Republican legislators think so, but their bills face 10 hearings
Two legislators from Farmington on Thursday outlined their bill for a sweeping overhaul of the state’s tax system, but admitted they did not know if they are on exactly the right track.
Sen. William Sharer, right, and Rep. Tom Taylor, both Republicans, said their 207-page bill would eliminate almost all taxes and replace them with a 2 percent across-the-board consumption tax.
Their hope is that this would raise the same amount of revenue for the
state, cities and counties, but make New Mexico more attractive to
businesses by eliminating the corporate tax, the compensating tax,
personal income tax and myriad other taxes.
“Far too many people come into this building seeking exemptions, credits and deductions,” Taylor, right, said during a news conference at the State Capitol.
Each time something is exempted or credited, the tax system becomes more complicated and less reliable in terms of what revenue it will generate, he said.
“For a long time, we have talked about a broad-based tax with very low rates. The bill does exactly that,” Taylor said, likening it to the original gross receipts tax of the 1960s.
Sharer said this year 51 new tax bills already had been introduced in New Mexico.
“Obviously our system is an epic failure,” he said.
A solution to the madness would seem to be eliminating taxes and therefore all the possibilities for credits and exemptions. Then to make up the revenue that would be lost, the 2 percent consumption tax would be instituted.
But both legislators said there could be problems with their bill that they have not accounted for, even after months of review. Taylor said one difficulty was that exemptions and credits are sprinkled throughout New Mexico law, not just in the tax code.
Sharer’s proposal, Senate Bill 368, faces four committee hearings in the Senate. Sharer said that exceeds the number of hearings allowed by the Senate rules, but he did not seem to mind.
A companion bill that Taylor will carry in the House of Representatives has been scheduled for six committee hearings.
“I’m sure that’s a world record,” Taylor said.
But, like Sharer, he said multiple reviews of the bill would likely expose any flaws in the concept that many taxes can be erased and replaced by one.
As analysts from the state and other groups dig into the bill, they may find deficiencies that so far had not been flagged, Sharer said.
Not eliminated by their bill, the legislators said, would be severance, gasoline and property taxes.
They have made allowance in the proposal for impoverished people or those living just above the poverty line. Sharer said they could file for rebates and reclaim some of the taxes they paid for living expenses.