On Tuesday afternoon, Gov. Susana Martinez vetoed the highly politicized Senate Bill 9, a proposal advocates say would have made big-box corporations pay more of their fair share in taxes.
The bill, introduced this session for the eighth year in a row by state Sen. Peter Wirth, D-Santa Fe, would have required national corporations to pay New Mexico taxes on a share of their income.
This year, Wirth tweaked the bill to call for lowering New Mexico's overall tax rate. An additional amendment further refined it, stipulating that the combined reporting requirement apply only to big-box stores such as Walmart.
In November, Wirth explained the rationale behind the bill in an interview with SFR: “We’ve got a tax code full of loopholes, exemptions and deductions, and it’s not fair…I think that’s what people are screaming about,” he said at the time, “for good reason.”
Since the close of the legislative session, the bill has become a political football.
Democrats who support the bill argue that it levels the playing field by making big-box corporations pay the same taxes that small, locally owned companies must pay.
Republicans argue that the bill actually complicates matters for small businesses.
At a recent public forum in Santa Fe, a constituent asked Wirth what would happen if Martinez did indeed veto the bill.
Wirth said it would become "a huge political issue."
After SFR tweeted Wirth's comment, Ryan Cangiolosi, the governor's deputy chief of staff, sent a reply tweet:
In campaign and now in office Gov. Martinez's position has been same. Didn't work in '10. Won't in '14.
The next morning, Cangiolosi followed up his original tweet with this clarification:
During campaign and now, Gov Martinez's position on combined reporting has been the same. Attack didn't work in '10, won't work in '14.
In a press release announcing her veto, Martinez is quoted as follows:
"While proponents of this legislation may have had a few particular corporate targets in mind
when pushing for this tax increase, the result would be much broader and raise taxes on
businesses like grocery stores," the Governor said. "Increasing taxes on grocery stores, clothing
retailers, and home improvement stores, while choosing to cut taxes for a different set of
corporations - such as large banks, casinos, payday loan companies, or any other large
corporation that pays corporate income tax - is not only misguided and arbitrary tax policy, but
it's also not the way to foster economic growth in New Mexico."
“I’ve stated repeatedly that if this bill makes New Mexico less competitive, raises taxes, and
drives up the cost of items that families and businesses buy every day, I would veto it – and it
does just that,” the Governor concluded.
Wirth, for his part, has already published the following rebuttal:
I am extremely disappointed with the Governor's veto of Senate Bill 9. New Mexico businesses are the big losers today. This was a chance to lower the top corporate tax rate and begin the process of fixing our tax code which is a mess. Instead, the Governor sided with out-of-state "big box" retailers, letting them continue to avoid paying their fair share of New Mexico's corporate tax.
Tax reform will not be easy. The broad support for Senate Bill 9 shows that New Mexicans and New Mexico businesses want tax fairness. I am committed to continuing a bipartisan tax reform discussion in future legislative sessions.
Perhaps the most accurate assessment of the situation comes from political blogger Matthew Reichbach, who tweeted, "Gov vetoes SB9. Dems already writing campaign ads."