The implementation of HB129 is set to impact the current tax code significantly. By shifting to the single sales factor method, the bill aims to alleviate the tax burden on manufacturers and corporations operating in New Mexico. This change could enhance the competitiveness of New Mexico businesses in attracting investment and retaining existing companies. However, this effective change is also expected to create shifts in state revenue, requiring careful monitoring to assess its impact on the state's overall tax income, particularly from businesses not heavily involved in sales.
Summary
House Bill 129 is a significant piece of legislation introduced in New Mexico, focusing on the taxation of corporate income. This bill mandates the apportionment of all business income using a single sales factor approach. This method is anticipated to simplify taxation for businesses by allowing them to determine their New Mexico tax liability based solely on sales, rather than a combination of sales, payroll, and property factors. The intent is to create a more favorable business climate and possibly attract new businesses to the state.
Contention
Notably, the bill has sparked debate regarding its potential to privilege major businesses, potentially leading to inequities in the tax system. Opponents argue that focusing solely on sales could disadvantage smaller businesses that may not have the same sales volume but contribute significantly to employment and local economies. Furthermore, there are concerns about how this shift could affect state funding for essential services that depend on a balanced tax base, leading to resistance from certain legislative members and community advocates.
Providing for the apportionment of business income by the single sales factor and requiring the use of single sales factor pursuant to the multistate tax compact.
Providing for the apportionment of business income by the single sales factor and requiring the use of single sales factor pursuant to the multistate tax compact.
Providing for the apportionment of business income by the single sales factor and the apportionment of financial institution income by the receipts factor, deductions from income when using the single sales factor and receipts factor and the decrease in corporate income tax rates.
Providing for the apportionment of business income by the single sales factor and the apportionment of financial institution income by the receipts factor, deductions from income when using the single sales factor and receipts factor, the decrease in corporate income tax rates determining when sales other than tangible personal property are made in the state and excluding sales of a unitary business group of electric and natural gas public utilities.