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It’s time for tax fairness and transparency

Stephanie Maez-Gibson

Stephanie Maez-Gibson

It’s time to close the tax loophole for out-of-state corporations and provide more transparency and accountability when it comes to tax “incentives.” Will we choose the priorities of Wall Street or Main Street?

New Mexicans share core values of fairness, transparency and accountability. They also have an abiding faith in democracy. Thus, it is disappointing when the debates that occur at the highest levels of government over the policies that affect people’s lives often fail so miserably to reflect these basic core values.

Where are the jobs? That’s the question foremost on minds of everyday New Mexicans.

Yet while far too many New Mexico families continued to suffer through job loss, stagnant incomes and foreclosures, one proposal did not pass the Legislature last year – an initiative that would have gone a long way toward restoring some semblance of fairness and balance.

Tomás Garduño

Tomás Garduño

That proposal would have closed the tax loophole for out-of-state corporations – a tax giveaway that enables these corporations to avoid paying their fair share. All while New Mexico small businesses continue to invest in vital community services such as public safety and education.

Another proposal, which did pass during last year’s legislative session, unfortunately fell victim to the governor’s veto pen. It would have created a formal mechanism of accountability and transparency by requiring an independent review of all tax incentives.

So just at the time when New Mexicans most needed more transparency and accountability on the job creation front, this long-overdue reform was shot down. It would have established a strong, independent review policy to determine which of the large number of corporate tax giveaways stuffed throughout New Mexico’s tax code were actually delivering on their original promise to create actual jobs.

Tax “incentives” are fine, but New Mexicans have a right to know that they work, that they actually produce measurable results. This is what we mean by accountability.

Today the Legislature is back in session. And once again, it must grapple with the problems bearing down on middle-class working families.

New Mexico is at a crossroads

Nothing could be more obvious. The public policies needed to address our state’s challenges must be accessible and clear in the matter of who pays and who benefits. But with their armies of lobbyists, big corporations and the financial sector know how to play the game of pay-to-play in New Mexico.

New Mexico families can’t afford a lobbyist.


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Yet they’re the ones on the hook when bad public policy is enacted. When out-of-state corporations take advantage of loopholes that sap our communities of resources needed for necessary investments in education and public safety, the consequences can be catastrophic.

The damage caused by these irresponsible policies are there for all to see – reductions in resources for firefighters and emergency responders, fewer teachers and increased student class sizes in our schools.

This is not how an attractive climate for new business activity to flourish is created.

It’s time that the governor and our lawmakers take note – if given the choice and all of the information, there can be little doubt that New Mexicans would defend the everyday heroes – our teachers and public safety personnel – against out-of-state corporations that earn and export massive profits while not paying their fair share.

An engaged citizenry is vital to our democracy

In order to engage all New Mexicans in these crucial policy debates, we’re distributing educational materials that focus on how state government affects the lives of everyday people – individuals and communities in New Mexico.

These fact-based materials are being made available to the public, as well as to constituents of legislators who serve on key committees that hear legislation focused on jobs, taxes, and the budget.

Moreover, due to redistricting, many constituencies will soon discover that they are represented by new state legislators.

That’s all the more reason why we want to help every New Mexican to be better able to engage in an active dialogue with their respective legislators and the executive. We’re fortunate to have a citizen state legislature that is accessible and responsive to everyday constituents. But our lawmakers can only respond when they hear the people. And to be heard the people must speak out.

New Mexico stands at this crossroads facing a fateful decision. Will we choose the priorities of Wall Street or Main Street?

We believe that New Mexicans deserve a state government that reflects the values they hold dear – fairness, transparency, accountability and hard work. It’s time to choose policies that generate jobs for the people of New Mexico rather than padding profits for out-of-state corporations that can afford to buy influence.

New Mexicans are open and honest and we entrust our elected officials to uphold those same values. When they don’t, we believe in a New Mexican citizenry – fully informed and engaged – that will hold them accountable.

Maez-Gibson is incoming chief executive officer at the Center for Civic Policy, and Garduño is co-director at the SouthWest Organizing Project.

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16 comments so far. Scroll down to submit your own comment.

  1. You’re welcome Mick.  I think people tend to forget that government has frequently intervened in tax policy, as they have in providing direct subsidies and even “give-aways”, to encourage one thing or another (many times with good intentions, and sometimes for special interests), or as you say pick winners and losers.  There are many who are comfortable with government doing the picking, but not free markets.  I am not one of those, I think a majority of our problems today, the distortions of the tax code, tax “fairness”, etc. are driven by government trying to do too much in the free market and not trusting it. Regulations are very necessary, but tax policy is not a good place for the incompetent government, and they always are, to muck around without full understanding of consequences and effects.  I remember a lecture in grad school by one of my favorite econ profs, Paul Samuelson, where he described meeting with JFK after he was named economic advisor.  He proposed tax cuts to stimulate the economy and business growth, JFK was not convinced and questioned the logic as JFK alway followed Keynes, but Samuelson told him Keynesian ideas of economic intervention into the economy were perfectly consistent with raising or lowering taxes, as that was government intervention the same as direct subsidies and transfer payments.  And so even the Democrats have used them over the years.

