New Mexico House Bill HB129

New Mexico 2022 Regular Session

• Introduced: 1/24/22
• Report DNP: 2/3/22

Caption

Business Income By Single Sales Factor

Impact

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.