The combined reporting debate has raged for going on seven years, and really the only thing that's settled is that it's a political hot potato. Here's why.
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This week's paper (Indicators, Nov. 10: "Combo Plate") delves into the thorny issue of how corporations should report their income. In one camp sit the proponents of combined reporting, a method that requires multistate corporations to report ALL the money they make in a given year and then divvy up their taxes among the states where they operate.
Though most of its surrounding states have combined reporting, New Mexico doesn't. Instead, corporations can choose whether they do it that way or report only the income they actually earn in New Mexico to New Mexico authorities. The flaw in that system, according to its critics, is that it makes it easier for corporations to (legally) choose to report some of their could-go-either-way expenses in lower-tax states, like Texas.
Richard Anklam, the president of the New Mexico Tax Research Institute, says both approaches have their pros and cons--and how favorably or unfavorably each will affect a company's finances depends largely on the company's structure and character. In short, it's hard to make a blanket statement for or against combined reporting.
Not that that's stopped us. This election season (and others before it) was colored by sometimes-vicious commentary on the issue. Here's a sampling of what's been said by New Mexico's talking heads--and where it's coming from.
The Head: Richard "Dick" Minzner, registered lobbyist and former NM Department of Taxation & Revenue secretary
The Connections: Of Minzner's seven clients, only one (UNM) is based in New Mexico. The others include Neutron Energy Inc., an Arizona-based uranium development company; Florida Power and Light; and a Texas-based oil and gas company.
The Line: Quoted in the Albuquerque Journal as saying combined reporting would have "a negative impact on economic development without any substantial benefit to the state."
The Head: Paul Gessing, director of the Rio Grande Foundation, a libertarian think tank
The Connections: The Rio Grande Foundation was partially funded, in 2006, with a $50,000 grant from the Cato Institute, the national libertarian think tank that's also the brainchild of industry mogul Charles Koch, who is the subject of this decidedly un-adoring New Yorker profile (which, if you haven't read, you should).
The Line: "Combined Reporting IS a Tax Increase!"
The Head: Senator Peter Wirth, D-Santa Fe
The Connections: Has supported the interests of the Association of Commerce and Industry of New Mexico.
The Line: Wrote in an Albuquerque Journal opinion piece about how most western states have already passed combined reporting legislation, and that New Mexico should follow suit to prevent companies in those states from " taking advantage of our law."
