Harper: Tax policy overhaul paves way for state’s future

While state lawmakers are pulling out all the stops to find “now money” to plug an expected deficit in the next fiscal year, Rep. Jason Harper has introduced a bill he hopes can put the state on better financial footing for decades to come. Harper, R-Rio Rancho, admits that House Bill 412, the New Mexico […]

Harper: Tax policy overhaul paves way for state’s future

While state lawmakers are pulling out all the stops to find “now money” to plug an expected deficit in the next fiscal year, Rep. Jason Harper has introduced a bill he hopes can put the state on better financial footing for decades to come.

Harper, R-Rio Rancho, admits that House Bill 412, the New Mexico Tax Reform Act, is not a quick fix and will not patch the budget in fiscal year 2018 or even 2019. But by restructuring the state gross receipts tax and simplifying income and other tax policies, New Mexico will position itself for more solid growth in the new economy, he said.

“It doesn’t help us fix the current budget problem,” Harper said of his bill, “but this hopefully prevents another budget problem.”

The measure comes halfway through the 2017 legislative session, when reserve funds have been depleted by efforts to balance budgets for the last fiscal year and the current year, which ends in June, and many lawmakers are focused on raising enough new money to get through the upcoming year.

After thousands of hours of data crunching, the more than 300-page bill proposes bringing back the gross receipts tax on food, but at a lower rate statewide, somewhere below 3 percent. Those receiving food assistance would be exempted from the tax, Harper said, and the bill increases tax credits to low-income residents.

The bill eliminates most other exemptions to the gross receipts tax — including loopholes for nonprofits and internet sales. It rebrands the tax it as a sales tax.

Additionally, the bill provides for a single rate of 5 percent for both corporate and personal income tax, and makes changes that send more money to the road fund, as well as local governments and Medicaid.

The simple 5 percent tax rate is used by the state of Utah, which ranks high for state tax structures, Harper said.

Harper, an engineer with three scientific patents, has been compiling data and running spreadsheet models since the end of the last legislative session. He also has presented the information to business and industry groups and interim legislative committees, including the Legislative Finance Committee.

He said lawmakers in both parties are stuck with an outdated tax code that is clearly not working and a governor who is refusing to sign measures that would boost revenue. “The only way is to get a comprehensive reset,” he said.

His outreach has paid off, with two senior Democrats agreeing to co-sponsor the bill: Sen. John Arthur Smith of Deming, chairman of the Senate Finance Committee, and Sen. Carlos Cisneros of Questa, co-chairman.

“I think that’s the only true tax reform that’s out there, and I thing that the discussion needs to carry forward,” Smith said.

Progressives in the Democratic Party have said any reintroduction of a tax on food is a nonstarter, Smith said. But he said those same lawmakers lament cuts to public education, not understanding that removing the gross receipts tax from food is costing the state $400 million a year, money that could pay for schools.

“They are saying never a tax on food,” Smith said, “but they want to help education. I think the food tax is going to have to be discussed.”

Explaining the complicated tax measure might be Harper’s biggest obstacle. The bill, for instance, does not initially set an absolute sales tax rate for the state until data are gathered on economic sectors that might not be paying taxes today.

That information will be crunched the first year the bill becomes law, with no changes until a full analysis is completed.

“We spent thousands of hours developing a tax tool [available online] that allows us to calculate the new rate based on a revenue neutral change to the tax code,” Harper said. “Our calculations show that the state GRT rate will fall from 5.125 percent to approximately 2.7 percent if HB 412 is enacted.

He said that rate is based on a very conservative calculation, and after initial implementation, the state rate would be adjusted again. “We expect the state rate will again decrease, falling below 2.7 percent.”

Contact Bruce Krasnow at [email protected].

We're ad free

That means that we rely on support from readers like you. Help us keep reporting on the most important New Mexico Stories by donating today.

Related

Emily’s List endorses seven candidates for Legislature

Emily’s List endorses seven candidates for Legislature

Emily’s List, a nonprofit that supports women candidates and reproductive rights, endorsed seven incumbents facing general election opponents in New Mexico legislative elections. All…
Equality New Mexico endorses 15 legislative candidates

Equality New Mexico endorses 15 legislative candidates

A New Mexico-based LGBTQ rights organization endorsed 15 candidates for state House and Senate seats for the 2024 elections.  Marshall Martinez, executive director of…
Lujan Grisham pocket vetoes two bills

Lujan Grisham pocket vetoes two bills

Gov. Michelle Lujan Grisham pocket vetoed two bills the legislature passed this legislative session: one changing the Cybersecurity Act and the other concerning law…
BLM announces final methane waste rule

BLM announces final methane waste rule

The federal Bureau of Land Management announced its final methane waste rule on Wednesday. These new regulations clamp down on the practice of venting…
What consumers, farmers should know about the flu impacting dairy cows

What consumers, farmers should know about the flu impacting dairy cows

Migrating birds appear to have caused a virus in dairy cattle that is causing reduced milk production. So far, the disease, which initially started…
Republicans seek to limit national monument designations

Republicans seek to limit national monument designations

Republican-backed legislation in the U.S. Congress would make it harder for the government to designate new national monuments. The proposed Congressional Oversight of the…
Amid new graduation requirements, what do high schoolers want to learn?

