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TABLEOFCONTENTS
Tax Expenditure Report ................................................................................................................................. i
Secretary’s Message ................................................................................................................................... 11
Brief Summary of New Mexico’s Major Taxes ............................................................................................ 12
Tax Expenditures ......................................................................................................................................... 18
Notes About Types of Tax Expenditures ............................................................................................. 20
Notes about the Data .......................................................................................................................... 21
Categorizing Expenditures .................................................................................................................. 23
Advanced Energy Credit against GRT, Compensating Tax, Withholding Tax, PIT, or CIT ....................... 25
Advanced Energy GRT and Compensating Tax Deduction ...................................................................... 27
Affordable Housing Credit against Modified Combined Tax, PIT, or CIT ................................................ 29
Agricultural Biomass Credit against PIT and CIT ..................................................................................... 31
Agricultural Water Conservation Expenses Credit against PIT and CIT .................................................. 33
Aircraft Sales or Services GRT Deduction ................................................................................................ 35
Alternative Energy Product Manufacturers Credit Against Modified Combined Tax ............................. 36
Angel Investment Credit against PIT ....................................................................................................... 38
Apportionment Election of CIT for Manufacturers ................................................................................. 40
Apportionment Election of CIT For Headquarters .................................................................................. 42
Armed Forces Salaries Exemption from PIT ............................................................................................ 43
Back‐to‐School Tax‐Free Weekend GRT Deduction ................................................................................ 44
Biodiesel Blending Facility Tax Thirty Percent Credit Against GRT and Compensating Tax ................... 45
Biomass‐Related Equipment and Biomass Materials Deduction from Compensating Tax .................... 46
Blended Biodiesel Fuel Credit against PIT and CIT .................................................................................. 48
Border‐Zone Trade‐Support Company GRT Deduction .......................................................................... 49
Buses Operated by Religious and Nonprofit Charitable Organizations Exemption from WDT .............. 51
Buses Used for Transportation of Agricultural Laborers Exemption from WDT .................................... 52
Business Facility Rehabilitation Credit against PIT and CIT ..................................................................... 53
Capital Gain Deduction from PIT ............................................................................................................. 54
Certain Disabled Military Veteran Exemption from MVX ....................................................................... 56
Child Care to Prevent Indigency Credit against PIT ................................................................................. 57
Coal Exemption from Severance Surtax .................................................................................................. 58
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Commercial Motor Carrier Vehicles Operating Exclusively within 10 Miles of Mexico Border Exemption
from Trip Tax and WDT ........................................................................................................................... 60
Construction Equipment and Materials Used in the Construction of Sole Community Provider
Hospitals GRT Deduction ........................................................................................................................ 62
Construction of Sole Community Provider Hospitals GRT Deduction .................................................... 63
Contributions of Inventory to Nonprofit Organizations or Governmental Agencies Deduction from
Compensating Tax ................................................................................................................................... 65
Conveyance of Land for Conservation or Preservation Fifty Percent Credit against PIT and CIT ........... 66
Corporate‐Supported Child Care Credit against CIT ............................................................................... 68
Disabled Person Exemption from MVX ................................................................................................... 69
Disabled Street Vendors Exemption from GRT ....................................................................................... 71
DOH‐Licensed Hospitals Credit against GRT ........................................................................................... 72
DOH‐Licensed Hospitals Fifty Percent GRT Deduction ........................................................................... 74
Education Trust Fund Payment Deduction from PIT .............................................................................. 75
Electric Transmission and Storage Facilities GRT and Compensating Tax Deduction ............................ 76
Electric Transmission and Storage Facilities Services GRT Deduction .................................................... 78
Electricity Conversion GRT Deduction .................................................................................................... 79
Electricity Exchange GRT Deduction ....................................................................................................... 80
Electronic ID Reader Credit against PIT and CIT...................................................................................... 81
Excess of Elderly Taxpayers Maximum Property Tax Liability Rebate from PIT ..................................... 82
Fees from Social Organizations Exemption from GRT ............................................................................ 83
Film and Television Credit against PIT and CIT ....................................................................................... 84
Fuel for Space Vehicles Exemption from GRT and Compensating Tax ................................................... 87
Geothermal Ground‐Coupled Heat Pump Credit against PIT and CIT .................................................... 88
Goods and Services for the DOD Related to Directed Energy and Satellites GRT Deduction ................. 89
Health Care Practitioner Services GRT Deduction and Hold Harmless Distribution ............................... 90
Hearing and Vision Aids GRT Deduction ................................................................................................. 92
High‐Wage Jobs Credit against Modified Combined Tax ........................................................................ 93
Hosting World Wide Web Sites GRT Deduction ..................................................................................... 96
Hybrid Vehicle Exemption from MVX ..................................................................................................... 97
Investment Credit against GRT, Compensating Tax, or Withholding Tax ............................................... 98
Investment Management or Advisory Services GRT Deduction ........................................................... 100
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Jet Fuel Fifty‐Five Percent GRT and Compensating Tax Deduction ...................................................... 101
Job Mentorship Credit against PIT and CIT ........................................................................................... 102
Laboratory Partnership with Small Business Credit against GRT .......................................................... 103
Loan‐Related Costs GRT Deduction ...................................................................................................... 104
Locomotive Engine Fuel GRT and Compensating Tax Deduction ......................................................... 105
Lottery Retailer Receipts GRT Deduction .............................................................................................. 107
Low‐ and Middle‐Income Taxpayers Exemption from PIT .................................................................... 108
Low‐Income Comprehensive Tax Rebate and Property Tax Rebate against PIT .................................. 109
Medical and Health Care Services GRT Deduction ............................................................................... 111
Medical Care Savings Account Exemption from PIT ............................................................................. 113
Microbrewer Beer and Small Wineries Rate Differential from Liquor Excise Tax ................................ 114
Military Construction Services GRT Deduction ..................................................................................... 116
Military Transformational Acquisition Programs GRT Deduction ......................................................... 117
Natural Gas Exemption from Oil and Gas Severance Tax ..................................................................... 118
Natural Gas Rate Differential from Oil and Gas Emergency School Tax ............................................... 119
Natural Gas Rate Differential from Oil and Gas Severance Tax ............................................................ 120
Newspaper Sales GRT Deduction .......................................................................................................... 122
New Mexico National Guard Member Premiums Paid for Group Life Insurance Exemption from PIT 123
Nonathletic Special Event at New Mexico State University GRT Deduction ........................................ 124
Nonprofit Elderly Care Facility Exemption from GRT ............................................................................ 125
Nonprofit Organizations Exemption from GRT ..................................................................................... 126
Nonprofit Organizations Fundraisers GRT Deduction ........................................................................... 128
Officiating at New Mexico Activities Association Events Exemption from GRT ................................... 130
Oil and Other Liquid Hydrocarbons Exemption from Oil and Gas Severance Tax ................................ 131
Oil and Other Liquid Hydrocarbons Rate Differential from Oil and Gas Emergency School Tax .......... 132
Oil and Other Liquid Hydrocarbons Rate Differential from Oil and Gas Severance Tax Rate .............. 133
Organ Donation Deduction from PIT .................................................................................................... 134
Penalty Pursuant to Section 7‐1‐71.2 NMSA 1978 Credit against GRT, Compensating Tax and
Withholding Tax .................................................................................................................................... 135
Persons One Hundred and Older Exemption from PIT ......................................................................... 136
Persons Sixty‐Five and Older or Blind Exemption from PIT and A Comprehensive Tax Rebate ........... 137
Physician Participating in Cancer Treatment Clinical Trials Credit against PIT ..................................... 139
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Prescription Drugs and Oxygen GRT and GGRT Deduction .................................................................. 140
Preservation of Cultural Property Credit against PIT and CIT ............................................................... 141
Production or Staging of Professional Contests GRT Deduction .......................................................... 142
Publication Sales GRT Deduction .......................................................................................................... 143
Purses and Jockey Remuneration at New Mexico Racetracks Exemption from GRT ........................... 144
Railroad Equipment, Aircraft, and Space Vehicles Exemption from Compensating Tax ...................... 145
Real Estate Transactions GRT Deduction .............................................................................................. 146
Renewable Energy Production Credit against PIT and CIT .................................................................... 147
Research and Development Small Business Credit against GRT or Fifty Percent Credit against
Withholding Tax .................................................................................................................................... 149
Rural Health Care Practitioner Credit against PIT ................................................................................. 151
Rural Job Credit against Modified Combined Tax, PIT, and CIT ............................................................ 153
Sale and Use of Agricultural Implements, Farm Tractors, Aircraft, and Motor Vehicles that Don’t Have
to be Registered GRT and Compensating Tax Deduction ..................................................................... 155
Sale of Certain Services to an Out‐of‐State Buyer GRT Deduction ....................................................... 158
Sale of Food at Retail Food Stores GRT Deduction and Hold Harmless Distribution ............................ 159
Sale of Software Development Services GRT Deduction ...................................................................... 161
Sale of Textbooks in Certain Bookstores Exemption from GRT ............................................................ 162
Sales to Nonprofit Organizations GRT, GGRT, and Compensating Tax Deduction ............................... 163
Sales to Qualified Film Production Company GRT and GGRT Deduction ............................................. 165
Sales to State‐Chartered Credit Unions GRT and GGRT Deduction ...................................................... 166
Solar Energy Systems GRT Deduction ................................................................................................... 167
Solar Market Development Credit against PIT ...................................................................................... 168
Spaceport‐Related Activities GRT Deduction ........................................................................................ 170
Space‐Related Test Articles Deduction from Compensating Tax .......................................................... 171
Special Needs Adopted Child Credit against PIT ................................................................................... 172
Sustainable Building Credit against PIT and CIT .................................................................................... 173
Tax Stamps Rate Differential in Cigarette Tax ...................................................................................... 175
Technology Jobs and Research and Development Credit against GRT, Compensating Tax, Withholding
Tax, PIT, or CIT ....................................................................................................................................... 176
Test Article Deduction from Compensating Tax ................................................................................... 178
TIDD – Tax Increment for Development District Dedicated Increments .............................................. 179
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Uranium Enrichment Plant Equipment Deduction from Compensating Tax ........................................ 180
Uranium Hexafluoride and Uranium Enrichment GRT Deduction ........................................................ 181
Unreimbursed or Uncompensated Medical Care Expenses Credit From PIT ....................................... 182
Unreimbursed or Uncompensated Medical Care Expenses Deduction From PIT ................................ 183
Unreimbursed or Uncompensated Medical Care Expenses Exemption From PIT ................................ 184
Vehicles Titled before July 1, 1991 Exemption from LVGRT ................................................................. 185
Venture Capital Investment Credit against PIT ..................................................................................... 186
Veteran Employment Credit against PIT and CIT .................................................................................. 187
Welfare‐to‐Work Credit against PIT and CIT ......................................................................................... 188
Wind and Solar Generation Equipment GRT Deduction ....................................................................... 189
Working Families Credit against PIT ..................................................................................................... 190
Not Tax Expenditures ................................................................................................................................ 191
Accredited Diplomats and Missions GRT Deduction ............................................................................ 192
Acquisition of Vehicle for Subsequent Lease Exemption from MVX .................................................... 192
Acquisition of Vehicle More than 30 Days Before Moving to NM Exemption from MVX .................... 193
Athletic Facility Surcharge Exemption from GRT and GGRT ................................................................. 193
Bad Debts Deduction from ITGRT ......................................................................................................... 194
Biodiesel for Subsequent Blending or Resale by a Rack Operator Deduction from Petroleum Products
Loading Fee ........................................................................................................................................... 194
Boats Exemption from GRT and Compensating Tax ............................................................................. 195
Business Located on Land Owned by the Municipality but Outside the Municipal Boundaries
Exemption from Supplemental Municipal GRT and Municipal Local Option GRT ................................ 195
Certain Retail Sales of Gasoline on an Indian Reservation, Pueblo Grant or Trust Land Deduction from
Gasoline Tax .......................................................................................................................................... 196
Charitable Organizations Exemption from PIT ...................................................................................... 196
Chemicals and Reagents GRT Deduction .............................................................................................. 197
Construction Material GRT Deduction .................................................................................................. 197
Construction Services and Construction‐Related Service GRT Deduction ............................................ 198
Dividends and Interest Exemption from GRT ....................................................................................... 198
Dyed Gasoline Used for Off‐Road Transportation Deduction from Gasoline Tax ................................ 199
Dyed Special Fuel Deduction from Special Fuel Excise Tax ................................................................... 199
Event Center Surcharge Exemption from GRT and GGRT ..................................................................... 200
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Films and Tapes GRT Deduction ........................................................................................................... 200
Food Stamps/SNAP Exemption from GRT ............................................................................................. 201
Fuel Exemption from GRT and Compensating Tax ............................................................................... 202
Gasoline or Special Fuels Returned to the Refiner as Uncollectible Deduction from Petroleum Products
Loading Fee ........................................................................................................................................... 202
Income Allocation and Apportionment Credit against CIT ................................................................... 203
Indians Exemption from PIT .................................................................................................................. 203
Insurance Companies Exemption from CIT ........................................................................................... 204
Intergovernmental Coal Severance Credit against Coal Severance Tax ............................................... 204
Intergovernmental Credit against CIT ................................................................................................... 205
Intergovernmental Production and Intergovernmental Production Equipment Credit against Oil and
Gas Severance Tax, Oil and Gas Conservation tax, Oil and Gas Emergency School Tax, and Oil and Gas
Ad Valorem Production Tax .................................................................................................................. 206
Internet Services GRT Deduction .......................................................................................................... 207
Interstate Sales of Spirtuous Liquors, Beer, & Wine and Winegrower‐to‐Winegrower Transfers
Deduction from Liquor Excise Tax ......................................................................................................... 207
Interstate Sales of Tobacco Deduction against Tobacco Products Tax ................................................. 208
Interstate Telecommunications Services Exemption from GRT ........................................................... 208
Interstate Commerce Transactions Deduction from LVGRT ................................................................. 208
Jewelry Manufacturing GRT Deduction ................................................................................................ 209
Jicarilla Apache Tribal Capital Improvements Tax Credit against Oil and Gas Emergency School Tax . 209
Lease for Subsequent Lease GRT Deduction ........................................................................................ 210
Lease of Construction Equipment GRT Deduction ................................................................................ 210
Natural Gas Already Taxed Exemption from Natural Gas Processors Tax ........................................... 211
Natural Resources Subject to Resources Excise Tax Exemption from GRT........................................... 211
“Net Income” Exemptions from PIT ...................................................................................................... 211
Nonresident Exemption from Estate Tax .............................................................................................. 212
Occasional Sale of Property or Services Exemption from GRT ............................................................. 212
Oil and Gas or Mineral Interests Exemption from GRT ........................................................................ 212
One‐Way Haul and Empty Travel Rate Differential from WDT ............................................................. 213
Personal Effects Exemption from Compensating Tax ........................................................................... 213
Petroleum Products Exported for Resale Exemption from Petroleum Products Loading Fee ............. 213
Processors Tax Paid on Natural Resources Exemption from Resources Tax ........................................ 214
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Products Subject to Oil and Gas Emergency School Tax Exemption from GRT .................................... 214
Purchase for Resale Exemption from Local Liquor Excise Tax .............................................................. 215
Purchase of Undyed Gasoline for Certain Off‐Road Use Refund of Gasoline Tax ................................ 215
Purchases by or on Behalf of the State GRT Deduction ........................................................................ 215
Refiners and Persons Subject to Natural Gas Processors Tax Exemption from GRT and Compensating
Tax ......................................................................................................................................................... 216
Religious Activities Exemption from GRT .............................................................................................. 216
Resale Activities of an Armed Forces Instrumentality Exemption from GRT and Compensating Tax .. 217
Returned or Destroyed Tobacco Products Refund or Credit against Tobacco Products Tax ............... 217
Sale of a Service for Resale GRT and GGRT Deduction ......................................................................... 217
Sale of a Service for Resale Deduction from ITGRT .............................................................................. 218
Sale of Aerospace Services for the U.S. Air Force GRT Deduction ........................................................ 218
Sale of Gasoline at Retail by a Registered Indian Tribal Distributor Deduction from Gasoline Tax ..... 219
Sale of Gasoline by a Registered Indian Tribal Distributor from a Non‐Mobile Storage Container
Deduction from Gasoline Tax................................................................................................................ 220
Sale of Tangible Personal Property for Leasing GRT Deduction ........................................................... 220
Sale of Tangible Personal Property for Resale GRT AND GGRT Deduction........................................... 221
Sales Through World Wide Web Sites GRT Deduction ......................................................................... 221
Sales to Manufacturers GRT and GGRT Deduction ............................................................................... 222
School Bus Deduction from Special Fuel Excise Tax ............................................................................. 222
School Bus Exemption from WDT ......................................................................................................... 223
Services on Manufactured Products GRT Deduction ............................................................................ 223
Services Performed Outside the State Credit against ITGRT ................................................................ 223
Stock Bonus, Pension, and Profit‐Sharing Trusts Exemption from PIT and CIT .................................... 224
Tax Paid by Out‐of‐State Terminal Deduction from Gasoline Tax and Special Fuel Excise Tax ............ 224
Stadium Surcharge Exemption from GRT and GGRT ............................................................................ 225
Tax Paid in Another State for Property and Services Credit against GRT and Compensating Tax ....... 225
Tax Paid on Alcoholic Beverages Destroyed in Shipment, Spoiled, or Otherwise Damaged Refund of or
Credit against Liquor Excise Tax and Local Liquor Excise Tax ............................................................... 226
Tax Paid on Gasoline or Special Fuel Destroyed by Fire, Accident or Acts of God Before Retail Sale
Refund of or Credit against Gasoline Tax and Special Fuel Excise Tax ................................................. 226
Tax Paid on Special Fuel in Certain Circumstances Refund of Special Fuel Excise Tax ......................... 227
Tax Paid to Another State Credit against MVX ..................................................................................... 227
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Tax Paid to Another State Deduction from Gasoline Tax and Special Fuel Excise Tax ......................... 228
Tax Paid to Another State Credit against Estate Tax ............................................................................ 229
Tax Paid to Navajo Nation for Selling Coal Seventy‐Five Percent Credit against GRT .......................... 229
Tax Paid to New Mexico Tribes Exemption from ITGRT ....................................................................... 230
Tax Paid to New Mexico Tribes Seventy‐Five Percent Credit against GRT ........................................... 230
Taxes Paid to Other States Credit against PIT ....................................................................................... 231
Telecommunication Providers Deduction from ITGRT ......................................................................... 231
Trade‐In Allowance GRT, MVX, and Deductions ................................................................................... 232
Transactions in Interstate Commerce GRT and GGRT Deduction ........................................................ 232
Transactions in Intrastate Transportation and Services in Interstate Commerce GRT Deduction ....... 233
Transportation From Within the Municipality to Outside the Municipality Exemption from Local
Option GRT ............................................................................................................................................ 234
Uncollectible Debts GRT and GGRT Deduction ..................................................................................... 234
Unpaid Charges for Hospital Services Credit against GRT .................................................................... 235
Use of Tangible Personal Property for Leasing Deduction from Compensating Tax ............................ 235
Vegetable Oil or Animal Fat biodiesel Deduction from Special Fuel Excise Tax ................................... 235
Vehicle that is Owned by the State of New Mexico Exemption from MVX .......................................... 236
Vehicle that was Previously Registered in New Mexico Exemption from MVX ................................... 236
Vehicles Exemptions from GRT and Compensating Tax ....................................................................... 237
Vehicles Used for Short‐Term Leasing Credit against MVX .................................................................. 237
Vehicles Used in Interstate Commerce GRT Deduction ........................................................................ 238
Wages Exemption from GRT ................................................................................................................. 238
Warranty Obligations GRT Deduction ................................................................................................... 238
Arguable .................................................................................................................................................... 239
Administrative and Accounting Services GRT Deduction ..................................................................... 240
Agricultural Products Exemption from GRT and GGRT ......................................................................... 240
Certain Commissions GRT Deduction ................................................................................................... 241
Certain Sales for Resale Ten Percent Credit against GRT and GGRT .................................................... 241
Feed and Fertilizer & Auctioneers Selling Livestock and Agricultural Products at Auction GRT
Deduction .............................................................................................................................................. 242
Gross Amounts Wagered Exemption from GRT ................................................................................... 242
Insurance Companies Exemption from GRT ......................................................................................... 243
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Livestock Feeding Exemption from GRT ............................................................................................... 243
Petroleum Products Sold to the Federal Government Exemption from Petroleum Products Loading
Fee ......................................................................................................................................................... 243
Pipeline Transportation of Oil and Gas Products Exemption from GRT and Compensating Tax.......... 244
Processing Agricultural Products GRT Deduction ................................................................................. 244
Receipts of Homeowners Associations Exemption from GRT .............................................................. 244
Resale of Certain Manufactured Homes GRT Deduction ...................................................................... 245
Sale by or to U.S. Armed Forces Exemption from Liquor Excise Tax and Local Liquor Excise Tax ........ 245
Sale of Prosthetic Devices GRT and GGRT Deduction ........................................................................... 246
Sale or Lease of Real Property & Lease of Manufactured Homes GRT Deduction ............................... 246
Sales to Federal Government, State of New Mexico, or New Mexico Tribes Exemption from Cigarette
Tax and Tobacco Products Tax .............................................................................................................. 247
Sales to Governmental Agencies GRT and GGRT Deduction ................................................................ 247
Tax Paid on Special Fuel Used Credit against Special Fuel Excise Tax .................................................. 248
Travel Agents’ Commissions GRT Deduction ........................................................................................ 248
Use of Electricity Exemption from Compensating Tax .......................................................................... 248
Veterinary Medical for Treatment of Cattle GRT Deduction ................................................................ 249
Wide‐Area Telephone and Private Communications Service Deduction from ITGRT .......................... 249
Appendix A: Executive Order 2011‐071 ................................................................................................... 250
Appendix B: Table of Expenditures by Category ...................................................................................... 252
Appendix C: Frequently Used Acronyms .................................................................................................. 257
Appendix D: Principles of Good Tax Policy ............................................................................................... 258
Index of Statutes ....................................................................................................................................... 260
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SECRETARY’SMESSAGE
TheTaxExpenditureReportisanexampleofgoodgovernment.In2011,NewMexicoGovernorSusanaMartinez’ExecutiveOrder2011‐071directedtheTaxationandRevenueDepartment(TRD),withassistancefromotherexecutivebranchagencies,toprepareanannualTaxExpenditureReport.Thereportservestwogoodgovernmentpurposes:(1)itcreatestransparencytothepublic,and(2)itcreatesaneffectivetoolforpolicymakerstomakebetterinformeddecisionsabouttaxincentives.
