By RICK NEBEL
Los Alamos
This is a response to a recent article in the Los Alamos Daily Post (link) on Chris Chandler’s and Leo Jaramillo’s briefing on the recent legislative session. In particular I want to address Ms. Chandler’s comment on economic development.
Let’s say that my New Mexico company has a contract with LANL. First of all, when the money comes in to LANL from the government, LANL pays Gross Receipts Tax (GRT) on it. When we receive money from LANL, we pay GRT on it. Finally, if we spend the money on goods and services in NM, then we pay GRT on that as well.
Now suppose that an out-of-state company has a contract with LANL. Once again, LANL pays GRT on the money when it comes from the Federal government. However, the out-of-state company does not pay GRT. Why not? Because that contract is interstate commerce and it is out of the jurisdiction of the State of New Mexico. In other words, if you want to do business in New Mexico you are better off if you locate out of state.
We are just a small business so why should New Mexico care if we leave? We aren’t a major part of the economy. However, when you look at the businesses that were founded in New Mexico but left because of the poor business climate, it is a real eye opener. Hilton Hotels comes to mind. So does Microsoft. Jeff Bezos never opened a business in New Mexico, but he did grow up in Albuquerque. Think how much better our economy would look if these companies were still headquartered in New Mexico.
So what do we need to do? We need to get rid of the business-to-business part of the GRT. To my knowledge, no other state taxes that way. It puts New Mexico businesses at a real disadvantage. With the oil and gas revenues up, this is the logical time to do it. You would think that the chairman of the House Revenue Committee would be all over that.
I admit that tax reform isn’t a terribly glitzy issue, so I’m going to suggest that it be packaged as a “gun safety” issue. It can be called the New Mexico Quit Shooting Yourself in the Foot Act.
Sincerely,
Rick Nebel