Amid new graduation requirements, what do high schoolers want to learn?

By Margaret O’Hara, The Santa Fe New Mexican The main things that bring Brayan Chavez to school every day: Seeing, talking to and engaging with…
Special ed teachers hope lawmakers OK pay raises, admin changes

Special ed teachers hope lawmakers OK pay raises, admin changes

By Margaret O’Hara, The Santa Fe New Mexican Brittany Behenna Griffith has a laundry list of adjectives to describe the ideal special education teacher:…
Lawmakers must find consensus on competing education spending plans

Lawmakers must find consensus on competing education spending plans

By Margaret O’Hara, The Santa Fe New Mexican A challenging task awaits New Mexico lawmakers in the next 30 days: Reconciling three very different…
Health workers fear it’s profits before protection as CDC revisits airborne transmission

Health workers fear it’s profits before protection as CDC revisits airborne transmission

Amy Maxmen, KFF Health News Four years after hospitals in New York City overflowed with covid-19 patients, emergency physician Sonya Stokes remains shaken by…
Lujan Grisham, Biden admin announce $10 million in federal funds for tribes, pueblos

Lujan Grisham, Biden admin announce $10 million in federal funds for tribes, pueblos

Gov. Michelle Lujan Grisham announced Friday $10 million in funding from the federal American Rescue Plan Act was awarded to six tribal nations and…
Proposal to curb executive powers moves to House Judiciary

Proposal to curb executive powers moves to House Judiciary

The House Government, Elections and Indian Affairs Committee discussed a potential constitutional amendment that seeks to limit the governor’s executive powers. The committee approved…
Senators introduce legislation to aid abortion providers

Senators introduce legislation to aid abortion providers

Sen. Martin Heinrih and other Senate colleagues introduced abortion rights legislation into the U.S. Senate on Thursday. The Abortion Care Capacity Enhancement and Support…
U.S. Supreme Court hears case to restrict access to medication abortion

U.S. Supreme Court hears case to restrict access to medication abortion

The U.S. Supreme Court heard the case about the regulations around mifepristone, one of a two-step regime for abortion medication, on Tuesday. FDA v.…
At stake in mifepristone case: Abortion, FDA’s authority, and return to 1873 obscenity law

At stake in mifepristone case: Abortion, FDA’s authority, and return to 1873 obscenity law

Lawyers from the conservative Christian group that won the case to overturn Roe v. Wade are returning to the U.S. Supreme Court on Tuesday in pursuit…
Senators introduce legislation to aid abortion providers

Senators introduce legislation to aid abortion providers

Sen. Martin Heinrih and other Senate colleagues introduced abortion rights legislation into the U.S. Senate on Thursday. The Abortion Care Capacity Enhancement and Support…
New Mexico Medicaid to cover cost of over-the-counter oral contraception

New Mexico Medicaid to cover cost of over-the-counter oral contraception

New Mexico Medicaid announced on Wednesday that it will cover the cost of Opill, the first oral contraception approved for over-the-counter use. It is…
U.S. Supreme Court hears case to restrict access to medication abortion

U.S. Supreme Court hears case to restrict access to medication abortion

The U.S. Supreme Court heard the case about the regulations around mifepristone, one of a two-step regime for abortion medication, on Tuesday. FDA v.…
San Juan County, Navajo Nation settle redistricting case

San Juan County, Navajo Nation settle redistricting case

The Navajo Nation and San Juan County reached an agreement Monday about commission districts after the tribe alleged that its members were not adequately…
MIT ranks NM elections most well-run in the U.S.

MIT ranks NM elections most well-run in the U.S.

New Mexico’s 2022 election was ranked most well-run in the country by Massachusetts Institute of Technology’s Election Data and Science Lab’s Elections Performance Index.…
Emily’s List endorses seven candidates for Legislature

Emily’s List endorses seven candidates for Legislature

Emily’s List, a nonprofit that supports women candidates and reproductive rights, endorsed seven incumbents facing general election opponents in New Mexico legislative elections. All…
Ex-GOP candidate allegedly hired people to kill witnesses in shootings of homes of Democratix politicians

Ex-GOP candidate allegedly hired people to kill witnesses in shootings of homes of Democratix politicians

Republican failed state house candidate Solomon Peña is facing more federal charges, this time on a murder-for-hire scheme.  Peña allegedly tried to hire two…
BLM announces final methane waste rule

BLM announces final methane waste rule

The federal Bureau of Land Management announced its final methane waste rule on Wednesday. These new regulations clamp down on the practice of venting…
U.S. Supreme Court hears case to restrict access to medication abortion

U.S. Supreme Court hears case to restrict access to medication abortion

The U.S. Supreme Court heard the case about the regulations around mifepristone, one of a two-step regime for abortion medication, on Tuesday. FDA v.…

GET INVOLVED

© 2023 New Mexico Political Report