Sinceissuingthefirstreportin2012,TRDhasworkeddiligentlyeachyeartoimprovethequalityandscopeoftheTaxExpenditureReport.The2015TaxExpenditureReportreflectedseveralsignificantimprovements.Mostnotably,itpresentedanoverviewoftheState’sexpendituresbycategory,reflectedsignificantimprovementsintheaccuracyofexpenditureamounts(especiallywithrespecttopersonalandcorporateincometaxdeductions)andprovidedamorerobustanalysisofmanyexpenditures.The2016reportcontinuestheseeffortstoinclude:expandingtheevaluationofmanyoftheexpenditures,addingamoredetailedexplanationofhowtheaverageGRTrateisusedtocalculatetherevenuelossofGRTdeductions,addingasectiontoeachexpendituretoshowwhichofthefivecategoriestheexpenditureisin,andincludingdataforsomeexpendituresthathadnodatain2015.Thisyear,andbasedonfurtherreviewandanalysis,severalstatutoryprovisionswereremovedfromthereport:theyarenottaxexpendituresbutratherdefinethetaxbaseorconstitutethebaselinesystemoftaxationforspecificactivities.Theseprovisionsinclude,forexample,theseverancetaxratedifferentialsforMolybdenum,PotashandTimber.
Theimprovementsofthelasttwoiterationsofthereportshouldbecreditedtotheleadership,directionandhardworkoftheTaxPolicyDirectorandstaff,whohavefocusedondatacollectionandotherprocessimprovementsthatwillcontinuetoyieldanincrementallybetterreporteachyear.Moreover,TRDisfortunatetohaveateamoftalentedeconomists,whohavededicatedanuntoldnumberofhourscombingthroughthestatutes,collectingandcollatingdata,andanalyzingtheimpactsofthedeviationsfromtheNewMexicotaxprograms.Thenotedgroupinclude:ChiefEconomistElisaWalker‐Moran,HectorDorbecker,JamesGirard,JamesKaminskyandLucindaSydow.Anundertakingofthismagnitudewouldnotbepossiblewithoutthem.NorwoulditbepossiblewithoutthecooperationofthemanyexecutivebranchagencieswhoplayaroleinadministeringmanyofthetaxcreditsNewMexicousestoincentivizebeneficialeconomicactivity.Weremaingratefulfortheirassistance.
ActingSecretaryJohnMonforteTaxationandRevenueDepartmentStateofNewMexico
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BRIEFSUMMARYOFNEWMEXICO’SMAJORTAXES
PERSONALINCOMETAXBecauseitisbasedonafederaltaxprogram,NewMexico’spersonalincometax(“PIT”)1isrelativelysimpleforthetaxpayertocomplywithandfortheStatetoadminister.
ThePITratesforTaxYears2008through20162are:
MarriedFilingSeparately
HeadofHousehold,SurvivingSpouses,andMarriedFiling
JointlyIndividuals,Estates,
andTrusts Rate
Upto$4,000 Upto$8,000 Upto$5,500 1.7%Over$4,000to$8,000 Over$8,000to$16,000 Over$5,500to$11,000 3.2%Over$8,000to$12,000 Over$16,000to$24,000 Over$11,000to$16,000 4.7%Over$12,000 Over$24,000 Over$16,000 4.9%
PITalsosharesmanybasedefinitionissueswiththefederalincometaxprogram.Forexample,NewMexicofollowsthefederalpracticeofallowingtheexclusionofacertainamountofincomefromtaxationthroughthepersonalexemptionandthestandarddeduction.Notethat,becausethesepoliciesarecommonpracticeamongthestatesandbecausetheyarepartandparcelofdefiningtheNewMexicotaxbase,theyarenottreatedastaxexpendituresinthisreport.Similarly,therearenumeroustaxexpendituresunderfederaltaxlawonwhichtheState“piggybacks”becauseNewMexicotaxableincomeisbasedonfederaladjustedgrossincome.Becausesuchpiggybackingisacommonpracticeamongmoststates,thestatetaxeffectsofthesefederaltaxexpendituresarenotreportedastaxexpendituresinthisreport.
CORPORATEINCOMETAXNewMexico’scorporateincometax(“CIT”)isalsobasedonthefederalcorporateincometaxwiththesamecorrespondingadministrativebenefitsfortaxpayersandtheStateinitsadministration.
Section7‐2A‐2(C)NMSA1978defines"baseincome"asthatpartofthetaxpayer'staxableincomeuponwhichthefederalincometaxiscalculated,excludingtheamountofthenetoperatinglosscarryoverdeductionandincludinginterestreceivedonstateorlocalbonds3.Thestatutethendefines“netincome”asbaseincomeadjustedbyexclusionsofincomefromtheobligationsofthefederalgovernment,otherincomewheretaxisprohibitedbyexplicitstatutoryorconstitutionalauthority,andstatutoryprovisionsfornetoperatinglosscarryoverdeductions4.
Thus,“netincome”isdefinedasthetaxbaseforCITpurposesinNewMexico,and,byapplicationoftheincome‐graduatedpercentagetaxrate,“baselinetaxrevenue”isdefined.
1Forreference,alistofcommonlyusedacronymsisprovidedinAppendixC.2PITandCITdatafromtaxyear2014isthemostcompletedatasetavailableatthetimeofpublicationofthisreport.ThecurrentPITrateshavebeenineffectsince2008.3Section7‐2A‐2(C)NMSA19784Section7‐2A‐2(H)NMSA1978
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ThefollowingtableshowstheCITratesfrom1987throughfullimplementationofHB641(2013)in2018:
1987‐2013 2014 2015 2016 2017 2018Upto$500,000 4.8% 4.8% 4.8% 4.8% 4.8% 4.8%$500,000.01to$1,000,000 6.4% 6.4% 6.4% 6.4% 6.2% 5.9%Over$1,000,000 7.6% 7.3% 6.9% 6.6% The2013LegislativeSessionproducedtwoadditionalCITchanges,includingmandatorycombinedreportingforcertainretailersandsingle‐salesfactorapportionmentelectionformanufacturers.The2015LegislativeSessionaddedthesingle‐salesfactorapportionmentelectionforheadquarters.
GROSSRECEIPTSTAXInNewMexico,astatetaxof5.125%andlocaloptiontaxesareimposedongrossreceiptsreceivedfromcertaintransactions.“Grossreceipts”isthetotalamountofmoneyorotherconsiderationgenerated“fromsellingpropertyinNewMexico,fromleasingorlicensingpropertyemployedinNewMexico,fromgrantingarighttouseafranchiseemployedinNewMexico,fromsellingservicesperformedoutsideofNewMexico,theproductofwhichisinitiallyusedinNewMexico,orfromperformingservicesinNewMexico”5.Thisisafarmorecomprehensivetaxbasethanthetypicalretailsalestaximposedbymoststates.Itisalsomorecomprehensivethanavalueaddedtaxbase,acommonlysuggestedalternativeforconsumptiontaxation.Becauseofthisbroadbasedefinition,manyoftheexemptionsanddeductionsintheGRTprogramarenecessarytopreventmultipletaxationoftransactionsandtheassociatedeconomicdistortionthatwouldcause.Examplesincludetheexemptionforwages,dividends,andinterest,allofwhicharetaxedundertheincometax.Alsoexemptarevarioustransactionswhicharetaxedunderseparateexcisetaxes,includingmotorfuels,motorvehicles,etc.
AnothersetofdeductionsandexemptionsintheGRTprogramisdesignedtoreducetheincidenceof“taxpyramiding.”Taxpyramidingreferstotheimpositionoftaxonbusinesspurchases.BecausethefinalsalesbybusinessesaretypicallysubjecttoGRT,imposingtheGRTontheirpurchasescreatesanadditionallayeroftaxation.Thispracticecreateseconomicdistortionbecause,forexample,smallbusinesseshavetopurchasemoreofthegoodsandservicestheyneedfromoutsidecompaniesthandolargebusinesses;theGRTonthoseinputscreatesadiscriminatoryburdenonthem.Deductions,likethedeductionforthesaleofgoodsforre‐sale,reducethisburdenandensurethatthetaxpolicyprinciplesofHorizontalEquityandEfficiencyaremet.Therefore,theyarenottreatedastaxexpenditures.
Whilenotdirectlyrelatedtodeterminingwhetheraparticularexemption,deduction,orcreditisataxexpenditure,thequestionaboutthemunicipalshareoftheGRTcomesupquitefrequentlybecauseitplaysaroleaboutthefiscalimpactoftaxexpenditures.PursuanttoSection7‐1‐6.4NMSA1978,theStategiveseachmunicipalityapproximately24%(1.225%dividedby5.125%)oftheGRTrevenuefromtheStateratethatisgeneratedfromactivitytakingplaceinthatmunicipality.Tothinkofitanotherway:fortaxableactivitytakingplacewithinamunicipality,theState’seffectiveratebecomes3.9%whiletheeffectiverateforeachmunicipalityisincreasedby1.225%.
5Section7‐9‐3.5(A)(1)NMSA1978
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COMPENSATINGTAXInNewMexico,acompensatingtaxisimposedatarateof5.125%ontheuseoftangiblepropertyand5%oncertainservicesusedinNewMexico.ThistaxisNewMexico’sversionofa“use”tax.UnliketheGRT,thelegalincidentofthecompensatingtaxisonthepurchaser,butthecollectionobligationforthecompensatingtaxmaytransfertothesellerifthesellerisnotsubjecttoGRTandcanberequiredtofulfillthiscollectionobligationundertheU.S.Constitution.TypicallythecompensatingtaxisimposedonNewMexicobusinesseswhentheypurchasefromout‐of‐statevendors.BecauseoftheunusualnatureoftheGRT,manyofthedeductionsfromthecompensatingtaxbasecanbethoughtofassimplydefiningthetaxbase.
OTHEREXCISETAXESAsisthecasewiththeGRTandthecompensatingtax,NewMexico’sexcisetaxescontainseveralprovisionswhichservetodefinethetaxbasebypreventingdoubletaxationortaxpyramiding.Examplesincludetheexemptionforsalesofcigarettesontriballandstotribalmembers.Otherprovisionsaretreatedastaxexpendituresinthisreport,includingthesaleofcigarettesbytribalvendorstonon‐tribalmembers.
NATURALRESOURCEEXTRACTIONTAXESNewMexicoimposesavarietyoftaxesonnaturalresourceproductionactivities.Thesetaxesaregenerallyimposedontheprivilegeofseveringnaturalresourcesandthelargestofthedeductionsassociatedwiththesetaxesreducetaxablevalueforroyaltiespaidtofederal,Indian,andstateownersoftheminerals.BecausetheStateispreemptedfromimposingtaxontheseentities—orbecauseitwouldn’tmakesensefortheStatetotaxitself—thesearenottreatedastaxexpenditures.MostoftheremainingdeductionsallowedunderNewMexico’smineralsproductiontaxes,suchasprocessingandtransportationdeductions,servetodefinethetaxbasebecausetaxablevaluefortheseveredproductsisdeterminedattheextractionlocation.Becausetheactualsalesofseveredmaterialsoftenoccursafterthematerialshavebeentransportedfromtheextractionsiteandprocessedtosomedegree,thesedeductionsarenecessarytodeterminethevalueoftheproductthatformsthestatutorytaxbase.Otherprovisions,aimedatstimulatingparticulartypesofproduction,forexample,aretreatedastaxexpenditures.
ThedropinoilpricesandcontinuedlownaturalgaspriceshasledtolowerseverancetaxrevenuesforNewMexicoinFY15andFY16.Thetaxexpendituresforoilandgaslistedinthisreportincentivizecontinuedproductionwhenpricesdropbelowspecificthresholds.However,despitethelowprices,severancetaxexpendituresforoilandgasremainatzeroandproductionwasnotincentivizedbecausepricesremainedabovethethresholdsspecified.
PROPERTYTAXNewMexico’spropertytaxlawfeaturesanumberoflimitationsandexclusionsthatreducetherevenue‐generatingpotentialofthetax.Someofthesearebroad‐based,however,andarenottreatedastaxexpendituresinthisReport.Examplesincludetheexclusionfromtaxofpersonalpropertyandthe3%limitonannualvaluegrowthforresidentialproperty.Otherprovisionsthataretargetedatspecificpopulationsareincluded.Notethatbecausemostpropertytaxesareassessedandcollectedatthecountylevel,TRDdoesnotmaintaindatathataddressestheimpactofpropertytaxexpenditures.
2016NewMexicoTaxExpenditureReport Page15
PERSONALINCOMETAXBYINCOMEBRACKETTABLE
AllTaxPayers(TaxYear2014Data)
IncomeBracketNumberofReturns
PercentReturns
NewMexicoTaxableIncomebyBracket
PercentNMTaxableIncome
EstimatedTaxonTIinBracket
PercentTax
Under$25,000 628,635 62.28% 2,616,698,286 2.76% 67,773,915 5.34%
$25,000‐$50,000 145,020 14.37% 5,308,344,213 5.61% 190,048,885 14.99%
$50,000‐$75,000 88,052 8.72% 5,407,146,932 5.71% 203,833,160 16.08%
$75,000‐$100,000 49,627 4.92% 4,279,208,068 4.52% 161,410,063 12.73%
$100,000‐$200,000 61,892 6.13% 8,365,758,766 8.84% 295,000,173 23.26%
Over$200,001 36,119 3.58% 68,691,347,610 72.56% 349,937,789 27.60%
Total 1,009,345 100.00% 94,668,503,875 100.00% 1,268,003,985 100.00%
SingleFilers
Under$25,000 343,260 73.84% 1,522,205,703 8.81% 41,923,801 12.81%
$25,000‐$50,000 67,939 14.62% 2,431,247,048 14.07% 90,996,897 27.80%
$50,000‐$75,000 27,685 5.96% 1,677,658,581 9.71% 64,740,557 19.78%
$75,000‐$100,000 10,871 2.34% 931,597,491 5.39% 35,017,938 10.70%
$100,000‐$200,000 9,899 2.13% 1,316,398,232 7.62% 43,941,182 13.42%
Over$200,001 5,204 1.12% 9,403,892,598 54.41% 50,748,339 15.50%
Total 464,858 100.00% 17,282,999,653 100.00% 327,368,714 100.00%
HeadofHouseholdFilers
Under$25,000 135,606 83.05% $435,881,216 15.80% $10,173,070 14.57%
$25,000‐$50,000 16,392 10.04% $592,957,221 21.50% $20,902,681 29.93%
$50,000‐$75,000 6,394 3.92% $385,814,033 13.99% $14,820,224 21.22%
$75,000‐$100,000 2,194 1.34% $187,555,820 6.80% $7,380,962 10.57%
$100,000‐$200,000 1,846 1.13% $243,123,310 8.81% $8,700,241 12.46%
Over$200,001 848 0.52% $913,051,470 33.10% $7,852,829 11.25%
Total 163,280 100.00% 2,758,383,070 100.00% 69,830,007 100.00%
JointandSurvivingSpouse
Under$25,000 143,959 38.86% $617,210,830 0.89% $14,352,748 1.68%
$25,000‐$50,000 58,288 15.73% $2,197,815,584 3.17% $74,766,619 8.74%
$50,000‐$75,000 52,954 14.29% $3,282,056,654 4.74% $121,894,781 14.25%
$75,000‐$100,000 36,118 9.75% $3,121,892,246 4.51% $117,646,492 13.75%
$100,000‐$200,000 49,701 13.42% $6,745,988,853 9.74% $240,620,026 28.12%
Over$200,001 29,431 7.94% $53,317,953,184 76.96% $286,371,573 33.47%
Total 370,451 100.00% 69,282,917,351 100.00% 855,652,238 100.00%
SeparateFilers
Under$25,000 5,810 54.02% $41,400,537 0.77% $1,324,296 8.74%
$25,000‐$50,000 2,401 22.32% $86,324,360 1.62% $3,382,688 22.32%
$50,000‐$75,000 1,019 9.47% $61,617,664 1.15% $2,377,598 15.69%
$75,000‐$100,000 444 4.13% $38,162,511 0.71% $1,364,671 9.01%
$100,000‐$200,000 446 4.15% $60,248,371 1.13% $1,738,724 11.47%
Over$200,001 636 5.91% $5,056,450,358 94.62% $4,965,048 32.77%
Total 10,756 100.00% 5,344,203,801 100.00% 15,153,025 100.00%
2016NewMexicoTaxExpenditureReport Page16
CORPORATEINCOMETAXBYINCOMEBRACKETTABLE
2digitNAICS
2014IndustriesTaxableIncomeover
$1,000,000
TaxableIncomeover$500,000butnotover
$1,000,000
TaxableIncomeunder$500,000
CIT #Returns CIT #Returns CIT#
Returns
11Agriculture,Fishery
andHunting$75,202 <4 $175,787 4 $489,289 181
21OilandGasandOther
Mining$36,123,275 40 $1,024,313 22 $987,160 314
22 Utilities $91,614 <4 $63,536 <4 $45,696 17
23 Construction $1,083,407 8 $492,884 13 $1,035,834 457
31‐33 Manufacturing $94,955,722 61 $1,724,410 34 $2,936,708 665
42 WholesaleTrade $4,905,884 23 $1,307,930 26 $2,441,606 591
44‐45 RetailTrade $18,079,502 42 $1,339,419 26 $2,020,825 467
48‐49Transportation&Warehousing
$21,385,483 14 $372,144 7 $744,181 255
51 Information $5,992,954 18 $39,527 <4 $746,549 205
52 Finance&Insurance $17,722,467 47 $1,032,010 23 $1,630,738 610
53RealEstate&Rental&
Leasing$2,010,954 10 $80,881 <4 $1,109,234 528
54Professional,
Scientific&Technical$6,274,030 21 $926,100 19 $2,158,884 885
55ManagementofCompanies&Enterprises
$40,097,788 42 $801,355 14 $1,415,177 270
56Admin&Support&
WasteMgtRemediation
$1,921,963 4 $209,909 4 $577,248 271
61 EducationalServices $471,851 <4 $0 0 $130,169 41
62HealthCare&Social
Assistance$1,487,880 8 $386,159 7 $440,516 175
71Arts,Entertainment,
&Recreation$110,863 <4 $136,002 <4 $111,086 61
72Accommodation&FoodService
$634,908 5 $211,100 4 $550,184 157
81OtherServicesexceptPublicAdministration $221,004 <4 $123,602 <4 $332,188 205
Note:OnlybusinessesthatreportedavalidNAICScodesareincludedinthechartabove.
