Bloggers note: Here's a piece from Sen. Peter Wirth, a colleague in the Senate from Santa Fe. It's timely in view of the current impasse between the Governor and the House over the budget and Martinez' s stance that film tax credits be cut. Here it is...
Film jobs and tax breaks
When I first came to the Legislature in 2005, budgets were a bi-partisan affair as Republicans and Democrats worked together to review state programs and determine funding priorities. We set aside reserves in excess of ten percent and increased money for programs that both parties agreed were under-funded, none more important than teacher salaries. The budgets in my first couple of years passed unanimously.
How things have changed.
This past week, Governor Martinez instructed Republicans in the House to vote against the 2012 budget because it does not cut the film tax credit from 25% to 15%. She estimates this cut will bring in twenty-five million dollars in revenue which she would apply to education funding. While more education funding is a laudable goal, the question each legislator should be asking is whether this end justifies the risk of dismantling one of the best clean jobs initiatives this state has ever seen?
Movies and New Mexico go well together. Governor King, Governor Johnson and most recently Governor Richardson realized that movies provide good clean jobs. Today 10,000 to 12,000 New Mexicans can say the film industry either employs them or provides substantial benefits to their small businesses. I am repeatedly approached by New Mexico business owners, Republicans and Democrats, who tell me that their small business would not have survived the recession without the film industry.
Movie producers go where the economics make the most sense. Our twenty-five percent credit is not the top among different states but positions us to compete. Dropping the credit to fifteen percent will undoubtedly save us money but at what cost? If the film business leaves, are we willing to lose a large portion of those 10,000 to 12,000 jobs and the taxes these individuals and businesses pay? How about the landlords, restaurants and hotels that depend on this film business? Why are we singling out this industry, when there are 1.3 billion in other tax credits, deductions and loopholes? These are questions I cannot answer.
So here is another option for Governor Martinez that will raise at least twenty five million dollars for education. Let's finally close the corporate loophole that makes New Mexico the last western state with a corporate tax that allows multi-state corporations to avoid the tax their New Mexico competitors pay.
It is unconscionable and unfair that large New Mexico banks, oil and gas producers and retailers pay 7.6% corporate tax yet their national competitors can choose to avoid this tax. It is also unconscionable and unfair that New Mexico small businesses pay pass-through income tax at the 4.9% tax rate but are forced to compete against multi-state companies who can pay little or no corporate tax.
Is this a tax increase as some argue? NO. As proposed in Senate Bill 6 (http://www.nmlegis.gov/Sessions/11%20Regular/bills/senate/SB0006.pdf), the tax rate stays the same. We simply ask all multi-state companies to play by the same rules.
And, to take it one step further, next week I will propose an amendment to SB6 to lower the top 7.6% corporate tax rate across the board, meaning that all large business operating in New Mexico pay the same rate. This would fulfill a basic tenet of tax policy by broadening the tax base and lowering the rate. New Mexico large businesses would get a tax reduction and compete on a level playing field. The state would still raise revenue which can go to education. To me, this makes far more sense than risking tens of thousands of film industry jobs.
Senator Peter Wirth - (D)
District: 25
Capitol Phone: (505) 986-4276
For more details, go to www.senatorpeterwirth.com
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Paid for by the Democratic Party of New Mexico -- www.nmdemocrats.org |
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