  2. Dr. J, I thank you…  I think your suggestion that many of these tax policies were intended to attract out of state investment is an honest answer. I think at the time many of these decisions were made, that was the thinking. It may have even been the right answer at that time.

    But now is a good time to rethink the current status quo. 

    Why does a subsidy for corporate America come across as a tax incentive when the lobbyists call for a handout? Perhaps the same reason that subsidies to agribusiness are called transfer payments and are not called welfare. And why does the common agribusiness model assume illegal workers or guest workers is the way to balance their break even analysis?

    How come that crony capitalist mantra, “The Government shouldn’t be picking winners and losers” just disappears when the cronies are threatened?

    What the real insiders know is that the mantra is: “Socialize the Risk, but Privatize the Reward.” [Space Port, Rail Yard...]

    We are all in this together. It’s not about Redistribution of Wealth. It’s about Equity.

    The cronies have this chant that only consumers pay taxes. They bring that up whenever a corporation is in danger of being taxed. You know the line: “if a corporation gets taxed, they just pass the cost on to the consumer.”

    I have no problem with concepts like accelerated depreciation for tangible plant improvements. I’m skeptical of tax allowances for not so tangible worker training and waiver of minimum wages during a training period and that kind of shenanigans. But I am willing to have a thoughtful discussion. I agree that finding a perfect and equitable solution may be difficult, but clouding the issue with rants about forced redistribution of wealth and the like are not productive. The same could be said for my whining about crony capitalism, but I honestly think that is one of the biggest threats that we have to the Free Enterprise System and to the stability of our Nation.

    As ever, Michael J. Flynn

     

     

  3. Fair enough Thinkie, that’s reasonable to show it makes a difference.  However, I do hope the “studies” come out with more consistent, scientific, and objective conclusions and methodology than the studies about the film incentive program did.

  4. Look, Dr.J, all people like me are asking is legislators make sure these tax cuts you call incentives WORK. If they’re so great, do the due diligence to show that they work. It’s that simple. And I don’t know what’s so partisan about it.
    But don’t ask me to take your much less some lobbyists’ word for it that tax incentives for giant out-of-state corporations work when so many of us residents are still out of work and my son’s classroom size just increased. It doesn’t seem to be working. Maybe it is. I’m thrilled if it is. But show me.
    Show me a verifiable consequence of taking away an incentive and I’ll be with you defending it. Show me a job created that would have gone elsewhere and I won’t be so skeptical.
    But maybe, just maybe, resident small business owners could make BETTER use of those incentives. Taco stands are not the only New Mexico-owned businesses, you know.
    And maybe some tax incentives don’t need to be so big that we are losing teachers who are actually creating the future of this state. Maybe one or two tax cuts are not bringing SO much benefit to the economy compared to the cost.
    Because one way to guarantee we will need subsidies is if we don’t educate our children. No tax loophole is going to bring jobs to a state with no infrastructure and no quality workforce, unless all they want to do is take something and leave. And I don’t much want to incentivize that kind of business.

  5. Look people, this tax regulation, or lack thereof, however you want to view it through your partisan viewpoint, is there because legislators wanted to diversify our economy, encourage larger businesses to do business in NM instead of other states with onerous taxation, and thus move NM away from being a government nanny state always begging for federal and state tax money to survive.  If you want to remove any incentive for out of state companies to come here, fine, but think about what the unintended consequences are for that, in order to encourage some taco stand locally owned, the big guys may just leave.  And again, how does raising taxes on anybody create private jobs here and expand our state and diversify our economy away from government subsidies?

  6. The really sad thing is how much responsibility for our self determination we have passed on to Washington.  In NM the lagrest transferor of money to the population is Federal, State and Local Government….and Federal Government is the biggest source of those transfer payments.  NM gets  2+ dollars for each dollar we send to Washington.  You think that seems fair to other states?  We have transferred huge amounts of money to individuals living on reservations and pueblos.  Yet with that cradle to grave welfare system I continue to see massive unemployment, poverty, drug and alcohol addiction and healthcare issues on the various reservations and pueblos. Casinos were not the solution to poverty and some in NM are in serious financial condition. 

    Ms Gibson and Mr Garduno you both seem like advocates for removing resources from the most productive and transferring them to the most needy.  A nobel idea.  But you fail to ask the hard question as to why we have so many needy in this state?  Is it the fact that they can get that free lunch way too easy? 

  7. When the people find that they can vote themselves money, that will herald the end of the republic. Ben Franklin
    “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. Tocqueville
    The reality can be framed in other words, but the class warfare that will characterize the next elections is about redistributing wealth.