2016NewMexicoTaxExpenditureReport Page17
GROSSRECEIPTSTAXAVERAGERATETABLE
TRDutilizestheconceptofanaverageactualgrossreceiptstaxratewhenestimatingthecostofataxexpenditureasmeasuredintermsofgrossreceiptstaxforgone.InordertoobtaintheaverageactualgrossreceiptsinFY16of6.9273%,thegrosstaxamountasreportedthroughtheRP‐500monthlyreportforallindustrieswithinallcitiesandcounties,isdividedbytheamountoftaxablegrossreceiptsasreportedforthegeneralfund.TheRP‐500isamonthlylocalgovernmentdistributionreportthatprovidesthedetailbehindthedistributionsmadetoeachmunicipalityorcountyforthemonthinwhichthebusinessactivitytookplace.TheRP‐500reportbreaksdownthedistributionsintoeitherthecurrentactivitymonthorallothermonths,whichcanbefromlatereportingoramendments.Asanexample,ifTaxpayerAamendsreturnsforsixmonthsinthereportingmonthofSeptemberitwillaffectthedistributionmadeinOctoberandwouldbereportedunder“OtherMonths”inthereport.TheresultisthattheRP‐500isnotupdatedwiththeeffectsoftaxpayeramendmentsonolderreturns.Instead,theyareaggregatedintothe“OtherMonths”category.
Alternatively,theRP‐80reportforagivenactivitymonthisupdatedwiththeeffectsoftaxpayeramendments.Thisreportprovidesgrossreceiptsinformationbygeographicareaand6‐digitNAICScodesandshowsasinglemonth’sactivityascurrentlyrecordedinGenTax.Basedontheexampleabove,theamendmentsthatTaxpayerAsubmittedwillshowupintheiractualactivitymonths.NormallyTRDupdatestheRP‐80simultaneouslywiththeRP‐500.Thiswayeachlocationthatreceivesadistributionhasthecurrentactivityforthedistributionmonth.Forthereasonsexplainedabove,theRP‐80cannotbedirectlycomparedtotheRP‐500.
BelowaretwoGrossReceiptsTaxAverageRateTablesthatprovideexamplesofhowtheRP‐500andRP‐80differ.
RP‐500Report
GrossReceipts
TaxableGrossReceipts
GrossTax
Food&Medical
Deductions
AverageStateRate
Formula:A‐B
Formula:F*E
$Millions A B C D E=(C/B) F GFY2011 $98,539 $46,917 $3,226 $4,036 6.875% $51,622 $3,549FY2012 $100,236 $48,796 $3,379 $4,250 6.924% $51,440 $3,562FY2013 $102,260 $50,053 $3,425 $4,307 6.843% $52,207 $3,573FY2014 $104,023 $51,523 $3,517 $4,344 6.827% $52,500 $3,584FY2015 $106,409 $55,506 $3,762 $4,284 6.777% $50,903 $3,450FY2016 $103,929 $52,238 $3,619 $4,917 6.927% $51,690 $3,581
Source:RP‐500.Fiscalyearsrepresentdistributions.
RP‐80ReportGrossReceipts
TaxableGrossReceipts
GrossTax
Food&Medical
Deductions
AverageStateRate
Formula:A‐B
Formula:F*E
$Millions A B C D E=(C/B) F GFY2011 $103,786 $47,825 $3,283 $4,115 6.864% $55,961 $3,841FY2012 $105,298 $49,546 $3,391 $4,316 6.843% $55,752 $3,815FY2013 $107,631 $50,576 $3,465 $4,352 6.851% $57,055 $3,909FY2014 $109,294 $52,313 $3,570 $4,410 6.825% $56,981 $3,889FY2015 $109,994 $55,179 $3,792 $4,259 6.873% $54,816 $3,767FY2016 $107,507 $51,755 $3,664 $4,872 7.079% $55,753 $3,947
Source:RP‐80.Fiscalyearsrepresentbusinessactivity.
2016NewMexicoTaxExpenditureReport Page18
TAXEXPENDITURES
Anydiscussionoftaxexpendituresnecessarilybeginswithadefinitionoftheterm.Thefederalgovernmentdefinestaxexpendituresas“thoserevenuelossesattributabletoprovisionsoftheFederaltaxlawswhichallowaspecialexclusion,exemption,ordeductionfromgrossincomeorwhichprovideaspecialcredit,apreferentialrateoftax,oradeferraloftaxliability….”6Inprevioustaxexpenditurereports,wedefinethemas“deviationsfromabaselinetaxsystemcreatedbyspecifictaxlawprovisions.”7Taxexpendituresmayreflectanoverarchingstatewidepolicy,suchastopromotethegeneralwelfareofallcitizens,ormayreflectaspecificpurpose,suchastoincentivizeacertaintypeofconsumerbehavior,economicdevelopment,orjobcreation.Putsimply,taxexpendituresmaybethoughtofasspendingthroughthetaxcode.
Withthatdefinitioninmind,noteverycredit,exemption,deduction,orratedifferentialconstitutesataxexpenditure.Certaincredits,exemptionsanddeductionsarenotconsideredtaxexpendituresdueto:(1)constitutionalprohibition(2)Federalpre‐emption;(3)comitybetweengovernments;and(4)taxbase‐defining.Taxbase‐definingisparticularlyimportantgiventhatNewMexicohasaGRTwhichappliesmorebroadlythanatraditionalsalestax.Intheory,becausetheGRTis“imposedonanypersonengaginginbusinessinNewMexico”8and“engaginginbusiness”isdefinedas“carryingonorcausingtobecarriedonanyactivitywiththepurposeofdirectorindirectbenefit…”9,weretherenoexemptions,deductions,orcredits,virtuallyalleconomicactivityinNewMexico–includingreceiptsintheformofwages–wouldbesubjecttothistax.
Thequestionsare:dodifferenttaxstructuresconstitute“taxexpenditures”?Ifso,whatisthebaselinefromwhichtheyaredeviating?
Thesequestionsarenoteasilyansweredbecausemosttaxingjurisdictionstaxdifferentactivitiesindifferentwaysandfordifferentdesiredoutcomes.Exemptions,deductions,credits,orratedifferentialsforactivitiesinonetaxprogramcategorizedastaxexpendituresarenottreatedastaxexpendituresifthepolicymakersinNewMexicohavedecidedtousedifferenttaxstructurestotaxdifferentactivities(e.g.personalincometaxes,corporateincometaxes,motorvehicleexcisetaxes,andseverancetaxes,tonameafew)..Likewise,ifataxstructuretaxesdifferentactivitiesorproductsdifferentlywithoutestablishingabasetaxrate,wedonottreattheseratedifferentialsastaxexpenditures.If,however,ataxstructurehasabasetaxrateandthereareinstancesinwhichanactivityorproductistaxedatadifferentrate,wetreattheseastaxexpenditures.Werecognizethat,tosomedegree,thisisanacademicdifference,butwearenotinapositiontosubstituteourjudgmentforthatoftheLegislatureandGovernorbyattemptingtodeterminewhattaxrateshouldserveasthebaserateandwhichtaxratesshouldthenbeviewedasdeviationsfromthatbaserate.
Reasonablemindswithasharedunderstandingofthesedefinitionsmaydisagreeonspecifictaxexpenditureexamples.However,therearegenerallyacceptedstandardsformostdeviations,andweconfidentlyincludethemintheTaxExpendituressectionofthisreport.Similarly,weconformtogenerallyacceptedstandardsforexamplesofdeviationsthatarenottaxexpendituresinthatsection.Finally,wecreatedasectionwhereconsensusislacking.Thissectionisprovidedtoensuretransparencyandconsistencyinreporting.WithExecutiveOrder2011‐071inmind,we62USC§62272013TaxExpenditureReport8Section7‐9‐4NMSA19789Section7‐9‐3.3NMSA1978
2016NewMexicoTaxExpenditureReport Page19
includethestatutorybasis,theintendedpurpose,anevaluation,anyrecommendations,andthefiscalimpactorestimatedfiscalimpactforeachtaxexpenditure.Inanefforttomakethedatamorereadable,andhopefullymoreuseful,weincludechartsandhistoricaltablesofthefiscalimpact.
WhilenotmandatedbytheExecutiveOrder,wealsoincludebothareliabilityfactor,andabriefhistoryofeachstatute,tohelpthereaderunderstandhowthestatutehasevolved,aswellasasummaryoftheprovisionasitexistsatthepresenttime.Wealsoaddedasectiontoeachexpendituretoshowwhichofthefivecategories(citizenbenefit,economicdevelopment,etc.)theexpenditureisin.Manysectionshavebeenamendedseveraltimesandwenotetheyearofeachamendment.Foramendmentsthathaveadirectimpactonthedeviationbeingdiscussed,wesummarizethesubstanceofthechange.
Intotal,thereare123taxexpenditures,98provisionsthatarenottaxexpenditures,and23activitieswhereconsensusislacking.
2016NewMexicoTaxExpenditureReport Page20
NOTESABOUTTYPESOFTAXEXPENDITURES
EXEMPTIONSANDDEDUCTIONSIntermsofthepracticaleffectontaxliability,thereislittledifferencebetweenan“exemption”anda“deduction.”However,thereareconceptualdifferencesandsignificantadministrativedifferencesbetweenexemptionsanddeductions.Ataconceptualordefinitionallevel,an“exemption”isastatutorymeansoffreeingataxpayerfromaduty,liability,orrequirement.NewMexicotaxexemptionscomeinseveralforms.Therecanbeabroadexemptionforcertaintypesoftaxpayersfromataxprogram—insurancecompaniesareexemptfromcorporateincometaxiftheypayNewMexicopremiumtaxes.Therecanbeexemptionsforcertaintypesoftransactions;and,therecanbeexemptionsforcertainamountsofincome,revenue,orgrossreceipts.Inmostinstances,exemptionsfreetaxpayersofareportingobligationwithrespecttotheexemptentity,transactions,oramounts.Inshort,unlessspecificallyrequiredbystatuteorinstruction,exemptionsarenotreported.
Ataxdeductionisastatutorymechanismthatdecreasesataxpayer’sliabilitybyreducingtheamountofthetaxpayer’sincome,revenue,orgrossreceiptsthatissubjecttotax.Likeexemptions,deductionscanapplytocertaintypesofentities,totransactions,ortoamountsofincome,revenue,orgrossreceipts.Unlikeexemptions,deductionsdonottypicallyfreetaxpayersofreportingobligations.Rather,taxpayersthatareentitledtodeductionstypicallymustfilereturnsundertheparticulartaxprogramtowhichthedeductionpertains,identifytheamountofthetaxbasebeforethededuction,andthenreducethistaxbasebytheamountofthededuction.Inaddition,manydeductionsundertheGRTprogramrequirethetaxpayertoobtainnontaxabletransactioncertificatestoestablishentitlementtothededuction.
Asnotedabove,manydeductionsandexemptionsinNewMexicostatutesarenottaxexpenditures.
CREDITSAtaxcreditisastatutorymechanismwhichallowstaxpayersthatmeetthequalificationsforobtainingacredittosubtracttheamountofthecreditfromthetotaltaxliabilitytheyowetheState.Taxcreditscanbegrantedinrecognitionoftaxesalreadypaidortoencouragebehaviorslikeinvestmentorparenting.Mosttaxcreditsarereportedonreturns,butarenotalwaysseparatelyreported.
DIFFERENCEBETWEENTAXCREDITSANDDEDUCTIONSTaxdeductionsandtaxcreditscanbothreduceataxpayer’staxliability,buttheydoitindifferentways.Taxdeductionsreducethetaxpayer’staxbase,forexampletaxableincomeforincometaxesorgrossreceiptsforGRT,inordertocalculatethetaxpayer’sliability.Additionally,deductionscannotreducetaxableincomebelowzero.Incontrast,taxcreditsdonotdirectlyreduceaperson’staxbase.Rather,theyaredollarfordollarcreditamountsthatoffsetorreduceataxpayer’sliability.Incontrasttodeductions,creditsthatexceedliabilityareoftenallowedtobecarriedforwardtothetaxpayer’snextreportingperiod,or,inmorelimitedinstances,arerefundable.
2016NewMexicoTaxExpenditureReport Page21
NOTESABOUTTHEDATA
Aswiththe2015TaxExpenditureReport,thisreportcontinuestoqualifytheexpenditureamountswithReliabilityFactors,whichareanefforttohelpthereaderunderstandthemethodologyfordeterminingthefiscalimpactofthetaxexpenditure.Westressthatthefiscalimpactofanexpenditureneedstobereadinconjunctionwiththatexpenditure’sreliabilityfactor.TheReliabilityFactorisascaleof1‐4asfollows:
1: Themostreliableinformationcomesdirectlyfromtaxpayer‐reporteddata,ascontainedinGenTax.Itrequiresnoadditionalestimationormanipulationwithoneexception;instanceswheretheGRTactualaveragerateisusedtoestimatetheforgonetaxinsteadofusingtheknownratesinthedifferentjurisdictionsinthestate.Thisdata,however,isonlyasreliableasthetaxpayerswhoarereportingit.
2: Estimatedfromtaxpayer‐reporteddataascontainedinGenTax(RP‐80report).Forexample,ifaGRTtaxexpenditureisindustry‐specific,weareabletomakeassumptionsbasedonNorthAmericanIndustryClassificationSystem(“NAICS”)codes.
3: EstimatedusingnationaldataandextrapolatingtoNewMexico.4: Theleastreliabledata.Estimatesrepresenttheeconomists’bestestimateaboutthe
valueofataxexpenditure.Duetolimiteddataforanalysis,theseestimatesarefrequentlyroundeduptothenearestmillion.
Inaddition,alimitednumberofexpenditureshaveunknownreliability,becausethereisnodataavailabletomakeevenanestimateoftheamount.ThisisreflectedinthetablebelowshowingthenumberofexpendituresforeachReliabilityFactor.
ReliabilityFactor Description NumberofExpenditures1 Mostreliable.Noestimation 682 EstimatedfromGenTaxdata 163 Estimatedfromnationaldata 154 Leastreliable.Estimatedfrom
limiteddata8
Unknown Nodataavailable 16
Readersshouldunderstandthattaxpayershavetheopportunitytoamendtheirtaxreturnsforuptothreeyears,plusthecurrentyear.Amendedreturnsoftenimpactexpenditureamounts.Wedecidedthatcurrentdataismorevaluablethanhistorically‐consistentdata.Therefore,whencomparingthisyear’sTaxExpenditureReporttopriorversions,thereadershouldexpecttoseesomechangestoprioryears.Forexample,theamountofaparticularexpenditureforFY2013maybedifferentinthe2016TaxExpenditureReportthanitwasinthe2015TaxExpenditureReport.Amendedreturnscompriseasignificant,butnotthesolereason,forthesevariations.OthersourcesofthevariationmayincludelatefilingsbytaxpayersorimprovementstoTRDmethodologiesforquantifyingcertainexpenditures.
NewMexico,likemanystates,definesayeardifferentlyfordifferenttaxstructures.Forinstance,theGRTtaxyearcorrespondstotheState’sfiscalyear(July1‐June30)whiletheincometax
2016NewMexicoTaxExpenditureReport Page22
programsuseacalendaryear(January1‐December31).Thispresentsachallengefororganizingandreportingthedata.BecausethetaxfilingdeadlineforpersonalincometaxisinAprilofthefollowingyearandthemoneyaccompanyingthosereturnsgoestotheGeneralFundduringthefollowingfiscalyear,wepresentthetaxyeardataasfiscalyear(i.e.,PITyear2014ispresentedasFY2015becausePITyear2014returnsaredueinAprilof2015whichisinthe4thquarterofFY2015).PITandCITdatafromtaxyear2014isthemostcompletedatasetavailableatthetimeofpublicationofthisreport.
Finally,ourgoalistoprovidedataforeachtaxprogramaffectedbyataxexpenditure.However,wearelimitedbothbyfederalandstatelawfromdisclosingdatawhichmightrevealataxpayer’sidentity.Therefore,whentherearelessthanthreetaxpayersreportingadeduction,exemption,orcreditagainstaparticulartax,wecombinedthedataforallofthetaxprogramsaffectedbythosedeductions,exemptions,andcredits.Whencombiningthedataisnotenough,weredactedit.Further,asavisualcuethroughoutthisdocument,thereaderwillfindanumberofblankentriesintableswherethedataareredacted.
2016NewMexicoTaxExpenditureReport Page23
CATEGORIZINGEXPENDITURES
FollowingTRD’spresentationofthe2015TaxExpenditureReporttointerimLegislativecommittees,TRDcategorizedtheexpendituresreportedinthis2016TaxExpenditureReportintothefollowingfivemajorcategories:citizenbenefits;economicdevelopment;environment,conservation,andrenewableenergy;healthcare;and,highlyspecializedindustryincentives.PleasenotethatthegroupingofexpendituresintocategoriesisnotanindicationofwhetherTRDbelievesanyparticularexpenditureorcategoryofexpendituresisgoodorbad,asamatterofpolicy.Rather,categorizingexpendituresaffordspolicymakersabroaderviewofNewMexico’staxexpendituresthatcannotbegleanedfromreviewingeachindividualexpenditureinisolation.
Aswiththedeterminationofwhetheraparticulardeduction,credit,orexemptionconstitutesataxexpenditure,TRDacknowledgestherethatcanbelegitimatedifferencesofopinionastowhetheraparticularexpenditurebelongsinonecategoryoranother.Certainexpendituresmaycrossmultiplecategories.Forexample,anexpenditurelistedinthehighlyspecializedindustrycategorymightalsoserveeconomicdevelopmentpurposes.However,TRDbelievesitisimportanttotheintegrityofthecategorizationexercisetoincludeeachexpenditureinonlyonecategory.Finally,asTRDcontinuestodevelopitscapacitytechnologically,expenditurecategoriesmaychange.Forexample,wemayhavethecapabilityinfuturetaxexpenditurereportstogroupexpendituresthatpertaintoaspecificindustryoraspecificsubsetoftaxpayersintosmallercategoriesinordertoexaminetheuniverseofexpendituresthataffectorcouldaffectcertaingroupsorindustries.
Theoutlinebelowsetsforthexpendituresincludedineachcategory.ThefulllistcanbefoundinAppendixB.
1. CitizenBenefitsa. Expendituresthatareavailabletoorthatbenefitallindividualtaxpayers,suchasthe
expendituresforfood&medicalservicesandprescriptiondrugdeductionsfromGRTandcontributionstotheeducationdeductionfromPIT.
b. Expendituresdesignedtoalleviateburdensforaspecificsubsetofthepopulation,suchasveterans,activemilitary,low‐income,ortheelderly.
c. Expendituresthatlessentheburdensofgovernment,suchascertainnonprofitexpenditures.
2. EconomicDevelopmenta. ExpendituresdesignedtostimulateinvestmentinNewMexico,suchastheangel
investmentPITcredit.b. Jobcreationexpenditures,suchasthehigh‐wageandruraljobtaxcredits.c. Expendituresdesignedtoattractindustries,suchasthefilmproductionandR&Dcredits.
3. Environment,Conservation,andRenewableenergy
a. Expendituresdesignedforenvironmentalhealth,topromoteconservation,andtopromoterenewableenergytechnologiesandusage,suchastheadvancedenergycredit(renewablesandcarbonsequestration),biofuelsincentives,renewableenergyproductiontaxcredit,andPIT/CITcreditforlandconservationcontributions.
2016NewMexicoTaxExpenditureReport Page24
4. HealthCareExpendituresdesignedtoincreaseaccessibilitytoandlowerthecostsofhealthcare.ExamplesincludethehealthcarepractitionersGRTdeduction,hospitalconstructiondeduction,andruralhealthcarepractitionersPITcredit.
5. HighlySpecializedIndustriesExpendituresavailabletospecificorhighlyspecifiedindustries,suchasagriculture,uranium,aerospace,andotherindustries.
