on Thursday, delivering a victory to business groups who had railed against
the proposed tax changes.

After stripping the tax increases from the measure, House Bill 291, the
Senate Finance Committee then voted 7-4 to advance the scaled-back bill
that would still expand two tax breaks for low-income New Mexico workers to
the Senate floor.

Without the tax increases, the more generous tax credits would cost the
state an estimated $70 million annually. But a $7.4 billion budget bill
nearing final approval at the Roundhouse accounts for the price tag — at
least for the coming budget year.

“It’s not everything we wanted … but at least we’re helping people who need
it around the state,” said Sen. George Muñoz, D-Gallup, the committee’s
chairman, during Thursday’s hearing.

He also said the timing was not right for tax increases, with many
businesses still struggling due to the COVID-19 pandemic.

The Thursday hearing was a contentious one, with a business owner at one
point being inadvertently heard on the onlilne webcast using a curse word
in reference to legislators and accusing them of “trying to throw taxes at
us.”

That prompted criticism from Muñoz, who said the individual would be barred
from participating in future committee meetings.

In addition, Sen. Jacob Candelaria, D-Albuquerque, said the hot mic comment
showed as “clear as day” the attitudes of many business groups.

“I don’t believe in rapacious, exploitative capitalism and I think we
should be investing in people,” Candelaria said.

Backers of the original bill argued it would make New Mexico’s tax code
more progressive, while also diversifying the state’s revenue base. Money
from taxes and royalties on oil and natural gas industries, a historically
volatile revenue source, currently make up more than 40% of total state
revenues.

But critics said the higher rates could be harmful for businesses and lead
to job losses around New Mexico.

“No business will get through this without a tax increase,” said Carla
Sonntag, the president of the New Mexico Business Coalition.

The provisions stripped from the tax package on Thursday included
provisions phasing out 2013 corporate income tax cuts signed into law by
then-Gov. Susana Martinez and implementing new top personal income tax
brackets, with a new top bracket of 6.5% — up from 5.9% under the state’s
current tax code.

Top Senate Democrats had previously argued for a “revenue neutral” tax
package, saying an expected influx of federal stimulus dollars and a
projected $2.7 billion in cash reserves provided the state with the
opportunity to make sweeping changes to its tax code.

Meanwhile, the provisions still left in the bill would expand the tax
benefits offered by the Low Income Comprehensive Tax Rebate and the Working
Families Tax Credit.

The tax credit would also be expanded to allow an estimated 41,6000 New
Mexicans between the age of 18 to 24 to qualify. And it would expand the
tax benefit to those working legally who are not U.S. citizens.

If approved by the full Senate, the tax package would have to return to the
House due to the amendments.

Both chambers would have to sign off on the same version of the bill before
the 60-day legislative session ends Saturday in order to send it to Gov.
Michelle Lujan Grisham for final approval.
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