  8. Taxes have nothing to do with distribution of wealth.  Taxes are for providing services that are best organized and distributed through the government.
    A store that has a big parking lot, for example, is using the roads to get many customers to their business.  The store is relying on public utilities, including sewers and services like electricity and communications services, traffic signals, police and fire protection, however they are provided. Maybe the store does not provide sufficient wages or hours to their employees to make a living.  The employees may have to rely on services like food stamps or public hospitals for health care, since the wages also are not sufficient or benefits are not provided.
    The store is using a lot of services and cannot function if these services are not provided.  It should pay for this at a same or higher rate than small businesses, who rely on the same services but may consume less of them.
     

  9. OK. This doesn’t have to be a theoretical or metaphysical discussion about the redistribution of wealth or whether or not the very concept of taxes is oppressive.

    I think the question at hand is tax equity. More specifically, should corporate entities who use foreign flags of convenience (incorporation in Delaware, for example) be rewarded by us local yokels at the expense of the New Mexico sole proprietor or New Mexico incorporated business?

    I think not. Your honest remarks on this narrow question please.

    Respectfully, Michael J. Flynn

  10. Taxes. are they or are they not, redistribution of wealth. [sic]
     
    Assuming that everyone else already agrees with a false definition simply because you’ve accepted it does not make it any less inaccurate, Mr. MacQuigg; indeed, such rhetoric is little more than a remarkably simplistic sound bite that people substitute for complex realities which they can’t be bothered to think past the logical traps of two-dimensional rhetoric.  What you are saying is that one of the most basic mechanisms of societal responsibility and participation is tantamount to “redistribution”; therefore our entire economic system is also “redistribution”.  After all, demanding artificially-endowed currency for goods and services – up to and including food and medical aid – is just as much an integral mechanism in modern economics as paying taxes in order to maintain the people’s government, and is thus by your definition redistributive.

  11. Taxes. are they or are they not, redistribution of wealth.
    If that is the effect, then that is the process.
    We could debate whether taxes are forced redistribution, but not whether taxes are redistribution of wealth of their face.
    Assuming we concede that forced redistribution of wealth in the form of taxes is a legitimate function of government, what is fair? except what seems fair to whoever is asked the question.
    Point to a number for “fair” that you can defend with anything but your opinion that ,it seems like a fair number to you.
     
     

  12. Why should the big box out-of-state businesses have advantages in the tax code that local businesses do not have?
    Why isn’t this sort of “tax fairness” a reasonable expectation? 
    It is not a matter of “redistributing wealth.”  It is a matter of businesses being treated equally in terms of making a contribution to help maintain roads and expand utilities, to provide fire and police protection to support their businesses–costs that are shared, but not for them?
     

  13. Before you can argue about what a “fair” proportion is; don’t you first have to justify the premises; forced redistribution of wealth is morally defensible, and then that, the redistribution of wealth is a legitimate function of government.
     
    then we can start talking about “fair” redistribution.

  14. So what is fair?  As soon as we get done with the one percent who is next?  Why not give every one the chance to get to the top of the hill, knowing darn well that most including me will never make it.  The world can do better with less “fairness” and with more “opportunity” and “choice”.   A flatter and less cumbersome tax code would take care of mmuch of this.

  15. Dr J. @  And tax fairness is a very subjective and partisan term I’m afraid, why should I accept their definition of it?

    So, how can we make these arguments more objective?

    I think the authors could provide some quotes to chapter and verse of NN Statutes and Regulations that would provide objective evidence of what you think is now subjective and partisan. These and some companion case studies would, I think, show that out of state corporations can pay themselves liscencing fees, management fees, and the like so that profits made in New Mexico become vapor when these fees paid from the left hand to the right hand show up as expenses to the New Mexico entities, but as non taxed revenues in corporate safe havens in Deleware.

    If that is what is actually happening, then would you think that was fair to New Mexico businesses, especially sole proprietors who haven’t created such clever constructs for no other reason than to avoid taxes?

    Legal; perhaps. Fair; I don’t think so.

    Respectfully, Michael J. Flynn [with apologies given my spell checker is not working on this netbook]

  16. It’s always interesting when certain political and cultural segments of our society call for more taxes and “fairness”, whatever that is.  I always grab my wallet when someone mentions tax “fairness”, as they obviously want the government to rake in more and more money and yet they could care less about how it is spent, we just need more taxes and everything will be better.  I fail to see how raising taxes on anyone, tax “fairness”, and requiring “transparency”, again whatever that is, on tax incentives is going to create one job in the private sector or help businesses grow.  It will create many jobs in the government and allow our elected officials to continue spending money like drunken sailors on their special interests without any accountability, but I think the general citizenry is far too smart to go for this kind of rhetoric, thus these attempts will fail once again, thank goodness.  We don’t need more taxes and more government, we need less of all this.  And tax fairness is a very subjective and partisan term I’m afraid, why should I accept their definition of it?

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