Thechartbelowreflectsthemostrecentdataavailableforalltaxexpenditures.Thedatapresentedisbasedontheun‐redactedcostofthetaxexpenditures.
50%
18%
3%
21%
8%
CitizenBenefits
EconomicDevelopmentIncentive
Environment,Conservation&RenewableEnergy
HealthCareIncentive
HighlySpecializedIndustry
2016NewMexicoTaxExpenditureReport Page25
ADVANCEDENERGYCREDITAGAINSTGRT,COMPENSATINGTAX,WITHHOLDINGTAX,
PIT,ORCIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: AtaxpayerwhoholdsanownershipinterestinaqualifiedgeneratingfacilitylocatedinNewMexicomayclaimanadvancedenergycreditagainstGRT,compensatingtaxorwithholdingtax.Theallowablecreditis6%ofthecostsofdesigningandconstructingthequalifiedgeneratingfacility.Ifthecreditamountexceedsthetaxpayer’sGRT,compensatingtaxandwithholdingtaxliability,theexcessmaybeclaimedagainstthetaxpayer’sNewMexicoPITorCITreturn.AqualifiedgeneratingfacilityisonethatbeginsconstructionbeforeDecember31,2015andis:
(1) solarthermalelectric,
(2) solarphotovoltaicelectric,
(3) geothermalelectric,
(4) arecycledenergyproject,or
(5) neworrepoweredcoal‐basedelectric.
Theaggregateamountofalladvancedenergytaxcreditsthatmaybeclaimedwithrespecttoasinglequalifiedgeneratingfacilitymaynotexceedsixtymilliondollars($60,000,000).
Thecreditisnotrefundablebutmaybecarriedforwardforuptotenyears.
StatutoryBasis: 7‐2‐18.25,7‐2A‐25,and7‐9G‐2NMSA1978
IntendedPurpose: PresumablytoincentivizeinvestmentinrenewableenergygenerationfacilitiesbymitigatingalloraportionoftheGRT,compensatingtaxliability,withholdingtax,PIT,andCIT.
History: Originallyenactedin2007asacreditagainstGRT,compensatingtax,andwithholdingtax.
Amendedin2009toallowcreditamountsthatexceedstheclaimant’sGRT,compensatingtaxandwithholdingtaxliabilitytoclaimtheexcesscreditagainstPITandCIT;madetheGRT,compensatingtax,andwithholdingtaxcreditconformtothenewcredits.
Evaluation: ThelackofactivityinFY2009andFY2010islikelyattributable,atleastinpart,tothenewnessofthecreditatthattimeandthechangesthattookplaceinthe2009LegislativeSession.Itmaybethatthiscreditisusedlessthanwasanticipatedbecauseataxpayerwhoclaimsthiscreditisineligibletoclaimtheinvestmenttaxcreditoranyothercreditthatmaybetaken
2016NewMexicoTaxExpenditureReport Page26
againstPIT,CIT,GRT,compensatingtax,orwithholdingtaxliabilities.Inshort,thisstand‐alonecreditmaybelessattractivetothetaxpayerthanthecombinationofotheravailablecredits.
Recommendations: Thiscredithasnotbeenwidelyused,andthus,hasnotrealizeditsintendedpurpose.Ifacomprehensiveenergy‐relatedtaxprogramisbeingconsidered,thenthiscreditshouldberepealed.Ifnocomprehensiveprogramisbeingdeveloped,thenataminimum,considerallowingthecredittoexpire.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:Someofthedatahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.FY2016hasbeenredacted.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $645.1 $127.8 $5,417.1 $2,077.4 $1,586.2
Claims 3 5 145 29 123
0
20
40
60
80
100
120
140
160
$‐
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
CombinedTaxes(thousands)
AdvancedEnergyCreditsDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page27
ADVANCEDENERGYGRTANDCOMPENSATINGTAXDEDUCTION
Category: Environment,Conservation&RenewableEnergy
BriefDescription: Receiptsfromsellingorleasingtangiblepersonalpropertyorservices,suchasdesign,construction,equipment,andequipmentinstallationtoapersonthatholdsaninterestinaqualifiedgeneratingfacilityaredeductibleiftheinterestholderinthefacilitydeliversanontaxabletransactioncertificatetotheseller.
Similarly,thevalueofeligiblegenerationplantcostsfromthesaleorleaseoftangiblepersonalpropertytoapersonwhoholdsaninterestinaqualifiedgeneratingfacilitymaybedeductedincomputingthecompensatingtax.
Theaggregateamountofalladvancedenergytaxdeductionsthatmaybeclaimedwithrespecttoaqualifiedgeneratingfacilityshallnotexceedsixtymilliondollars($60,000,000).TheNMENVcertifiesthequalifiedgeneratingfacility.
StatutoryBasis: 7‐9‐114NMSA1978
IntendedPurpose: ToencouragetheconstructionanddevelopmentofqualifiedgeneratingfacilitiesinNewMexicoandtosequesterorcontrolcarbondioxideemissions.
History: Originallyenactedin2010toallowadeductionforthesaleoftangiblepersonalpropertyorservicesthatareeligiblegenerationplantcosts.
Amendedin2011toallthedeductionofreceiptsfromtheleasingofthetangiblepersonalproperty.
Evaluation: EDDdoesnotcurrentlytrackthenumberoftemporaryconstructionjobsoreconomic‐basedjobsrelatedtothededuction.However,accordingtotheNMENV,whiletherearefewpermanentjobsassociatedwiththededuction,thenumberoftemporaryconstructionjobsfromtheprojectscertifiedbytheNMENVisnotable.
Assuming60newtemporaryconstructionjobswerecreated,andthepeopleemployedwouldnothavebeenotherwiseemployedinNewMexico,TRDestimatesthesejobswouldhavegeneratedapproximately$50thousandinPITrevenue.ThisestimatetakesintoaccounttheBureauofLaborandStatistics‐publishedaveragewagesfortheapplicablefields,assumingthetemporaryjobslastedanaverageofsixmonths.Makingcertainassumptionsaboutspending,GRTrevenueofapproximately$50thousandcouldresult.Otherformsofrevenue–insurancepremiumtax,propertytax,etc.–havelikelyalsobeengenerated,insmalleramounts.
2016NewMexicoTaxExpenditureReport Page28
Recommendations: Considerrepealing.Thisdeductionworksintandemwiththeadvancedenergycredit,andneitherarewidelyused.
ReliabilityFactor: 2‐Thisestimateisextrapolatedfromincompletetaxpayerinformation.Thelackofcompletereportingdiminishestheaccuracyofthisestimate.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CombinedTax $500.0 $500.0 $500.0 $500.0 $500.0 $500.0
$‐
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
Expenditures(thousands)
AdvancedEnergyDeduction
2016NewMexicoTaxExpenditureReport Page29
AFFORDABLEHOUSINGCREDITAGAINSTMODIFIEDCOMBINEDTAX,PIT,ORCIT
Category: CitizenBenefits
BriefDescription: AtaxcreditcanbeappliedagainstGRT(lesslocaloptiongrossreceiptstaxes),compensatingtax,withholding,PIT,CIT,E911,andotherCRStaxliabilitiesforinvestmentsinaffordablehousingprojectsequalto50%oftheamountofcashinvestedorthefairmarketvalueoftheland,buildings,materials,orservicesrelatingtosuchprojects.ThistaxexpenditureisavailabletotaxpayersreceivingataxcreditvoucherissuedbytheNewMexicoMortgageFinanceAuthority(“MFA”).
UndertheMFA’sprogram,thetaxcreditvoucherisadministeredbasedondonationsmadetoaffordablehousingprojectsandtheAffordableHousingCharitableTrust.In2006and2007,thetaxcreditvoucherwascappedat$200,000and$500,000respectively.Asof2008,itwassetatabaserateof$1.85multipliedbythereportedstatepopulationandadjustedannuallyforinflation.InFY2016,thiscapamountwillbeapproximately$4million.Donationsmayincludeland,buildings,materials,cashorservices.Cashequivalents,suchasstorecreditorwaivedinvoices,areconsideredacashdonation.Donationsreceivedbytheprojectsponsorinexchangefortaxcreditsmaybeusedtofundtheacquisition,substantialrehabilitation,and/ornewconstructionofaffordablehousingprojectsthroughoutthestate,includingdownpaymentandclosingcostassistanceforacquisitionofaffordablesinglefamilyhousing.NominimumormaximumdollarlimitsareplacedondonationsmadedirectlytotheAffordableHousingCharitableTrust.
Thecreditisnotrefundablebutmaybecarriedforwardforuptofiveyears.
StatutoryBasis: 7‐9I‐5NMSA1978
IntendedPurpose: Presumablytoincentivizetheconstructionofaffordablehousingprojects.
History: Originallyenactedin2005.
AnamendmenttotheAffordableHousingTaxCreditActin2010expandedwhereeligible“affordablehousingprojects”canbelocatedfromcountieswithapopulationoflessthan100,000toallcountiesandtoincludematerialsasanallowableinvestment.
Evaluation: MFAreportsthisprogramishighlyeffectiveinleveragingdonationsforaffordablehousingdevelopmentorganizationslikeHabitatforHumanity.Between2009and2014,theauthorityfacilitatedatotal288unitsofaffordablehousing(111multifamilyrentalunitsand177singlefamilyhomesforsale)representingareturnoninvestmentof$26.72foreverydollaroftaxcreditusedforaffordablehousingdevelopment.
2016NewMexicoTaxExpenditureReport Page30
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $84.0 $138.8 $1,389.2 $564.4 $831.0 $271.9
Count 79 102 208 142 177 30
0
50
100
150
200
250
$‐
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
$1,600.0
CombinedTaxes(thousands)
AffordableHousingCredits
2016NewMexicoTaxExpenditureReport Page31
AGRICULTURALBIOMASSCREDITAGAINSTPITANDCIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: Adairyorfeedlotowneriseligibleforacreditof$5foreachwettonofagriculturalbiomassthatistransportedfromtheowner’sdairyorfeedlottoafacilitythatusesagriculturalbiomasstogenerateelectricityormakefuelsforcommercialuse.TheaggregateannualcombinedtotalofallagriculturalbiomassPITandCITcreditsiscappedat$5,000,000.
Asusedinthissection:(1) "agriculturalbiomass"meanswetmanuremeetingspecifications
establishedbyEMNRDfromeitheradairyorfeedlotcommercialoperation;
(2) "biocrude"meansanonfossilformofenergythatcanbetransportedandrefinedusingexistingpetroleumrefiningfacilitiesandthatismadefrombiologicallyderivedfeedstocksandotheragriculturalbiomass;
(3) "feedlot"meansanoperationthatfattenslivestockformarket;and
(4) "dairy"meansafacilitythatraiseslivestockformilkproduction.
StatutoryBasis: 7‐2‐18.26and7‐2A‐26NMSA1978
IntendedPurpose: Presumablytoincentivizethesaleanduseofagriculturalbiomassasafuel.
History: Originallyenactedin2010.
Evaluation: TodatetheEMNRDhasnotreceivedanyapplicationsforthistaxcredit.Duetotherecentannouncementofanagriculturalbiomassprojectthatisunderconstruction,EMNRDanticipatesclaimsforthiscredittoincrease.Duetocredittransferability,TRDhasreceivednumerousinquiriesregardingthiscreditfrombothin‐stateandout‐of‐statetaxcreditbrokers.Highlevelsoftransfersmayindicatethattheincentiveisnotproperlyscopedtothetaxpayersmostdirectlyinvolvedinthedesirablebehavior.
Recommendations: (1) Continuetomonitorandevaluatecreditutilizationtodeterminewhethertheincentiveiseffectiveinstimulatingthedesiredoutcomes;
(2) Continuetomonitortransferstodetermineproperscoping;
(3) Ifacomprehensiveenergy‐relatedtaxprogramisunderconsideration,thenrepealofthiscreditshouldalsobeconsidered;
(4) Consideramendingthestatutetoclarifyclaimproceduresanddeadlines,specificallytoprescribethetaxyearinwhichthecreditshouldbe
2016NewMexicoTaxExpenditureReport Page32
claimed.TRDaddressedthisissuethroughBulletinB‐300.16dated12/2016,indicatingthatthecreditmustbeclaimedforthetaxyearstatedintheEMNRDcertificateofeligibility.EMNRDpartiallyaddressedthisissuethroughitsregulations.Tyingthedeliveryofthebiomasstoataxyearpreventsunintendedcredit“stacking”andensuressmoothannualadministrationandawardingofthecredit.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact: None,todate.
2016NewMexicoTaxExpenditureReport Page33
AGRICULTURALWATERCONSERVATIONEXPENSESCREDITAGAINSTPITANDCIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: CITandPITcreditsareavailableforagriculturalwaterconservationexpensesincurredbythetaxpayerforspecificimprovementsinirrigationsystemsorwatermanagementmethods.Theexpensesmustcomplywithawaterconservationplanapprovedbythelocalsoilandwaterconservationdistrictinwhichtheimprovementislocated.TheimprovementsmustbeprimarilydesignedtosubstantiallyconservewateronthelandinNewMexicothatisownedorleasedbythetaxpayerandusedtoproduceagriculturalproducts,harvestorgrowtrees,orsustainlivestock.
Thecreditamountis35%ofeligibleexpensesincurredincalendaryear2008and50%ofexpensesinsubsequentyearsthroughDecember31,2012whenthecreditexpired.
Thecreditisnotrefundablebutmaybecarriedforwardforuptofiveyears.Carryforwardclaimscancontinuetobemadethroughtaxyear2017.
StatutoryBasis: 7‐2‐18.20and7‐2A‐22NMSA1978
IntendedPurpose: Presumablytoincentivizeresponsiblewatermanagementandtooffsetthecostofconservation‐drivenirrigationimprovementsincurredbytheindividualfarmerorrancher.
History: Originallyenactedin2007withadelayedrepealofJanuary1,2013.
Evaluation: Thenumberofclaimswasrelativelyhighearlyinthelifespanofthiscreditandhasreducedovertime.Aplausibleexplanationisthatthecreationofthecreditstimulatedthenecessaryinvestmentinirrigationsystemsandwatermanagementmethods.Furthermore,thiscreditisnotrefundablewhichmeansthatthetaxpayermusthaveenoughliabilityoversixyearstooffsetthecreditinordertogetthefullbenefitofthecredit.Oncetheseearlyinitialinvestmentsweremade,thereweresignificantlyfewerfarmerswiththerequisiteliabilitytoclaimthecreditwhoneededtomakethisinvestment.
Recommendations: EvaluatethestatusandadequacyofagriculturalwaterconservationintheStatetodeterminewhetheraneworrevisedincentiveshouldbeconsideredorimplemented.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:Someofthedatahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.FY2015hasbeenredacted.
2016NewMexicoTaxExpenditureReport Page34
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
CITExpenditures $‐ $‐ $‐ $‐
PITExpenditures $10.7 $13.5 $26.8 $7.2
CITClaims ‐ ‐ ‐ ‐
PITClaims 5 3 8 4
‐123456789
$‐$5.0$10.0$15.0$20.0$25.0$30.0
CombinedTaxes(thousands) AgriculturalWaterConservationExpensesCredit
Datahavebeenredacted
2016NewMexicoTaxExpenditureReport Page35
AIRCRAFTSALESORSERVICESGRTDEDUCTION
Category: EconomicDevelopment
BriefDescription: Receiptsfromselling,maintaining,refurbishing,remodelingorotherwisemodifyingacommercialormilitarycarrierovertenthousandpoundsgrosslandingweightaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐62.1NMSA1978
IntendedPurpose: PresumablytoincentivizeamorerobustcommercialandmilitaryaircraftindustryinNewMexico.
History: Originallyenactedin2000andamendedin2005.
Amendedin2014toexpandthedeductionbyaddingthesaleofanaircraftover10,000poundstotheactivitiesthataredeductible.WithaneffectivedateofJuly1,2014,theimpactfromthisexpandeddeductionwillberealizedinFY2015.
Evaluation: Withthe2014changetothisdeduction,itistoosoontoevaluateitseffectiveness.Membersoftheimpactedindustrytoutthepotentialforsignificantnewbusinessopenedupbytheadditionofaircraftsalestothededuction.
Recommendations: None.
ReliabilityFactor: 2–Thisdeductionisseparatelyreported.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
NOTE:Thedatahavebeenredactedduetofewerthan3taxpayerstakingthededuction.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT
0Expenditures(thousands)
AircraftServicesDeductionDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page36
ALTERNATIVEENERGYPRODUCTMANUFACTURERSCREDITAGAINSTMODIFIEDCOMBINEDTAX
Category: EconomicDevelopment
BriefDescription: Manufacturersofcertainalternativeenergyproductswhohireatleastonenewemployeeforevery$500,000inqualifiedexpenditures(upto$30million)andforevery$1,000,000inqualifiedexpenditures(over$30million)mayreceiveataxcreditnottoexceed5%ofqualifiedexpendituresforpurchaseofmanufacturingequipmentusedinthemanufacturingoperation.
Thecreditisnotrefundablebutmaybecarriedforwardforuptofiveyears.
StatutoryBasis: 7‐9J‐1etseq.NMSA1978
IntendedPurpose: Presumablytoencouragehiringandinvestmentinthealternativeenergy productionsector.
History: Originallyenactedin2007andamendedin2011.
The2011amendmentincludedproductsofsinglecellphotosyntheticorganismsaseligiblealternativeenergyproductsfortaxableyears2011through2019.
Evaluation: Thiscreditisunderused.AccordingtotheSolarEnergyIndustriesAssociation’swebsite,therearecurrentlymorethan100solarcompaniesatworkthroughoutthevaluechaininNewMexico,thesecompaniesprovideawidevarietyofsolarproductsandservicesrangingfromsolarsysteminstallationstothemanufacturingofcomponentsusedinphotovoltaicpanels(15manufacturers,10manufacturingfacilities,50contractor/installers,3projectdevelopers,8distributors,and23engagedinothersolaractivitiesincludingfinancing,engineeringandlegalsupport..TRDbelievestheemploymenteligibilityinvestmentthresholdrequirementsmaybetoohighforthiscredittobeusefultosmallmanufacturers.Additionally,manufacturersthatqualifyforthiscreditmayalsoqualifyfortheinvestmenttaxcredit,whichhasahighercreditrateandbettercarryforwardandcreditrefundprovisions.
Recommendations: Thereispotentialoverlapwiththeinvestmenttaxcredit(ITC).Consider:
(1)RepealingthiscreditandsubsumingitintheITC;or
(2)MakingtheITCandthiscreditmutuallyexclusiveandlowertheinvestmentandemploymentthresholdrequirementsforthealternativeenergyproductmanufacturers’taxcredit.Doingsowouldallowlargemanufacturers,eventhosethatproducealternativeenergyproducts,tousetheinvestmenttaxcredit.Yet,itwouldopenupthisincentivetosmalleralternativeenergyproductproducers.TRDwillcontinuetomonitorcredit
2016NewMexicoTaxExpenditureReport Page37
utilization,especiallywithrespecttothesinglesalesfactorphase‐informanufacturers,asthatelectionmaystimulateexpansionorlargerinvestmentinalternativeenergymanufacturinginNewMexico.Asthereareseveralcreditsanddeductionsforrelatedexpenses,acomprehensivereviewoftherelationshipsandinteractionsbetweentheserelatedexpenditurescouldexplainwhysomeofthemareunderused.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CombinedTaxes $‐ $587.1 $63.1 $56.8 $‐ $29.1
Claims ‐ 26 5 4 ‐ 11
‐
5
10
15
20
25
30
$‐$100.0$200.0$300.0$400.0$500.0$600.0$700.0$800.0$900.0
$1,000.0
Expenditures(thousands)
AlternativeEnergyProductManfacturersCredit
2016NewMexicoTaxExpenditureReport Page38
ANGELINVESTMENTCREDITAGAINSTPIT
Category: EconomicDevelopment
BriefDescription: Forpurposesofthis2016TaxExpenditureReport,ataxpayerwhofilesaNewMexicoPITreturnandmakesaqualifiedinvestmentmayclaimacreditinanamountnottoexceed25%ofnotmorethan$100,000ofthequalifiedinvestment($25,000).Tobeaqualifiedinvestment,itmustbeinabusinessthatmaintainsitsprincipalplaceofbusinessinNewMexicoandengagesinhigh‐technologyresearchormanufacturingactivitiesinNewMexico.
