SANTA FE, N.M., Oct. 10, 2013—Once again New Mexico is only 38th in the nation, according to the Tax Foundation’s annual State Business Tax Climate Index, the 2014 edition of which was released yesterday, but this time the report singled out the state for one positive improvement it made that it liked very much.
“While not reflected in the current Index edition, Governor Susana Martinez signed legislation this year that will lower the corporate income tax rate from the current 7.6 percent to 5.9 percent by 2018, in part by tightening the jobs credit and film credit. New Mexico currently has the highest corporate tax rate among its neighbors, and this cut will improve its competitiveness in the region,” wrote the authors of the Index in a special note on Page 26.
A state’s competitiveness with its neighbors is no small matter for its economy, according to the Foundation’s Index, and its corporate tax rate is a leading indicator if a firm will move to it or not. “It’s important to remember that even in our global economy, states’ stiffest and most direct competition often comes from other states. The Department of Labor reports that most mass job relocations are from one U.S. state to another, rather than to a foreign location.”
The Index measures a state’s corporate tax rank, individual income tax rank, sales tax rank, unemployment insurance tax rank and property tax rank to come up with an over-all rating. New Mexico has come in 38th for the last three years, but the Index see improvement ahead, not only because of the corporate tax reform, but also because of the state’s low property tax rate, which the Index awarded best in the nation. Not so, New Mexico’s rankings for sales tax rate (45), corporate rate – until above noted improvements – (40), individual income tax rate (34). The state’s unemployment insurance tax rate, however, came in a respectable 17th best.
A month before release of yesterday’s Index, Minda McGonagle, New Mexico state director for the National Federation of Independent Business, wrote in a column for the Albuquerque Journal, that the word is out that New Mexico is on the move.
“It came, surprisingly enough, from deep in the heart of Texas at a gathering of small-business representatives from around the nation: Praise for New Mexico. A compliment paid not just by anyone, but by Texas Gov. Rick Perry.
“He agreed with Gov. Susana Martinez that New Mexico is gaining on Texas when it comes to recruiting new businesses. At the San Antonio meeting, Perry made special mention of the progress our state is making. Congratulating Martinez on her leadership in pursuing tax and regulatory reforms, he noted his expectation for the competition to only get tougher.”
The full Tax Foundation 2014 State Business Tax Climate Index can be read by clicking the graphic above.
For more than 70 years, the National Federation of Independent Business has been the Voice of Small Business, taking the message from Main Street to the halls of Congress and all 50 state legislatures. NFIB annually surveys its members on state and federal issues vital to their survival as America's economic engine and biggest creator of jobs. NFIB’s educational mission is to remind policymakers that small businesses are not smaller versions of bigger businesses; they have very different challenges and priorities.
National Federation of Independent Business/New Mexico