News Column

Pressure Builds for Martinez on Tax Bill

March 2, 2012

Trip Jennings

New Mexico Gov. Susana Martinez

Supporters of a bill that would require big-box retail chains to pay more taxes in New Mexico handed in more than 5,000 petition signatures to Gov. Susana Martinez's office Thursday.

The book-sized packet of names represented the latest pressure applied to the first-term Republican governor as she considers whether to sign or veto Senate Bill 9.

Under the proposal, sponsored by state Sen. Peter Wirth, D-Santa Fe, companies that operate stores larger than 30,000 square feet in New Mexico but have their headquarters elsewhere would be forced to file their state corporate income-tax returns the same way as in-state store owners.

At the same time, the proposed law would lower the top rate of the state corporate income tax from 7.6 percent to 7.5 percent for corporations with revenue of more than $1 million a year.

Whatever Martinez decides to do, the state's Democrats hope to use her action as an election-year rallying cry. A veto would provoke criticism from Democrats that Martinez is standing with out-of-state corporations and not local businesses. On the other hand, sign the legislation and critics could say Martinez broke her no-tax-increases pledge.

Martinez hasn't made a decision yet, a spokesman said Thursday, although the governor said during the 30-day legislative session that she would veto it. Martinez backed away from that prediction on the last day of the legislative session. Her spokesman has said if the bill diminishes New Mexico's competitiveness with surrounding states or raises taxes, she will not sign it.

The governor has until March 7 to decide what to do.

"This is not a job-killing deal, it's a job creator," said Mike Mellon of Santa Fe on Thursday as the petition signatures were handed over to a member of the governor's staff. The presentation took place in the lobby of Martinez's fourth-floor State Capitol office.

"It's a win-win situation," said Steven Mayes of MoveOn.org New Mexico, who was among those present in the handoff of signatures.

The petition drive is the latest example of the amount of public input that has surrounded the issue.

Prior to Thursday, Martinez's office had heard from 2,300 people in support of the bill versus about 1,700 who opposed it, a spokesman said.

Martinez told reporters on Wednesday that she wouldn't be swayed by sheer numbers, according to published reports.

The signatures generated by the petition drive came from people living all over New Mexico, said Miles Conway, political coordinator for Communications Workers of America New Mexico.

Earlier this week, the Communications Workers of America launched a website, Ohsusana.org, to encourage individuals to ask Martinez to sign the legislation. The group also is using Facebook to target ads to New Mexicans on the social networking site.

It was unclear Thursday how many of those who had signed the petition already have registered their opinion with the Governor's Office or who might have signed the petition more than once.

Some of the signatures appeared "duplicative of people who have already contacted us, or duplicates within the sheets of paper given to us today," Martinez spokesman Scott Darnell wrote in an email Thursday.

Wirth and supporters of Senate Bill 9 have said the legislation is a way to remove an advantage out-of-state corporations enjoy over their in-state counterparts. Currently, out-of-state corporations have a choice in how they can file state corporate income tax returns. They can either file a return that separates out how much profit was earned here versus what was earned in other states, or they can file a different return that allows them to expense profits to states that don't have a corporate income tax, such as Delaware.

Supporters add that the extra revenue collected from big-box retailers affected by the proposed law would enable New Mexico to lower the top corporate income tax rate on most corporations.

Opponents have countered the legislation would hurt New Mexico's efforts to recruit out-of-state businesses into New Mexico because of higher taxes.

Supporters are quick to point out that most western states have something similar to Wirth's legislation already in their tax codes. But opponents of Wirth's bill argue that those states allow companies to apportion a more significant amount of profits earned in other states than New Mexico does.

That arcane tax discussion can get mind-blowingly complex, but it was not part of Thursday's hand-off of signatures.

Senate Bill 9's passage during the 2012 legislative session represented a major victory for Wirth, who has pushed similar legislation in each of the last seven years without much success. This time around, the bill cleared the House and Senate on mostly party-line votes, a signal achievement after not making it to the floor of either chamber before.

Even then, the bill's path to success was not obstacle-free. The bill was changed during the legislative session to apply only to out-of-state big-box retailers and not to all out-of-state corporations, as the bill's original version called for.

Then the bill had to survive a flurry of lobbying from corporate opponents in the last days of the session.



Source: (c) 2012 The Santa Fe New Mexican (Santa Fe, N.M.)


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