PriortoJanuary1,2015,EDD,inanycalendaryear,didnotissueeligibilitycertificatestoexceedthe$750,000cap.Theperiodforwhichthecreditmaybecarriedforwardisthreeconsecutiveyears.
FortaxyearsbeginningonorafterJanuary1,2015untilJanuary1,2025,2015legislationincreasedthecreditamountperinvestmentto$62,500andincreasedthenumberofqualifiedinvestmentsthatataxpayercouldmakepertaxyeartofive.Theaggregateannualcapwasalsoincreasedfrom$750,000to$2,000,000.Theperiodforwhichthecreditmaybecarriedforwardisfiveconsecutiveyears.
StatutoryBasis: 7‐2‐18.17NMSA1978
IntendedPurpose: Presumablytoincentivizetheinvestmentinhigh‐technologyresearchandmanufacturingactivitiesinNewMexicobyangelinvestors.
History: Originallyenactedin2007withadelayedrepealdateofJanuary1,2013.Thecreditwasamendedin2012and2015.
The2012amendmenteliminatedthedelayedrepealandextendedthedatebeforewhichaninvestmentmustbemadeinordertoqualifyforthecredit—fromDecember31,2011toDecember31,2016.The2015amendmentchangedthequalifiedinvestmentamount,relaxedthelimitsonthenumberofinvestments,increasedtheannualcapandextendedthecarryforwardperiod.
Evaluation: Whilethiscreditisbeingusedbyangelinvestors,priortothe2015amendments,thecreditwastoolimitingbothintermsofdollaramountandnumberofinvestments,toattractneededinvestment.The2015amendmentsintendedtoaddresstheseconcerns,butitistooearlytodeterminetheeffectivenessoftheamendments,asthetaxyear2015useofthiscreditwillnotbereporteduntilspringof2016,attheearliest.
Recommendations: Thereistensioninthestatutorylanguagethatshouldbecorrectedthroughclarifyinglegislation.SubsectionCprescribesthattheclaimmustbemadewithinoneyearofmakingtheinvestment.Yet,SubsectionEcontemplates
2016NewMexicoTaxExpenditureReport Page39
andallowsaqueuethatmayrendertheone‐yearclaimlimitationimpracticable.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $250.0 $310.8 $339.9 $384.5 $510.8
Claims 44 60 47 51 83
0
102030405060
708090
$‐
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
PIT(thousands)
AngelInvestmentCredit
2016NewMexicoTaxExpenditureReport Page40
APPORTIONMENTELECTIONOFCITFORMANUFACTURERS
Category: EconomicDevelopment
BriefDescription: AtaxpayerwhoseprincipalbusinessactivityismanufacturingmayelecttohaveitsbusinessincomeapportionedtoNewMexicobyusingaformulawhichputsagreateremphasisonthetaxpayer’ssalesthanonthetaxpayer’spropertyorpayroll.Thetransitionfromallowingataxpayertouseadouble‐weightedsalesfactorformula(2014)toallowingataxpayertouseafullyphased‐insinglesalesfactorformulawillbecompletefortaxyearsbeginningonorafterJanuary1,2018.Fortaxyear2014,themostrecenttaxyearreported,theformulaprescribeda50%salesfactor.
StatutoryBasis: 7‐4‐10(B)NMSA1978
IntendedPurpose: Asenactedin1993,thepurposeforhavingthedouble‐weightedsalesfactorformulaelectionformanufacturerswastoencourageinvestmentandemploymentinthisstatebymanufacturerswhodonotanticipatesubstantialsalesrevenuewithinthisstate.Thispurposelanguagewasdeletedinthe2001amendment.Nonetheless,thepurposeforallowingmanufacturerstochooseanalternativeapportionmentformulapresumablyremainsthesame.
History: Originallyenactedin1993andamendedin2001,2002,2009,2013,and2015.
The2013amendmentprovidedaphase‐inoverfiveyearstheuseofasinglesalesfactorbytaxpayerswhoseprincipalbusinessactivityismanufacturing.
Evaluation: Whilethisexpendituredoesreducecorporateincometaxrevenuedirectly,thereisgoodevidencetoindicatethattheindirecteffectistocreateamorefavorablebusinessclimateformanufacturinginNewMexico.Forexample,theshareofGRTpaidbymanufacturershasincreasedfrom2.7%to4.2%oftotalGRTfromFY2009toFY2014.Inadditiontoallowingtheeventualelectionofsalesfactoronlyapportionment,the2013legislativechangesalsoincludedchangestothequalifyingrequirementsthatshouldincreasethestabilityandpredictabilityofthisexpendituregoingforward.Fullevaluationofthisexpenditurewillhavetocontinueovertime,asthephase‐inwillnotbecompleteuntil2018andmanystatesalreadyhaveafullyphased‐insinglesalesfactor.
Recommendations: Noneatthistime.
ReliabilityFactor: 2‐Thiselectionisreported.Someestimationisrequired.Differencesbetweenannualexpenditurereportsareattributedtotaxpayersfilinglate,oramendedreturns.
2016NewMexicoTaxExpenditureReport Page41
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $18,877.6 $2,458.7 $1,618.7 $1,777.8 $13,368.1
Claims 18 19 18 19 25
0
5
10
15
20
25
30
$‐$2,000.0$4,000.0$6,000.0$8,000.0$10,000.0$12,000.0$14,000.0$16,000.0$18,000.0$20,000.0
CIT(thousands)
ApportionmentElection
2016NewMexicoTaxExpenditureReport Page42
APPORTIONMENTELECTIONOFCITFORHEADQUARTERS
Category: EconomicDevelopment
BriefDescription: AtaxpayerwhoseprincipalbusinessactivityisaheadquartersoperationmayelecttohaveitsbusinessincomeapportionedtoNewMexicobyusingasinglesalesfactor.
StatutoryBasis: 7‐4‐10(C)NMSA1978
IntendedPurpose: PresumablytoencouragecompaniestolocatetheirheadquartersorcenterofoperationsfortheirmanagerialactivitiesinNewMexico,therebyincreasingemploymentandeconomicactivitywithinthestate.
History: Originallyenactedin2015SpecialLegislativeSession.
Evaluation: Thisexpenditurecannotbeevaluatedatthistime.Initialdatabecameavailablein2016.
Recommendations: (1)Considerclarifyingthedefinitionof“headquarters.”TRDreceivesnumerousquestionsbasedonthelanguageofthecurrentdefinitions.
(2)Considereitherashifttomarket‐basedsourcingforalltaxpayersor,atminimum,fortaxpayersmakingthiselection.TheshifttoasinglesalesfactorforserviceprovidersthatlocateheadquartershereandperformamajorityoftheservicesfromlocationsinNewMexicowillnotcreatethedesiredincentivebecausethosecompanieswillhaveaveryhighsalesfactorinNewMexicoundertheincome‐producingactivity/costofperformancetestcurrentlyprescribedbySection7‐4‐18NMSA1978.
ReliabilityFactor: 2‐Thiselectionisreported.Someestimationisrequired.
FiscalImpact: Notapplicabletotimeperiodscoveredbythisreport.
2016NewMexicoTaxExpenditureReport Page43
ARMEDFORCESSALARIESEXEMPTIONFROMPIT
Category: CitizenBenefits
BriefDescription: AsalarypaidbytheUnitedStatesgovernmenttoataxpayerforactivedutyserviceinthearmedforcesoftheUnitedStatesisexemptfromPIT.
StatutoryBasis: 7‐2‐5.11NMSA1978
IntendedPurpose: Presumablytoprovideataxbenefitforourarmedforcespersonnel.
History: Originallyenactedin2007.
Evaluation: AccordingtheNewMexicoDepartmentofWorkforceSolutionstherewereover17,500employedbytheU.S.militaryinNewMexicoin2014orabout2%oftotalemployment.AccordingtotheU.S.Census,StatisticalAbstractoftheUnitedStates2012,in2009therewere11,000activemilitarypersonnelinNewMexico.
Recommendations: None.
ReliabilityFactor: 1–Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $1,554.2 $1,448.8 $1,630.8 $1,712.0 $1,815.1
Claims 12,990 10,872 11,466 11,251 11,315
9,500
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
$‐$200.0$400.0$600.0$800.0
$1,000.0$1,200.0$1,400.0$1,600.0$1,800.0$2,000.0
PIT(thousands)
ArmedForcesSalariesExemption
2016NewMexicoTaxExpenditureReport Page44
BACK‐TO‐SCHOOLTAX‐FREEWEEKENDGRTDEDUCTION
Category: CitizenBenefits
BriefDescription: Receiptsfromretailsalesofspecifiedtangiblepersonalpropertyifthesaleoccursduringthefirstfullweekend(FridaythroughSunday)inAugustaredeductiblefromgrossreceipts.Thepropertyspecifiedbythisstatuteincludescertainclothingvaluedunder$100,computersvaluedunder$1,000,computeraccessoriesvaluedunder$500,andschoolsupplies.
StatutoryBasis: 7‐9‐95NMSA1978
IntendedPurpose: Presumablytoreducethecostofschoolsuppliesandschoolclothes.
History: Originallyenactedin2005.
Evaluation: Withoutdirectdataevaluatingtheeffectivenessofthisdeductionisdifficult.Thevaluelimitsondeductibleitemsarefixed,andcouldbecomelessappropriateovertimewithinflation.
Recommendations: None.
ReliabilityFactor: 4‐Nodirectdataexiststoestimatethisdeduction.TRDrequirestaxpayerswhotakeadvantageofthisdeductiontoseparatelyreportthedeductibleamount,butthereisnostatutoryauthoritytoenforcethereportingrequirement.TheestimateisbasedonapercentageofAugust2016retailsalesgrossreceiptsidentifiedforspecificNAICScodesasreportedbytaxpayers.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $3,100.0 $3,500.0 $3,300.0 $3,400.0 $3,500.0 $3,300.0
$2,900.0
$3,000.0
$3,100.0
$3,200.0
$3,300.0
$3,400.0
$3,500.0
$3,600.0
Expenditures(thousands)
Back‐to‐SchoolTax‐FreeWeekend
2016NewMexicoTaxExpenditureReport Page45
BIODIESELBLENDINGFACILITYTAXTHIRTYPERCENTCREDITAGAINSTGRTANDCOMPENSATINGTAX
Category: Environment,Conservation&RenewableEnergy
BriefDescription: AtaxpayerwhoisarackoperatorasdefinedintheSpecialFuelsSupplierTaxAct,andwhoownsandinstallsbiodieselblendingequipmentatitsfacilitytoproduceblendedbiodieselfuelmayclaimaGRTorcompensatingtaxcredit.Thecreditis30%ofthepurchaseandinstallationcostofequipment.
Biodieselisarenewableandbiodegradablefuelderivedfromagriculturalplantoilsoranimalfat.Blendedbiodieselfuelisadieselfuelthatcontainsatleast2%biodiesel.
Thecreditisnotrefundablebutmaybecarriedforwardforuptofouryears.
StatutoryBasis: 7‐9‐79.2NMSA1978
IntendedPurpose: Presumablytoincentivizetheestablishingorexpansionofafacilitythatproducesblendedbiodieselfuel.
History: Originallyenactedin2007.
Evaluation: Thiscredithasnotbeenclaimed.AccordingtoEMNRD’sEnergyConservationandManagementDivision,noapplicationsforthiscreditweresubmittedforFY2016.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisrequiredtobeseparatelyreported.Ifclaimedinthefuture,noestimationwillberequired.
FiscalImpact: Notaxpayershaveclaimedthiscredit.
2016NewMexicoTaxExpenditureReport Page46
BIOMASS‐RELATEDEQUIPMENTANDBIOMASSMATERIALSDEDUCTIONFROMCOMPENSATINGTAX
Category: Environment,Conservation&RenewableEnergy
BriefDescription: Thevalueofabiomassboiler,gasifier,furnace,turbine‐generator,storagefacility,feedstockprocessingordryingequipment,feedstocktrailerorinterconnectiontransformer,andthevalueofbiomassmaterialsusedforprocessingintobiopower,biofuelsorbiobasedproductsisdeductiblewhencomputingthecompensatingtaxdue.
StatutoryBasis: 7‐9‐98NMSA1978
IntendedPurpose: Presumablytoincentivizetheuseofbiomassmaterials.
History: Originallyenactedin2005.
Evaluation: AccordingtoEMNRD,severalnewbioenergyprojectsarecurrentlyunderwayinthestateandinvolvepartnershipsbetweenfederalagencies,localgovernments,NewMexicohighereducationinstitutions,andforeignentities.Therearecurrentlynoprivately‐ownedbiomasspowergeneratorsinNewMexico.TheNMENVreportsAlbuquerque’sSouthsideWaterReclamationPlantistheonlybiomasspowergenerator(netpowerproducer)inthestate.TheLasCrucesWasteWaterTreatmentPlantalsocreatesbiogasbutwithoutexportingenergytothegrid.NMENVnotesthereareahandfulofverysmallscaleprojectscurrentlyunderwayinotherpartsofthestatethatinvolveschoolsusingbiomassboilersforheating.EMNRDreportstwobiomassprojectsinthestateutilizewoodchipfueledpowersystemsandanotherusesasteamboilerthatuseslumbermillresiduesandforestthinningsforfuel.NewconstructionincludesanaerobicdigesternearRoswellthatusesdairywastetocreatebiogasandanotherfacilitynearClovisdesignedtouseconstructionwaste,wastewaterandsludge.Neitherhasbegunoperatingyet.
Notethatthisdeductioncanonlybetakenagainstcompensatingtax,whichcouldincentivizefirmstopurchaseequipmentandfeedstockoutofstate.
Recommendations: IncludeaGRTdeductionaswell.
ReliabilityFactor: 4‐Intheabsenceofanysourceofdirectdata,anaccurateestimateoftheimpactofthisdeductionisproblematic.TheU.S.DepartmentofEnergyestimatedapriceof$20to$80pertonofforestbiomassandwoodwastebiomassfuel.Usingthatinformationandagenerousestimateof20,000tonsofbiomassfuelusedannually,atanaveragepriceof$40perton,theimpactofthedeductionwouldbeabout$55,000.Thedeductionamountismultipliedbythe5.125%compensatingtaxrateforeachyeartoestimatethecost.Thecostcouldincreasedramaticallyifandwhenthenewpowergeneratorscomeonline.
2016NewMexicoTaxExpenditureReport Page47
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CompTax $55.0 $55.0 $55.0 $55.0 $55.0 $55.0
$‐
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
Expenditures(thousands)
Biomass‐RelatedEquipmentandBiomassMaterialsDeduction
2016NewMexicoTaxExpenditureReport Page48
BLENDEDBIODIESELFUELCREDITAGAINSTPITANDCIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: AtaxpayerwhoisliableforpaymentofthespecialfuelexcisetaxiseligibletoclaimacreditagainstPITorCITliabilityforeachgallonofblendedbiodieselfuelonwhichthatpersonpaidorwouldhavepaidthespecialfuelexcisetaxinthetaxableyear.Thisblendedbiodieselfuelisa3%mixtureofbiodieselwhichisadifferentmixturefromvegetableoilwhichis99%biodiesel.Thecreditamountwasphaseddownfrom3centspergallonto1centpergallonoverthelifeoftheincentive,whichexpiredDecember31,2012.
Thecreditisnotrefundablebutmaybecarriedforwardforuptofiveyears.
StatutoryBasis: 7‐2‐18.21and7‐2A‐23NMSA1978
IntendedPurpose: Presumablytoincentivizetheestablishmentorexpansionofafacilitythatproducesblendedbiodieselfuel.
History: Originallyenactedin2007withanexpirationofDecember31,2012.
Evaluation: Thecreditsawadecreaseasthevalueofthecreditreduced(from2007‐2010,thecreditwas$0.03pergallon;in2011,itwas$0.02pergallon;andin2012,itwas$0.01pergallon).ThecreditisnotavailableafterDecember31,2012andtheonlypossibilityforfurtherexpendituresfromthiscreditwouldbeduetotheuseofacarryforwardoramendedreturn.
Recommendations: Thiscreditisnotwidelyused,andthus,hasnotrealizeditsintendedpurpose.Ifacomprehensivefuel‐relatedtaxprogramisbeingconsidered,thenthiscreditshouldberepealed.Otherwise,thecreditshouldberepealedafterthecarry‐forwardandclaimantperiodexpire.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:Someofthedatahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.FY2011andFY2013havebeenredacted
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CombinedTaxes $‐ $‐ $‐ $‐
Claims 0 0 0 0
$‐
$50.0
$100.0
Expenditures
(thousands)
BlendedBiodieselFuelCreditDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page49
BORDER‐ZONETRADE‐SUPPORTCOMPANYGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Thereceiptsofatrade‐supportcompanyaredeductiblefromgrossreceiptsif:
(1) thetrade‐supportcompanyfirstlocatesinNewMexicowithintwentymilesofaportofentryonNewMexico'sborderwithMexicoonorafterJuly1,2003butbeforeJuly1,2013;ortheylocateinaborder‐zoneafterJuly1,2016butbeforeJanuary1,2021;
(2) thereceiptsarereceivedbythecompanywithinafive‐yearperiodbeginningonthedatethetrade‐supportcompanylocatesinNewMexicoandthereceiptsarederivedfromitsbusinessactivitiesandoperationsatitsborderzonelocation;and,
(3) thetrade‐supportcompanyemploysatleasttwoemployeesinNewMexico.
A"trade‐supportcompany"meansacustomsbrokeragefirmorafreightforwarder.
StatutoryBasis: 7‐9‐56.3NMSA1978
IntendedPurpose: Presumablytoincentivizethelocationoftrade‐supportcompaniestosupportandincreaseeconomicactivitiesatthevariousportsofentry(SantaTeresa,Columbus,andAntelopeWells).
History: Originallyenactedin2003,amendedin2007and2015toextendthecreditandaddreportingrequirements.
Evaluation: Thetradesupportsectorasdefinedinthisdeductionisverysmallandfocused.Eveniffullyused,itonlyappliestoasmallnumberoftaxpayers.
Recommendations: None.
ReliabilityFactor: 2–Allgrossreceiptsdeductionsfortaxpayersclassifiedastradesupportcompanies,pertheRP‐80report,locatedinthefollowinglocationsareassumedtoderivefromthisdeduction:SunlandPark,AnthonyandunincorporatedareasinLuna,DonaAna,andHidalgoCounties.Thismayresultintheover‐estimationofthisdeductionasthetradesupportclassificationdoesnotmatchupperfectlytothedefinitionoftaxpayerswhoareeligibletotakethisdeduction.Furthermore,thesecompaniescouldbeeligibleforadditionaldeductionswhichwouldmeanthatnotalloftheirdeductedamountsareattributabletothisdeduction.Thedeductible
2016NewMexicoTaxExpenditureReport Page50
amountsreportedaremultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $62.1 $28.5 $22.7 $235.9 $453.5 $271.5
Count 60 30 35 235 450 269
050100150200250300350400450500
$‐$50.0$100.0$150.0$200.0$250.0$300.0$350.0$400.0$450.0$500.0
Expenditures(thousands)
Border‐ZoneTrade‐SupportCompanyDeduction
2016NewMexicoTaxExpenditureReport Page51
BUSESOPERATEDBYRELIGIOUSANDNONPROFITCHARITABLEORGANIZATIONS
EXEMPTIONFROMWDT
Category: CitizenBenefits
BriefDescription: UseofthehighwaysinNewMexicobybusesoperatedbyreligiousornonprofitcharitableorganizationsisexemptfromtheWDT.
StatutoryBasis: 7‐15A‐5(C)NMSA1978
IntendedPurpose: Presumablytosubsidizetheactivitiesoforganizationsthefederalgovernmenthasdeterminedtobeperformingsocially‐beneficialactivities.
History: Originallyenactedin1988.
Evaluation: Itisunknownwhythenumberofbusesregisteredasnonprofithasbeendecreasing.
Recommendations: None.
ReliabilityFactor: 3–ThenumberofbusesregisteredasnonprofitwascollectedfromMVD.ExemptmilesarenotreportedonanyWDTform,soaveragemilestraveledperschoolbuswerecalculatedfromnationalschoolsources.Weightwascalculatedasanaverageofweightsbetween26,000and30,000poundsgrossvehicleweightrating(GVWR),whichmosttypeCbusesare.TheseestimatesmayhavechangedfrompreviousyearsbecauseofbetterMVDtrackingofqualifiedvehicles.
