Bill Jordan Guest Blog: WalMart, Out of State Corporations and NM Taxes

This is a guest blog by Bill Jordan, Deputy Director for Policy, New Mexico Voices for Children:

There’s been a lot of press coverage lately on WalMart and its low salaries and poor benefits. There’s another reason that New Mexicans should be unhappy with WalMart--they don’t want to pay their NM corporate income taxes. The state Tax and Revenue Department recently won a hearing to collect $11.6 million in back taxes, but a loophole in New Mexico’s corporate tax law allows many big multi-state corporations to avoid paying corporate income tax (CIT) on the money they make here.

This corporate tax loophole allows multi-state corporations to move their profits to a state like Delaware that has no corporate taxes in order to avoid showing a profit in New Mexico and paying tax on that profit. New Mexico businesses pay their corporate taxes, thus giving out-of-state businesses a competitive advantage. New Mexico owned businesses end up paying a heavier proportion of the business taxes our state collects. As one small business owner in Deming said to me recently, “WalMart doesn’t pay tax to pave the road in front of their store, but I pay my taxes to pave the road in front of my store AND their store.”  Exactly!

I urge you to support the Business Opportunity Act (technically called the Mandatory Combined Reporting Act, Rep. Peter Wirth, HB 123 in the 2006 legislative session), which would require out-of-state corporations to pay their fair share for the money they make here in New Mexico. This would level the playing field for our New Mexico businesses. It would not hurt our efforts to attract new out-of-state businesses since most of our neighbor states require combined reporting too.

Closing this tax loophole would bring more than $50 million in revenue to the state of New Mexico each year. Only a few dozen multi-state businesses would be required to pay their fair share of state taxes, while 17,000 New Mexico businesses would benefit from a level playing field.

So why haven’t we passed legislation that would give our locally owned businesses a fair shake? Giant multi-state corporations – with their skyscrapers full of tax lawyers and lobbyists – have so far defeated attempts to reform this tax law. Our state legislators are lobbied hard by the Association of Commerce and Industry (ACI) as well as by local chambers of commerce, which appear to be representing the interests of the large national corporations instead of the New Mexico owned businesses they claim to represent. We feel certain that if we can shed light on this issue, we can get New Mexico legislators to support New Mexico businesses, not WalMart and the big out-of-state guys.

If you own a New Mexico business and are outraged by this, please let your local chamber of commerce know!  If you would like to raise your voice in support of New Mexico businesses, or you would like more information about combined reporting, please contact Bill Jordan, Deputy Director for Policy, New Mexico Voices for Children at bjordan@nmvoices.org.