FiscalImpact:
FY2012 FY2013 FY2014 FY2015 FY2016
WDT $83.4 $73.4 $68.8 $62.8 $59.8
Buses 509 448 420 383 365
0
100
200
300
400
500
600
$‐$10.0$20.0$30.0$40.0$50.0$60.0$70.0$80.0$90.0
Expenditures(thousands)
BusesOperatedbyReligiousandNonprofitCharitableOrganizationsExemption
2016NewMexicoTaxExpenditureReport Page52
BUSESUSEDFORTRANSPORTATIONOFAGRICULTURALLABORERSEXEMPTIONFROMWDT
Category: HighlySpecializedIndustry
BriefDescription: UseofthehighwaysinNewMexicobybusesusedexclusivelyforthetransportationofagriculturallaborersisexemptfromtheWDT.
StatutoryBasis: 7‐15A‐5(B)NMSA1978
IntendedPurpose: Presumablytoincreasetheproductionofagriculturalproductsbyloweringthecostsoflaborforagriculturalproducers.
History: Originallyenactedin1988.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 3–ThenumberofbusesregisteredforagriculturalusewascollectedfromMVD.ExemptmilesarenotreportedonanyWDTform,andnopublicsourceisavailableformilestraveledbyagriculturalbuses.Thereforeaveragemilestraveledperschoolbuswascalculatedfromnationalschoolsources(schoolbusesoperateonasimilartwice‐a‐dayschedule).Weightwascalculatedasanaverageofweightsbetween26,000and30,000poundsgrossvehicleweightrating(GVWR),whichmosttypeCbusesare.TheseestimatesmayhavechangedfrompreviousyearsbecauseofbetterMVDtrackingofqualifiedvehicles.
FiscalImpact:
FY2012 FY2013 FY2014 FY2015 FY2016
WDT $3.6 $4.1 $6.2 $5.9 $5.7
Buses 22 25 38 36 35
0510152025303540
$‐
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
Expenditures(thousands)
BusesUsedforTransportationofAgriculturalLaborersExemption
2016NewMexicoTaxExpenditureReport Page53
BUSINESSFACILITYREHABILITATIONCREDITAGAINSTPITANDCIT
Category: EconomicDevelopment
BriefDescription: Ataxpayerwhoownsaqualifiedbusinessfacilityinanenterprisezoneandrestores,renovates,orrehabilitatesitmayreceiveacreditof50%perprojectcost(upto$50,000)onPITandCITowedtoNewMexico.
A“qualifiedbusinessfacility”isabuildingvacantforatleast24monthsandintendedtobeputintousebyapersoninthemanufacturing,distributionorserviceindustries.Culturalorhistoricpropertiesdonotqualifyforthiscredit.
Thecreditisnotrefundablebutmaybecarriedforwardforuptofouryears.
StatutoryBasis: 7‐2‐18.4and7‐2A‐15NMSA1978
IntendedPurpose: TostimulatethecreationofnewjobsandrevitalizeeconomicallydepressedareaswithinNewMexicoenterprisezones.
History: Originallyenactedin1994.
Evaluation: Thecredithasnotbeenusedbecausemostindividualsdonothaveenoughtaxliabilitytoapplythecredit.Qualifiedindividualsandcorporationswhotakethiscreditarenoteligiblefortheinvestmentcreditwhichprovidesahigherbenefit.AccordingtoEDD,therearecurrentlynoenterprisezonescompletingtherequiredannualreporting,whichindicatesthattheenterprisezonesthatwereestablishedwhenthiscreditwasoriginallyenactedhaveexpired.
Recommendations: Astherearecurrentlynoenterprisezones,eitherconsiderrepealingtheEnterpriseZoneActandthiscreditandreplacingitwithanothermechanismtospurredevelopmentorconsideramendmentsthatwouldaccomplishthatresult.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:DatainFY2012havebeenredactedduetofewerthan3taxpayersclaimingthecredit.Otheryearshavenoclaims.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
PITExpenditures $‐ $‐ $‐ $‐ $‐
CITExpenditures $‐ $‐ $‐ $‐ $‐
$‐$50.0$100.0
Expenditures
(thousands) BusinessFacilityRehabilitationCredit
Datahavebeenredacted
2016NewMexicoTaxExpenditureReport Page54
CAPITALGAINDEDUCTIONFROMPIT
Category: CitizenBenefits
BriefDescription: Ataxpayermayclaimadeductionfromnetincomeinanamountequaltothegreaterof:
(1) thetaxpayer'snetcapitalgainincomeforthetaxableyearforwhichthedeductionisbeingclaimed,butnottoexceed$1,000;or
(2) 50%ofthetaxpayer'snetcapitalgainincomeforthetaxableyearforwhichthedeductionisbeingclaimed.
Ataxpayermaynotclaimthisdeductionifthetaxpayerpaysfederalincometaxonaqualifieddiversifyingbusinessnetcapitalgainhasclaimedacreditagainstthetaxpayer'sNewMexicoPITliabilityequaltoacapitalgaintaxdifferential,ifthetaxpayerallocatesthequalifieddiversifyingbusinessnetcapitalgaintoNewMexico.
StatutoryBasis: 7‐2‐34NMSA1978
IntendedPurpose: Capitalgaindeductionsexisttoincentivizesavingsandinvestment.PresumablythisdeductionismeanttoencouragetaxpayerstoputtheirincometoproductiveusebyprovidinganincentivetoinvestincompaniesandtorecruitindividualsearninginvestmentincometoNewMexico.
History: Originallyenactedin1999andamendedin2003.The2013amendmentexpandedthecapitalgainsdeductionsimultaneouslywiththereductioninincometaxrates.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1–Thedeductionamountsforeachtaxpayerclaimingthisdeductionwerecomputed,makingthisdatamorereliablethaninpastyears,whichusedanaveragerateforalltaxpayers.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
2016NewMexicoTaxExpenditureReport Page55
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $33,220.6 $26,255.9 $47,079.5 $32,593.6 $47,241.4
Claims 58,594 69,953 82,549 96,545 106,283
0
20,000
40,000
60,000
80,000
100,000
120,000
$‐$5,000.0$10,000.0$15,000.0$20,000.0$25,000.0$30,000.0$35,000.0$40,000.0$45,000.0$50,000.0
PIT(thousands)
CapitalGainDeduction
2016NewMexicoTaxExpenditureReport Page56
CERTAINDISABLEDMILITARYVETERANEXEMPTIONFROMMVX
Category: CitizenBenefits
BriefDescription: ApersonisexemptfromtheMVXifthepersonisaresidentofNewMexicowhoservedinthearmedforcesoftheUnitedStatesandwhosuffered,whileservinginthearmedforcesorfromaservice‐connectedcause,thelossorcompleteandtotallossofuseof:
(1) oneorbothlegsatorabovetheankle;or
(2) oneorbotharmsatorabovethewrist.
StatutoryBasis: 7‐14‐6(E)NMSA1978
IntendedPurpose: Presumablytoeasethetaxburdenofindividualswhoseserviceinthearmedforcesresultedindisability.
History: Originallyenactedin1978andamendedin1988,1990,19954,2004,and2007toincludeSubsectionE.
Evaluation: Thistaxexpendituremeetsitsintendedpurposeofloweringthetaxburdenofdisabledveterans.Theestimatedfiscalimpactofthisexpendituresuggeststhattheexemptionfromtheexcisetaxhashadapositiveeffectonvehiclepurchases.
Recommendations: None.
ReliabilityFactor: 3‐ThenumberofdisabledveteransintheStateofNewMexicowasobtainedfromtheDepartmentofVeteranServices.Thenationalaveragepricesofnewandusedvehicleswerecollectedfortheyearsof2008through2015.PertheUniversityofMichiganTransportationResearchInstitute,in2011,1outof19.7driversboughtavehicle,eitherneworused.Thetotalnumberofdisabledveteranswasdividedby19.7andthenmultipliedbytheaveragepriceofanewandusedvehicle.TheresultingdollaramountwasmultipliedbytheMVXrateof3%.TheDepartmentofVeteransServicesdidnothavedataavailableforFY2016onthenumberofdisabledveteransinNewMexico.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
MVX $1,220.0 $1,260.0 $1,300.0 $1,350.0 $1,454.0
$1,100.0$1,150.0$1,200.0$1,250.0$1,300.0$1,350.0$1,400.0$1,450.0$1,500.0
Expenditures(thousands)
CertainDisabledMilitaryVeteranExemption
2016NewMexicoTaxExpenditureReport Page57
CHILDCARETOPREVENTINDIGENCYCREDITAGAINSTPIT
Category: CitizenBenefits
BriefDescription: AnyresidentwhofilesaPITreturnandwhoisnotadependentofanothertaxpayermayclaimacreditforchilddaycareexpensesincurredandpaidtoacaregiverinNewMexicoduringthetaxableyear.Thecreditisavailabletoataxpayerwhohasamodifiedgrossincome,includingchildsupportpayments,ifany,ofnotmorethantheannualincomethatwouldbederivedfromearningsatdoublethefederalminimumwage.
Thecreditisfor40%ofactualcompensationpaidtoacaregiverandmaynotexceed$480foreachqualifyingdependentor$1,200forallqualifyingdependentsinanytaxableyear.
StatutoryBasis: 7‐2‐18.1NMSA1978
IntendedPurpose: Presumablytoprotectthehealth,safetyandwell‐beingofchildrenoflow‐incomefamiliesandtogivetheparentsanopportunitytoplacetheirchildrenindaycarewhiletheywork.
History: Originallyenactedin1981andamendedin1990,1995,1999,and2015.
Evaluation: In2011,increasedauditandcomplianceeffortsbyTRDindicatedthatthiscreditwasbeingover‐utilizedbynon‐qualifiedtaxpayers.Manytaxpayerswhopreviouslytookthecreditcouldnotprovideproperdocumentationandweredeniedthecredit.Sometaxpayersreportexpendituresfornon‐qualifiedchildcare(carerenderedbygrandparents,relatives,etc.)ortheywerenotworkingwhenthecreditwasclaimed,whichisarequirementforeligibility.Theauditandcompliancemeasuresresultedinadeclineinthenumberofclaimsmade.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $1,272.2 $404.7 $376.0 $477.3 $624.2
Claims 1,177 1,265 1,544 1,628 1,540
‐
500
1,000
1,500
2,000
$‐$200.0$400.0$600.0$800.0
$1,000.0$1,200.0$1,400.0
PIT(thousands)
ChildCareCredit
2016NewMexicoTaxExpenditureReport Page58
COALEXEMPTIONFROMSEVERANCESURTAX
Category: HighlySpecializedIndustry
BriefDescription: Thefollowingexemptionsarecurrentlyineffect:(1)coalsoldanddeliveredpursuanttogenuinelynewcontractsenteredintoonorafterJuly1,1990;(2)coalsoldanddeliveredpursuanttocontractsalreadyineffectonJuly1,1990,thatexceedstheannualizedaveragecalendaryeardeliveriesunderthecontractduringproductionyears1987,1988,and1989,unlessthedeliveriesarereducedduetocausesbeyondthereasonablecontrolofeitherpartytothecontract:and(3)ifacontractexistingonJuly1,1990,andrenegotiatedafterMay20,1992,requiresthepurchasertotakeannualcoaldeliveriesinexcessofthegreateroftheaveragecalendaryeardeliveriesfrom1978‐1989orthehighestannualcontractminimumfrom1978‐1989,thesurtaxdoesnotapplytosuchexcessdeliveriesfortheremainingtermoftherenegotiatedcontract.
StatutoryBasis: 7‐26‐6.2NMSA1978
IntendedPurpose: PresumablythistaxexpenditureisanincentiveforincrementalproductionbytheNewMexicocoalminingindustry,providingreducedtaxliabilityunderneworrestructuredcontracts.
History: Originallyenactedin1990andamendedin1992,1994,1995,1997,and1999.
Evaluation: Thetaxexpenditureprovidedthroughthisexemptiondirectlybenefitsthecoalminingindustrybyprovidingexemptionfromtheseverancesurtaxforproductionofcoalquantitiesthatareinexcessofthegreateroftheaveragecalendaryeardeliveriesfrom1978‐1989orthehighestannualcontractminimumfrom1978‐1989.Since2010,newagreementshavebeenenteredintowhichhaveresultedinpreviouslyunallowableactivitytobeeligibleforthisexemption.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.FY2016dataisnotyetavailable.
2016NewMexicoTaxExpenditureReport Page59
Fiscalimpact
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $25,098.3 $26,071.3 $27,376.8 $22,673.6 $17,210.0
Count 4 4 3 4 4
0
0.511.522.5
33.544.5
$‐
$5,000.0
$10,000.0
$15,000.0
$20,000.0
$25,000.0
$30,000.0
SeveranceSurtax(thousands)
CoalExemption
2016NewMexicoTaxExpenditureReport Page60
COMMERCIALMOTORCARRIERVEHICLESOPERATINGEXCLUSIVELYWITHIN10MILESOFMEXICOBORDER
EXEMPTIONFROMTRIPTAXANDWDT
Category: EconomicDevelopment
BriefDescription: UseofNewMexicohighwaysbycommercialmotorcarriervehicleswhileoperatingexclusivelywithin10milesofaborderwithMexicoinconjunctionwithcrossingtheborderwithMexicoisexemptfromthetriptaxandtheWDT.
StatutoryBasis: 7‐15‐3.2and7‐15A‐5(D)NMSA1978
IntendedPurpose: Presumablytoincentivizecompaniesthathavecross‐borderactivitiestodobusinessinNewMexicoinsteadofTexasandArizona.
History: Originallyenactedin2006.
Evaluation: TheNewMexicoBorderAuthorityreportsthatthenumberofcommercialvehiclescrossingtheborderwithMexicohasincreasedsinceFY2011.ThistaxexpendituremeetsitsintendedpurposeofcreatingacompetitiveenvironmentforbusinessinNewMexico.TheopeningofthelargeUnionPacificintermodaltransferyardin2014nearSantaTeresaalsoindicatesthisexpendituremeetsitsintendedpurpose.
Recommendations: None.
ReliabilityFactor: 3‐DatafortruckentriesatSantaTeresawasobtainedfromtheU.S.DepartmentofTransportation(“USDOT”).TheportatColumbushasveryfewifanyfacilitiesfortransferoffreightandsowasnotincluded.FromconversationswithNMDOTitwasassumedthatalloftheSantaTeresaentrytrafficwouldstaywithinthe20mileNorthAmericanFreeTradeAgreementcommercialzone,andwasdestinedforthelargeUnionPacifictransferstation10milesfromtheborder,orothernearbyfreighttransferfacilities.20milesperentrywasassumedforaround‐triptotalroadmilescalculation.ThetotalnumberofmileswasthenmultipliedbytheaverageWDTrateofalltheweightclasses.Thesameprocedurewasfollowedtocalculatethetriptaxexpenditure.EstimatesforthisexpenditurehavechangedforthisTaxExpenditureReportbecausetheuseofUSDOTtruckentrystatisticsallowsabetterestimateofhowmuchthisexemptionisused.
2016NewMexicoTaxExpenditureReport Page61
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
WeightDistance $40.1 $39.6 $41.8 $43.8 $48.2 $60.0
TripTax $191.0 $188.0 $199.0 $209.0 $229.0 $285.0
$‐
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$400.0
Expenditures(thousands)
CommercialMotorCarrierVehiclesOperatingExclusivelywithin10MilesofMexicoBorderExemption
2016NewMexicoTaxExpenditureReport Page62
CONSTRUCTIONEQUIPMENTANDMATERIALSUSEDINTHECONSTRUCTIONOFSOLECOMMUNITYPROVIDERHOSPITALS
GRTDEDUCTION
Category: HealthCare
BriefDescription: ReceiptsfromsalesofconstructionequipmentorconstructionmaterialstoafoundationornonprofitorganizationforuseinthenewfacilityconstructionofaSoleCommunityProviderHospitallocatedinafederallydesignatedhealthprofessionalshortageareaaredeductiblefromgrossreceiptsundercertaincircumstances.
StatutoryBasis: 7‐9‐100NMSA1978
IntendedPurpose: Presumablytoreducethecostsofconstructingsolecommunityproviderhospitals.
History: Originallyenactedin2006.
Evaluation: AccordingtotheHSD,theMedicarePrescriptionDrug,Improvement,andModernizationActof2003establishedaruralcommunityhospitaldemonstrationprojectfor5yearstostudyareasonablereimbursementmethodologyforsuchhospitals.Section10313oftheAffordableCareActexpandedandextendedthisdemonstrationforanother5yearsuntil2013.HolyCrossHospitalinTaos,NMparticipatedinthisdemonstration,butwithdrewin2011.SanMiguelHospitalCorporationinLasVegas,NMwasselectedtoparticipateinthisdemonstrationundertheexpansionandextensionofthisprogrambytheACA.However,becausetheextensionforthefederalpilotprogramhasexpired,therearenomorefederalmatchingfundstosupporttheservicesprovidedatsolecommunityproviderhospitals.Asaresult,andbasedoninformationreceivedfromHSD,TRDisunawareofanyrecentnewconstructionofsolecommunityproviderhospitals.
Recommendations: BecausetheAffordableCareActdidnotprecludeanentityfrombuildingormakingcapitalinvestmentsinrural(sole)communityproviderhospitals,thedeductioncouldstillfulfillitspurposeasruralhealthfacilitiesfindalternativesourcesoffundingforoperations.
ReliabilityFactor: 1‐NonewsolecommunityproviderhospitalswerebuiltinNewMexicooverthelastseveralyears.Noestimationisrequired.
FiscalImpact: Notaxpayershaveclaimedthisdeduction.
2016NewMexicoTaxExpenditureReport Page63
CONSTRUCTIONOFSOLECOMMUNITYPROVIDERHOSPITALSGRTDEDUCTION
Category: HealthCare
BriefDescription: Receiptsfromthesaleofengineering,architectural,andconstructionservicestoafoundationornonprofitorganizationforuseinthenewfacilityconstructionofaSoleCommunityProviderHospitallocatedinafederally‐designatedhealthprofessionalshortageareaaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐99NMSA1978
IntendedPurpose: Presumablytoreducethecostsofconstructingsolecommunityproviderhospitals.
History: Originallyenactedin2006.
Evaluation: AccordingtotheHSD,theMedicarePrescriptionDrug,Improvement,andModernizationActof2003establishedaruralcommunityhospitaldemonstrationprojectfor5yearstostudyareasonablereimbursementmethodologyforsuchhospitals.Section10313oftheAffordableCareActexpandedandextendedthisdemonstrationforanother5yearsuntil2013.HolyCrossHospitalinTaos,NMparticipatedinthisdemonstration,butwithdrewin2011.SanMiguelHospitalCorporationinLasVegas,NMwasselectedtoparticipateinthisthisdemonstrationundertheexpansionandextensionofthisprogrambytheACA.However,becausetheextensionforthefederalpilotprogramhasexpired,therearenomorefederalmatchingfundstosupporttheservicesprovidedatsolecommunityproviderhospitals.AsaresultandbasedoninformationreceivedfromHSD,TRDisunawareofanyrecentnewconstructionofsolecommunityproviderhospitals.
Recommendations: BasedonthepresumptionthattheAffordableCareActdidnotprecludeanentityfrombuildingormakingcapitalinvestmentsinrural(sole)communityproviderhospitals,thisdeductionwouldbeabletofulfillitspurposeasruralhealthfacilitiesfindalternativesourcesoffundingforoperations.
ReliabilityFactor: 3‐TRDusedalistofsolecommunityproviderhospitalspublishedbytheU.S.DefenseHealthAgency,asingleapplicablehospital—GuadalupeCountyHospitalinSantaRosa—wasfoundtobeconstructedwithinthistimeperiod.Anestimatedconstructioncostof$10millionwasusedtoestimatethecostofthededuction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
NOTE:Wearenotrequiredtoredactthisinformationeventhoughitrelatestofewerthanthreetaxpayersbecausethedatadonotcomefromtaxreturninformation;rather,itcomesfromindependentsources.
2016NewMexicoTaxExpenditureReport Page64
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $800.0 $‐ $‐ $‐ $‐ $‐
$‐
$100.0
$200.0
$300.0
$400.0$500.0
$600.0
$700.0
$800.0
$900.0
$1,000.0
Expenditures(thousands)
ConstructionofSafetyNetCarePoolHospitalsDeduction
2016NewMexicoTaxExpenditureReport Page65
CONTRIBUTIONSOFINVENTORYTONONPROFITORGANIZATIONSORGOVERNMENTALAGENCIES
DEDUCTIONFROMCOMPENSATINGTAX
Category: CitizenBenefits
BriefDescription: ThevalueoftangiblepersonalpropertythatisremovedfrominventoryandcontributedtoaU.S.orNewMexicogovernmententityorthegoverningbodyofanIndiannation,tribe,orpuebloforuseonanIndianreservationorpueblograntorto501(c)(3)organizations,isdeductibleincomputingthecompensatingtaxdue.
StatutoryBasis: 7‐9‐91NMSA1978
IntendedPurpose: Presumablytoincentivizethecontributionofinventorytogovernmententitiesandnonprofitorganizations.
History: Originallyenactedin2001.
Evaluation: None.
Recommendations: Removethecross‐overPITdeductionunder§7‐9‐91(A)forownersofapass‐throughentityfromthiscompensatingtaxdeduction.Thelegalincidentofcompensatingtaxisonthebusiness,evenifthatbusinessisapass‐throughentity.Compensatingtaxesdonotgenerallyflowthroughtoowners.Asamatterofclarity,havingaPITdeductionburiedinthelanguageofacompensatingtaxdeduction,whenthereisnocorrespondingreferencetothedeductionwithinthePITstatutes,isproblematic.TRDsuggestseliminatingtheflow‐throughdeduction.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpactofthisdeduction.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page66
CONVEYANCEOFLANDFORCONSERVATIONORPRESERVATIONFIFTYPERCENTCREDITAGAINSTPITANDCIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: TaxpayersmayreceiveacreditagainstCITorPITfordonationsoflandorinterestsinlandif:(1)thedonationisforthepurposeofopenspace,naturalresourceorbiodiversityconservation,agriculturalpreservationorwatershedorhistoricpreservationbythelandownerortaxpayer;and(2)thedoneeisapublicorprivateconservationagencyeligibletoholdthelandandintereststhereinforconservationorpreservationpurposes.Thecreditequals50%ofthefairmarketvalueoflandorinterestthereinthatwasdonated.
Theamountofthecreditthatmaybeclaimedbyataxpayershallnotexceed$100,000foraconveyancemadepriortoJanuary1,2008andshallnotexceed$250,000foraconveyancemadeonorafterthatdate.
Thecreditisnotrefundablebutmaybetransferredinincrementsof$10,000ormoreormaybecarriedforwarduptotwentyyears.
Ataxpayermayclaimonlyonetaxcreditpertaxableyear.
StatutoryBasis: 7‐2‐18.10and7‐2A‐8.9NMSA1978
IntendedPurpose: ThesecreditswereenactedaspartoflegislationthatenactedtheLandConservationIncentivesAct,thepurposeofwhichwastoencourageprivatelandownerstobestewardsoflandsthatareimportanthabitatareasorconcernsignificantnatural,openspaceandhistoricresourcesbyprovidingprivatelandownerswithincentivesthatencouragetheprotectionofprivatelandsforopenspace,naturalresources,biodiversityconservation,outdoorrecreation,farmlandandforestlandpreservation,historicpreservationandlandconservationpurposes.
History: Originallyenactedin2003andamendedin2007.
Evaluation: Asdemonstratedbythechartsbelow,for2012through2015,55,146acresofland(orintereststherein)havebeenconveyedforthepreservationandconservationpurposesatatotalcostof$5,864,400totheState.Theresultingaveragecostperacreis$105.Basedonthecostperacre,thiscreditappearstobeaneffectivemechanismforensuringconservationandpreservation.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
2016NewMexicoTaxExpenditureReport Page67
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $2,534.1 $2,006.8 $675.1 $1,734.4 $1,448.1
Claims 17 19 23 45 41
05101520253035404550
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
CombinedTaxes(thousands)
ConveyanceofLandforConservationCredit
2012 2013 2014 2015 2016
Acres 16,708 14,513 10,683 13,771 8,471
‐
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
AcresConserved
ConveyanceofLandforConservationCredit
2016NewMexicoTaxExpenditureReport Page68
CORPORATE‐SUPPORTEDCHILDCARECREDITAGAINSTCIT
Category: CitizenBenefits
BriefDescription: Corporationsprovidingorpayingforlicensedchildcareservicesforemployees’childrenunder12yearsofagemaydeduct30%ofeligibleexpensesfromtheirCITliabilityforthetaxyearinwhichtheexpensesoccur.Thiscredithasathree‐yearcarryforward.Thecreditmaynotexceed$30,000pertaxpayerinanytaxableyear.
StatutoryBasis: 7‐2A‐14NMSA1978
IntendedPurpose: Presumablytoincentivizetheprovisionofchildcarebycorporations.
History: Originallyenactedin1983andamendedin1986and1995.
Evaluation: Thiscredithasbeenusedbythreeorfewertaxpayersinthelastfouryears.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:Datahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures
0
0.2
0.4
0.6
0.8
1
CIT(thousands)
Corporate‐SupportedChildCareCreditDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page69
DISABLEDPERSONEXEMPTIONFROMMVX
Category: CitizenBenefits
BriefDescription: ApersonisexemptfromtheMVXifthepersonhasadisabilityatthetimethepersonpurchasesavehicleandcanprovetotheMotorVehicleDivisionofTRDoritsagent,thatmodificationshavebeenmadetothevehiclethatare:
(1) duetothatperson'sdisability;and
(2) necessarytoenablethatpersontodrivethatvehicleorbetransportedinthatvehicle.
StatutoryBasis: 7‐14‐6(D)NMSA1978
IntendedPurpose: Presumablytolowerthetaxburdenofpurchasingavehiclebyindividualswithadisabilitywhoneedtomodifytheirvehiclesinordertodrivethem.
History: Section7‐14‐6wasoriginallyenactedin1998andamendedin1990,1994,2004and2007whenSubsectionDwasadded.
Evaluation: Thistaxexpendituremeetsitsintendedpurposeofloweringthetaxburdenofdisabledpersons.
Recommendations: None.
ReliabilityFactor: 3‐InformationonthenumberofhandicapplacardswascollectedfromTRD’sinternaldatabase.AccordingtotheBureauofTransportationStatistics,2.3%ofdisabledpeoplehaveaspeciallymodifiedvehicleintheirhousehold.Thenationalaveragepricesofnewandusedvehicleswerecollectedfortheyearsof2008through2015.AccordingtotheUniversityofMichiganTransportationResearchInstitute,in2011oneoutof19.7driversboughtaneworusedvehicle.Thetotalnumberofhandicapplacardswasmultipliedbytheratioofthosewithspeciallymodifiedvehicles,thendividedby19.7andthenmultipliedbytheaveragepriceofanewandusedvehicle.TheresultingdollaramountwasmultipliedbytheMVXrateof3%.Thisestimatehaschangedsignificantlyfrompreviousyearswithabetterestimateofthepercentageofvehicleswhichqualify.
2016NewMexicoTaxExpenditureReport Page70
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
MotorVehicle $46.7 $38.5 $45.8 $45.7 $58.9 $51.0
$‐
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
Expenditures(thousands)
DisabledPersonExemption
2016NewMexicoTaxExpenditureReport Page71
DISABLEDSTREETVENDORSEXEMPTIONFROMGRT
Category: CitizenBenefits
BriefDescription: ReceiptsofdisabledstreetvendorsfromthesaleofgoodsareexemptfromGRT.
StatutoryBasis: 7‐9‐41.3NMSA1978
IntendedPurpose: Presumably,thisexemptionisintendedtoeliminatetheburdenoffilingCRSreturnsondisabledstreetvendors.
History: Originallyenactedin2007.
Evaluation: Thecompliancerateofthedisabledvendors,priortotheenactmentoftheexemption,wouldbeexpectedtobeextremelylow,resultinginaminimaleffectivelossofrevenue.
Recommendations: None.
ReliabilityFactor: 4‐Nodataareavailabletoestimatethefiscalimpactofthisexemption.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page72
DOH‐LICENSEDHOSPITALSCREDITAGAINSTGRT
Category: HealthCare
BriefDescription: CertainhospitalslicensedbytheDOHmayclaimacreditagainstGRT,escalatingfromaslittleas0.755%startingJuly1,2007,toasmuchas5%afterJuly1,2011,dependinginpartonwhetherthehospitalislocatedinamunicipalityorinanunincorporatedareaofacounty.
StatutoryBasis: 7‐9‐96.1NMSA1978
IntendedPurpose: Presumablytoprovideequitabletaxtreatmentbetweenforprofithospitalsandnot‐for‐profithospitalswhoareexemptfromGRT.
History: Originallyenactedin2007;phased‐inthecreditoverfiveyears.
Evaluation: ThedecreaseofthiscreditinFY2016iscausedbyaflurryofapplicationsforrefundofotherrelatedhealthcaredeductions(7‐9‐93and7‐9‐77.1)resultingfromaHearingOfficer’sdecisionandorderknownasthe“HealthSouth”decision.TheHealthSouthdecisionruledthat,contrarytolongstandingTRDregulations,for‐profithospitalscouldclaimthedeductionunderSection7‐9‐93NMSA1978forservicesprovidedbyhealthcarepractitionersatthosefacilities.ItalsoindicatedthatTRDconcededthatfor‐profithospitalscouldclaimthedeductionunderSection7‐9‐77.1NSMA1978forhealthcareserviceswhenthepaymentsforthoseservicescamefromspecifiedfederalsources.Recentlegislativechangesthattookplaceduringthe20162ndSpecialSessionreversesthisdecisionandprecludesfor‐profithospitalsfromclaimingthesedeductions.However,theDOH‐licensedhospitalcreditunderSection7‐9‐96.1NMSA1978allowsforprofithospitalstoclaimacreditagainstGRTliabilityonreceiptsthatarenotdeductibleunderotherprovisionsoflaw.
Inadditiontothe“HealthSoutheffect”andtoamuchlesserdegree,TRD’srecentenhancementsoftax‐creditaccountingprocedureswithintheAuditandComplianceandRevenueProcessingDivisionshavecauseddifferencesbetweentheamountsofthiscreditreportedinthisbookandpreviousversions.However,thedatapresentedhereisthemostaccurateavailabletodate.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
2016NewMexicoTaxExpenditureReport Page73
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $8,874.5 $11,125.6 $13,886.9 $11,640.3 $14,299.7 $11,071.9
$‐
$2,000.0
$4,000.0
$6,000.0
$8,000.0
$10,000.0
$12,000.0
$14,000.0
$16,000.0
GRT(thousands)
DOH‐LicensedHospitalsCredit
2016NewMexicoTaxExpenditureReport Page74
DOH‐LICENSEDHOSPITALSFIFTYPERCENTGRTDEDUCTION
Category: HealthCare
BriefDescription: 50%ofthereceiptsofhospitalslicensedbytheDOHaredeductiblefromgrossreceipts.
Thisdeductionmaybeappliedonlytothetaxablegrossreceiptsremainingafterallotherappropriatedeductionshavebeentaken.
StatutoryBasis: 7‐9‐73.1NMSA1978
IntendedPurpose: Presumablytoprovideequitabletaxtreatmentbetweenforprofithospitalsandnot‐for‐profithospitalswhoareexemptfromGRT.
History: Originallyenactedin1991andamendedin1993and1995.
Evaluation: TheeconomicsubsidyprovidedbythisdeductionagainstgrossreceiptsisasocialpolicydecisiontakentoreducethetotalcostbornebyNewMexicansforeligiblehospitalcare.
Recommendations: None.
ReliabilityFactor: 2‐ThisestimateusesGRTreportedbytaxpayersclassifiedinNAICSsector622—Hospitals;assumesthatthosetaxpayersareproperlyclassifiedandhaveproperlyappliedthedeductionafterallotherapplicabledeductions.Inthe2015TaxExpenditureReport,a100percentdeduction,insteadofa50percentdeductionwasreported.Thishasbeencorrectedinallyears.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $23,838.0 $21,634.0 $20,706.0 $20,184.0 $21,565.0 $14,613.0
$‐
$5,000.0
$10,000.0
$15,000.0
$20,000.0
$25,000.0
$30,000.0
Expenditures(thousands)
DOH‐LicensedHospitalsDeduction
2016NewMexicoTaxExpenditureReport Page75
EDUCATIONTRUSTFUNDPAYMENTDEDUCTIONFROMPIT
Category: CitizenBenefits
BriefDescription: AtaxpayermayclaimadeductionfromnetincomeinanamountequaltothepaymentsmadebythetaxpayerintotheEducationTrustFundpursuanttoacollegeinvestmentagreementorprepaidtuitioncontractundertheEducationTrustActinthetaxableyearforwhichthedeductionisbeingclaimed.
StatutoryBasis: 7‐2‐32NMSA1978
IntendedPurpose: Presumablytoincentivizesavingforcollege.
History: Originallyenactedin1997.
Evaluation: WhiletherewasaslightdipinthenumberandvalueofclaimsinFY2010fromFY2009(showninthe2014TaxExpenditureReport),likelyassociatedwiththeoverallhealthoftheeconomy,thedeductionappearstobeincentivizingsomesavingsforcollege.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $918.1 $1,022.2 $1,072.6 $1,070.9 $1,249.5
Claims 3,744 3,966 3,991 4,101 4,339
‐5001,0001,5002,0002,5003,0003,5004,0004,5005,000
$‐
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
PIT(thousands)
EducationTrustFundPaymentDeduction
2016NewMexicoTaxExpenditureReport Page76
ELECTRICTRANSMISSIONANDSTORAGEFACILITIESGRTANDCOMPENSATINGTAXDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: ReceiptsfromsellingequipmenttotheNewMexicoRenewableEnergyTransmissionAuthority(“RETA”)oranagentorlesseeoftheauthorityaredeductiblefromgrossreceiptsiftheequipmentisinstalledaspartofanelectrictransmissionfacilityoraninterconnectedstoragefacilityacquiredbytheauthority,pursuanttotheNewMexicoRenewableEnergyTransmissionAuthorityAct,aredeductiblefromgrossreceipts.
ThevalueofequipmentinstalledaspartofanelectrictransmissionfacilityoraninterconnectedstoragefacilityacquiredbytheauthoritypursuanttotheNewMexicoRenewableEnergyTransmissionAuthorityAct,isdeductibleincomputingthecompensatingtaxdue.
StatutoryBasis: 7‐9‐101and7‐9‐102NMSA1978
IntendedPurpose: PresumablytoencouragethedevelopmentofrenewableenergytransmissioninfrastructureinNewMexico.
History: Bothdeductionswereoriginallyenactedin2007aspartoflegislationthatenactedtheNewMexicoRenewableEnergyTransmissionAuthorityAct.
Evaluation: AccordingtoRETA’s2016annualreport,RETAannouncedtheycouldrecommenceoperationsasaresultoffundingbyCleanLineEnergy.Infact,thefundsthatCleanLineEnergywillprovidetoRETAwillfullyfundtheiroperations,notonlytheportionpertainingtoCleanLineEnergy’sproject.TheprojectprovidesfundingtoRETAintheamountof$30,000topartiallyassigntheright‐of‐wayagreementithasenteredintowithoneofthepueblos.
Recommendations: TRDbelievesRETAshouldpresenttoRSTPand/orLFConthestatusoftheircurrentandplannedoperationsasthisandotherRETA‐baseddeductionshaveshownverylittleutilizationinrecentyears.
ReliabilityFactor: 2‐The2016annualreportfromRETAdoesnotindicatefurtherbondissuanceorthatRETAhasmadeanyqualifiedexpendituresasofFY2016.
NOTE:Wearenotrequiredtoredactthisinformationeventhoughitrelatestofewerthanthreetaxpayersbecausethedatadonotcomefromtaxreturninformation;rather,itcomesfromindependentsources.
2016NewMexicoTaxExpenditureReport Page77
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CompTax $‐ $‐ $‐ $‐ $‐ $‐
GRT $3,250.0 $‐ $‐ $‐ $‐ $‐
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
Expenditures(thousands)
ElectricTransmissionandStorageFacilitiesDeduction
2016NewMexicoTaxExpenditureReport Page78
ELECTRICTRANSMISSIONANDSTORAGEFACILITIESSERVICESGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: ReceiptsfromprovidingservicestotheNewMexicoRETAoranagentorlesseeofRETAfortheplanning,installation,repair,maintenanceoroperationofanelectrictransmissionfacilityoraninterconnectedstoragefacilityacquiredbytheauthoritypursuanttotheRETAAct,aredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐103NMSA1978
IntendedPurpose: Presumably,thedeductionisintendedtoencouragethedevelopmentofrenewableenergytransmissioninfrastructureinNewMexico.
History: Originallyenactedin2007aspartoflegislationthatenactedtheNewMexicoRenewableEnergyTransmissionAuthorityAct.
Evaluation: RETAhasreportedexpendituresforplanningandother“governmentalactivities.”Presumably,thiswillleadtoqualifiedexpendituresfortheotherrelateddeductions.
Recommendations: TRDbelievesRETAshouldpresenttoRSTPand/orLFConthestatusoftheircurrentandplannedoperationsasthisandotherRETA‐baseddeductionshaveshownverylittleutilizationinrecentyears.
ReliabilityFactor: 2‐RETA’sannualauditreportslistexpendituresforplanninganddevelopmentservices.Allexpenditures,excludingpersonalservicesandbenefits,areassumedtobeeligibleforthisdeduction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
NOTE:Wearenotrequiredtoredactthisinformationeventhoughitrelatestofewerthanthreetaxpayersbecausethedatadonotcomefromtaxreturninformation;rather,itcomesfromindependentsources.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $11.0 $27.0 $6.0 $6.0 $5.0 $6.0
$‐
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
Expenditures(thousands)
ElectricTransmissionandStorageFacilitiesServicesDeduction
2016NewMexicoTaxExpenditureReport Page79
ELECTRICITYCONVERSIONGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfromthetransmissionofelectricitywherevoltagesourceconversiontechnologyisemployedtoprovidesuchservices,andfromancillaryservices,aredeductiblefromgrossreceipts.
ThisdeductionworksintandemwiththeelectricityexchangedeductionprovidedinSection7‐9‐103.2NMSA1978.
StatutoryBasis: 7‐9‐103.1NMSA1978
IntendedPurpose: PresumablythisdeductionisintendedtoencouragebusinessesusingvoltagesourceconversiontechnologytolocateinNewMexico.
History: Originallyenactedin2012.
Evaluation: AccordingtotheTresAmigaswebsite,theU.S.ishometovastquantitiesofcleanenergyresources—wind,solar,geothermal,andhydropower—,yetitlacksamoderninterstatetransmissiongridtodelivercarbon‐freeelectricitytocustomersinhighlypopulatedareasofthecountry.Voltagesourceconversionisanemergingtechnology.In2015thecompanyannouncedthatitwasplanningtoinvest$500milliononafirst‐of‐itskindprojectinClovisthatwouldconnectthecountry’sthreedisparatepowergrids.InNovemberof2016TresAmigas,LLCannouncedisdownsizingitsplansforanelectricsuperstationcenteredinthestate,butit’sstillpursuingawaytohelpmovepoweracrosstheU.S.Thenewstrategyincludesalinkbetweenthenation’seasternandwesterngridsusingacapacityofapproximately200megawatts,not750MWasonceplanned.TresAmigasalsomaypursueatietoTexas’mainpowergrid,butitisnotapriorityatthistime.
Recommendations: None.
ReliabilityFactor: 1‐TherearecurrentlynoknownfacilitiesutilizingthistechnologyinNew Mexico.
FiscalImpact: Notaxpayershaveclaimedthisdeduction.
2016NewMexicoTaxExpenditureReport Page80
ELECTRICITYEXCHANGEGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfromthetransactionandexchangeofelectricpower,asapartofthetransmissionofelectricitywherevoltagesourceconversiontechnologyisemployedtoprovidesuchservicesandfromancillaryservices,aredeductiblefromgrossreceipts.
ThisdeductionworksintandemwiththeelectricityconversiondeductionprovidedinSection7‐9‐103.1NMSA1978.
StatutoryBasis: 7‐9‐103.2NMSA1978
IntendedPurpose: PresumablytoencouragethelocationofelectricityexchangesinNewMexico.
History: Originallyenactedin2012.
Evaluation: AccordingtotheTresAmigaswebsite,theU.S.ishometovastquantitiesofcleanenergyresources–wind,solar,geothermal,andhydropower,yetitlacksamoderninterstatetransmissiongridtodelivercarbon‐freeelectricitytocustomersinhighlypopulatedareasofthecountry.Voltagesourceconversionisanemergingtechnology.Accordingtothecompany’swebsite,TresAmigas,LLCisplanningtoinvest$500milliononafirst‐of‐itskindprojectinClovisthatwillconnectthecountry’sthreedisparatepowergrids.Thecompany,basedinSantaFenow,willbemovingtoAlbuquerquetoruntheTresAmigassuperstationoncethefacilityisupandrunning.
Recommendations: None.
ReliabilityFactor: 1‐TherearecurrentlynoelectricityexchangesutilizingvoltagesourceconversiontechnologyinNewMexico.
FiscalImpact: Notaxpayershaveclaimedthisdeduction.
2016NewMexicoTaxExpenditureReport Page81
ELECTRONICIDREADERCREDITAGAINSTPITANDCIT
Category: CitizenBenefits
BriefDescription: Ataxpayerlicensedtosellcigarettes,othertobaccoproducts,oralcoholicbeveragesmayclaimaone‐timecreditofupto$300againstPITandCITforthepurchaseofelectroniccard‐readingequipmentforageverification.Thecreditisallowedforeachbusinesslocationwherethebusinessinstallstheequipment.
StatutoryBasis: 7‐2‐18.8and7‐2A‐18NMSA1978
IntendedPurpose: Presumablytoincentivizetheuseoftheequipmentnecessarytoelectronicallyverifytheageofpurchasersoftobaccoandalcoholbysubsidizingitscost.
History: Originallyenactedin2001.
Evaluation: Thiscreditisseverelyunderused.Oneplausibleexplanationforthisisthatthevalueofthecreditistoolowwhencomparedtothecostoftheequipment.Thereisalsoadistinctpossibilitythatknowledgeintheindustryabouttheavailabilityofthecreditislacking.
Recommendations: Thiscreditshouldbere‐evaluated,takingintoaccountinputfromindustrystakeholders,orberepealedasineffectiveandunused.Industrychangeswithrespecttoelectronicageverificationequipmentandsystemsandwellasindustrysaturationshouldbeconsidered.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
CITExpenditures $0.00 $0.00 $0.00 $0.00 $0.00
PITExpenditures $0.00 $0.30 $0.00 $0.00 $0.00
$0.0$0.1$0.2$0.3$0.4$0.5$0.6$0.7$0.8$0.9$1.0
Expenditures(thousands)
ElectronicIDReaderCredit
2016NewMexicoTaxExpenditureReport Page82
EXCESSOFELDERLYTAXPAYERSMAXIMUMPROPERTYTAXLIABILITYREBATEFROMPIT
Category: CitizenBenefits
BriefDescription: Taxpayerswhoare65andoldermayclaimaPITrebatefortheamountoftheirpropertytaxthatexceedstheirmaximumliability(rangingfrom$20to$300dependingonthetaxpayer’smodifiedgrossincome).Notaxrebateshallbeallowedtoanytaxpayerwhosemodifiedgrossincomeexceeds$16,000unlessthetaxpayer’sprincipalplaceofresidenceisinacountythathasineffectforthetaxableyear,aresolutionauthorizinganincreasetoa$25,000grossincomecap.
StatutoryBasis: 7‐2‐18NMSA1978
IntendedPurpose: Presumablytopartiallyoffsetthepropertytaxcostsfortaxpayerswhoareoftenonfixedincome.
History: Originallyenactedin1977andamendedin1981,1993,1997,1999,and2003.
Evaluation: AccordingtotheU.S.Census,thenumberofpeopleover65whoareinthelaborforceisincreasing.Bycontinuingtowork,thelikelihoodisthattheirincomeexceedsthestatutorythresholdsothattheynolongerqualifyforthisrebate.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $3,359.8 $3,429.2 $3,372.2 $3,375.6 $3,374.3
Claims 17,233 17,423 16,913 16,823 16,552
16,000
16,200
16,400
16,600
16,800
17,000
17,200
17,400
17,600
$3,320.0
$3,340.0
$3,360.0
$3,380.0
$3,400.0
$3,420.0
$3,440.0
PIT(thousands)
ExcessofElderlyTaxpayersMaximumPropertyTaxLiabilityRebate
2016NewMexicoTaxExpenditureReport Page83
FEESFROMSOCIALORGANIZATIONSEXEMPTIONFROMGRT
Category: CitizenBenefits
BriefDescription: Receiptsfromduesandregistrationfeesofnonprofitsocial,fraternal,political,trade,labororprofessionalorganizationsandbusinessleagues,areexemptfromGRT.
StatutoryBasis: 7‐9‐39NMSA1978
IntendedPurpose: Presumablytoreducethetaxburdenofcertainnonprofitentities.
History: Originallyenactedin1969andamendedin1977.
Evaluation: Withnodirectdata,aproperevaluationisdifficult.
Recommendations: None.
ReliabilityFactor: 4–Therearenodirectdatatoestimatethisexemption.TheNationalCenterforCharitableStatisticsreportsthatin2012,312registered“other”publiccharities,includingchambersofcommerce,fraternalorganizationsandcivicleaguesreportedabout$1.1billionintotalrevenuesinNewMexicoovertheprior24months.Assumingthat10%isfromdues,theestimatedexemptionisabout$110million.TheexemptionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost,resultinginlostrevenueofabout$7.6millionovertwoyears.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $3,500.0 $3,500.0 $3,600.0 $3,600.0 $3,600.0 $3,800.0
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
$4,000.0
Expenditures(thousands)
FeesfromSocialOrganizationsExemption
2016NewMexicoTaxExpenditureReport Page84
FILMANDTELEVISIONCREDITAGAINSTPITANDCIT
Category: EconomicDevelopment
BriefDescription: ThefilmproductiontaxcreditappliesonlytofilmproductioncompaniesthatcommenceprincipalphotographypriortoJanuary1,2016.AcreditagainstPITorCITisavailablefor25%ofdirectproductionandpostproductionexpendituresmadeinNewMexicothataresubjecttotaxationbytheStateofNewMexicoanddirectlyattributabletotheproductionofafilmorcommercialaudiovisualproduct.
Anadditional5%isavailablefordirectproductionexpendituresforTVpilotsandserieswithatleastsixepisodesinasingleseasonandabudgetofatleast$50,000perepisode.Theadditional5%alsoappliestodirectproductionexpendituresthataredirectlyattributabletothewagesandfringebenefitspaidtoaNewMexicoresidentdirectlyemployedinanindustrycrewposition,excludingaperformingartist,onaproductionwithatotalbudgetof:
(1) notmorethan$30,000,000thatshootsatleasttenprincipalphotographydaysataqualifiedproductionfacilityinNewMexico;or
(2) $30,000,000ormorethatshootsatleastfifteenprincipalphotographydaysataqualifiedproductionfacilityinNewMexico.
Atieredscheduleofpaymentsisprovidedbasedonthesizeofthefilmtaxcredit.Forcreditsunder$2million,thecreditispaidimmediatelyuponauthorization.Forcreditsbetween$2millionand$5million,50%ofthepaymentispaidimmediatelyuponauthorization;theother50%ispaidtwelvemonthsfollowingthatdate.Forcreditsover$5million,therefundwillbepaidinthreeequalinstallments;oneispaidimmediatelyuponauthorization,oneispaidtheyearfollowing,andthelastispaidtwoyearsfollowing.
Anaggregateannualcaplimitspayoutsofthefilmproductiontaxcreditto$50millionacrossbothPITandCITprogramsinanyfiscalyear.
StatutoryBasis: 7‐2F‐1etseq.NMSA1978
IntendedPurposes: Thepurposesandgoalsofthefilmproductiontaxcreditareto:
1. establishthefilmindustryasapermanentcomponentoftheeconomicbaseofNewMexico;
2. developapooloftrainedprofessionalsandbusinessesinNewMexicotosupplyandsupportthefilmindustryinthestate;
3. increaseemploymentofNewMexicoresidents;
2016NewMexicoTaxExpenditureReport Page85
4. improvetheeconomicsuccessofexistingbusinessesinNewMexico;and
5. developtheinfrastructureinthestatenecessaryforathrivingfilmindustry.
History: Originallyenactedin2002andamendedin2003,2005,2006,2007,2011,2013,2015and2016.
The2011amendmentaddeda$50millioncap,providetrackingrequirements,requirefilmproductioncompaniestosubmittheapplication/claimwithinoneyear,andrequiremandatoryincometaxwithholdingonnonresidentactors.
The2013amendmentallowedanadditional5%tobeaddedtothecalculationforthefilmproductiontaxcreditfortelevisionshowssubjecttocertainrequirements(the“BreakingBad”provision);alsoallowsforanyamountofannualfilmcreditthatisunusedinFiscalYears2013‐2015underthe$50millioncap—uptoamaximumof$10million—tobecarriedforwardandaddedintothesubsequentfiscalyear’scap;inanyyearwherethe$50millioncapisnotreached,ifthereareamountsthatwouldbepaidinasubsequentyearunderthemulti‐yearprovisionsofthefilmcredit,thosesubsequentyearamountsmaybepaidinthecurrentyearuptothe$50millioncap;providesmorespecificrequirementsforwithholdingtaxesrelatedtoservicesprovidedbyartistsunderthe“directproductionexpenditures”provisionsofthecredit,anditprovidesforadefinitionof“qualifiedproductionfacility”andclarifiestaxobligationsofnon‐residentvendorservices.
In2015,thefilmandtelevisiontaxcreditappliestofilmproductionandaddscreditsfortelevisionpilotsandseries,qualifiedproductionfacilities,nonresidentindustrycrews,limitationonpaymentsforperformingartistsandaddsrequirementstocontractwithcertainvendors.Anadditionalamendmentaddsaprovisionforafilmproductioncompanythatiseligibletoreceiveafilmproductioncredit,toassignpaymentofalloraportionofthecredittoeitherathird‐partyfinancialinstitutionoranotherauthorizedthirdparty.The2015amendmenthasnoimpactonthetimeperiodscoveredbythisreport.
Evaluation: TheFilmDivisionhadasecondstraightrecord‐breakingyear,injectingnearly$390millionintotheeconomy,shatteringlastfiscalyear’srecordbyalmost$100million.Withsix(6)majortelevisionseries:(Midnight,Texas(NBCpilot),LongmireSeason5(Netflix),PreacherSeason1(AMC),FromDuskTillDawnSeason3(ElRey/Netflix),TheNightShiftSeason3(NBC)andGodlessSeason1(Netflix),andsix(6)features(GraniteMountain,Hostiles,AnIdealHome,Juarez,CowboyDrifterandIAmThat)inproductionwiththenumberofworkerdaystotaling260,307.
2016NewMexicoTaxExpenditureReport Page86
FY16PerformanceMeasures Target Year‐EndTotalNumberoffilmandmediaworkerdays 190,000 260,307Directspendingbyfilmindustryproductionsinmillions 200 387.2Numberofmajorfilmproductionsovers$1MmadeinNM 19 30PerformanceMeasures FY12* FY13 FY14 FY15 FY16
DirectSpendintoNMEconomy
*wasnotaperformancemeasureinFY2012
$213.70 $162.10 $288.60 $387.20
QualifyingSpend** $224.60 $233.50 $196.50 $343.10 $467.00
NumberofProjectsover$1M(totalbudget)
14 21 18 25 30
WorkerDays(crewsizexdaysemployed)
143,046 216,461 189,782 279,458 260,307
**approximatedviaNMFilmOfficeinitialregistrationestimates
Recommendations: TherewouldbesignificantfiscalbenefittotheStateifpaymentswerenotaccelerated.Themechanicsofthisprogramresultintaxpayersapplyingforthebenefitbyamendingreturns.Inrecentyearspaymentshavebeenaccelerated;infutureyearsTRDexpectstheaggregatecaptobereachedwithoutacceleratingpayments.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $96,192.3 $9,494.5 $50,000.0 $50,000.0 $50,000.0 $50,000.0
Claims 56 58 59 81 58 74
‐
1020304050
60708090
$‐
$20,000.0
$40,000.0
$60,000.0
$80,000.0
$100,000.0
$120,000.0
CombinedTaxes(thousands)
FilmProductionCredit
2016NewMexicoTaxExpenditureReport Page87
FUELFORSPACEVEHICLESEXEMPTIONFROMGRTANDCOMPENSATINGTAX
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfromthesaleandtheuseoffuel,oxidizer,orasubstancethatcombinesfuelandoxidizertopropelspacevehiclesortooperatespacevehiclelaunchersareexemptfromGRTandcompensatingtax.
StatutoryBasis: 7‐9‐26.1NMSA1978
IntendedPurpose: PresumablytoincentivizeoperationsatSpaceportAmerica.
History: Originallyenactedin2003aspartoflegislationexemptinganumberofspace‐relatedactivitiesfromGRTandcompensatingtax
Evaluation: FrompubliclyavailableinformationandthatpublishedbytheSpaceport,althoughnolaunchesrequiringrefuelingon‐siteappeartobecurrentlyscheduledatSpaceportAmerica,twooperatorswhichwouldrequiresuchactivitieshavemadesignificantinvestmentsatthesiteandtwoothershavesignedpartnershipswiththeauthority,includingonecompanywhichrelocatedtheirheadquarterstoNewMexico.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page88
GEOTHERMALGROUND‐COUPLEDHEATPUMPCREDITAGAINSTPITANDCIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: AtaxpayerwhopurchasesandinstallsafterJanuary1,2010butbeforeDecember31,2020ageothermalground‐coupledheatpumpinaresidence,business,oragriculturalenterpriseinNewMexicomayclaimacreditupto30%ofthepurchaseandinstallationcostsagainstPITorCITliability.
A“geothermalground‐coupledheatpump”isadevicethatprovidesspaceorwaterheatingorcoolingviagroundwaterorwatercirculatingthroughtheground.Thetotalgeothermalground‐coupledheatpumptaxcreditallowedtoataxpayershallnotexceedninethousanddollars($9,000).Thedepartmentmayallowamaximumannualaggregateoftwomilliondollars($2,000,000)ingeothermalground‐coupledheatpumptaxcredits.
StatutoryBasis: 7‐2‐18.24and7‐2A‐24NMSA1978
IntendedPurpose: Presumablytosubsidizethegeothermalground‐coupledheatpumpindustry.
History: Originallyenactedin2009.
Evaluation: None.
Recommendations: Itmaybeworthexaminingthe$9,000cap,especiallyinthecaseofmulti‐familyhousing,wheremorethanonegeothermalheatpumpdeviceisinstalled.Expandingthecapmaypromotebetterutilizationoftheavailablecapspace.Aspartofthatreview,however,considerationoftheenergycostsavingsthatresultfromthesedevicesshouldbeundertakentobetterunderstandthebenefitstooccupants,whetherrentersorhomeowners.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $67.0 $115.9 $238.5 $544.3 $515.6
Claims 15 33 67 172 187
‐20406080100120140160180200
$‐
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
CombinedTaxes(thousands)
GeothermalGround‐CoupledHeatPumpCredit
2016NewMexicoTaxExpenditureReport Page89
GOODSANDSERVICESFORTHEDODRELATEDTODIRECTEDENERGYANDSATELLITESGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: PriortoJanuary1,2021,receiptsfromthesalebyaqualifiedcontractorofqualifiedresearchanddevelopmentservicesandqualifieddirectedenergyandsatellite‐relatedinputs,maybedeductedfromgrossreceiptswhensoldpursuanttoacontractwiththeU.S.DepartmentofDefense.
AtaxpayerallowedadeductionpursuanttothissectionshallreporttheamountofthedeductionseparatelyinamannerrequiredbyTRD.
Definitions:
(1)"directedenergy"meansasystem,includingrelatedservices,thatenablestheuseofthefrequencyspectrum,includingradiowaves,lightandx‐rays;
(2)"inputs"meanssystems,subsystems,components,prototypesanddemonstratorsorproductsandservicesinvolvingoptics,photonics,electronics,advancedmaterials,nanoelectromechanicalandmicroelectromechanicalsystems,fabricationmaterialsandtestevaluationandcomputercontrolsystemsrelatedtodirectedenergyorsatellites.
StatutoryBasis: 7‐9‐115NMSA1978
IntendedPurpose: Topromotenewandsophisticatedtechnology,enhancetheviabilityofdirectedenergyandsatelliteprojects,attractnewprojectsandemployerstoNewMexicoandincreasehigh‐technologyemploymentopportunitiesinNewMexico.
History: Originallyenactedin2015.
Evaluation: Itistooearlytotellifthisdeductionhasfulfilledthepurposeforwhichitwascreated.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact: NOTE:DatainFY2016havebeenredactedduetofewerthan3taxpayerstakingthededuction.Noclaimsotheryearsasthecreditisnew.
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $‐ $‐ $‐ $‐ $‐
Claims ‐ ‐ ‐ ‐ ‐
‐11
$‐$0.5$1.0
Expenditures
(thousands) DirectedEnergyandSatellitesDeduction
2016NewMexicoTaxExpenditureReport Page90
HEALTHCAREPRACTITIONERSERVICESGRTDEDUCTIONANDHOLDHARMLESSDISTRIBUTION
Category: HealthCare
BriefDescription: ReceiptsoflicensedhealthcarepractitionersfrompaymentsbymanagedhealthcareprovidersorbyhealthcareinsurersforcommercialcontractservicesorbyMedicarePartCservicesprovidedbyahealthcarepractitioner,aredeductiblefromgrossreceipts.
Thedeductionisrequiredtobeseparatelystatedbythetaxpayer.Duringthe20162ndspecialsession,Section7‐1‐69.2wascreatedtoaddapenaltyforincorrectlyfilingforthisandforthefood(holdharmless)deductionsinsteadoftakingotherexemptionsordeductionswhichmustbetakenfirst,resultinginaholdharmlessdistribution.Thepenaltyisequalto20%ofthevalueoftheholdharmlessdistributionresultingfromtheincorrectdeduction.
EnactedwiththeoriginatinglegislationwereprovisionsintheTaxAdministrationActthatrevenuesofmunicipalandcountygovernmentswouldbeheldharmlessfromthededuction.
StatutoryBasis: 7‐9‐93,7‐1‐6.46,and7‐1‐6.47NMSA1978
IntendedPurpose: Presumablytokeephealthcareprovidersinthestate.
History: Allthreesectionswereoriginallyenactedin2004andamendedin2006and2007.Sections7‐1‐6.46and7‐1‐6.47NMSA1978werealsoamendedin2013.Section7‐9‐93wasamendedduringthe20162ndspecialsessiontoreinstatethepresumedoriginalintentionofthedeductionbyrestrictingittohealthcarepractitionersonlyandnothospitals.
Evaluation: Becauseoftheholdharmlessprovisionandthelossoftherevenuewhichhasbeenmadeupthroughothertaxburdens,thisreductioncomesatasignificantcosttoboththeGeneralFundandtheverytaxpayersitisbenefitting.
ThesignificantincreaseofthiscreditinFY2016iscausedbyaflurryofapplicationsforrefundresultingfromaHearingOfficer’sdecisionandorderknownasthe“HealthSouth”decision.TheHealthSouthdecisionruledthat,contrarytolongstandingTRDregulations,for‐profithospitalscouldclaimthedeductionunderSection7‐9‐93NMSA1978forservicesprovidedbyhealthcarepractitionersatthosefacilities.ItalsoindicatedthatTRDconcededthatfor‐profithospitalscouldclaimthedeductionunderSection7‐9‐77.1NSMA1978forhealthcareserviceswhenthepaymentsforthoseservicescamefromspecifiedfederalsources.Recentlegislativechangesthattookplaceduringthe20161stSpecialSessionreversesthisdecisionandprecludesfor‐profithospitalsfromclaimingthesedeductions.However,theDOH‐licensedhospitalcreditunderSection7‐9‐96.1NMSA1978allowsfor
2016NewMexicoTaxExpenditureReport Page91
profithospitalstoclaimacreditagainstGRTliabilityonreceiptsthatarenotdeductibleunderotherprovisionsoflaw.
Recommendations: None.
ReliabilityFactor: 1–Thisdeductionisseparatelyreported.Noestimationisrequired.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
HoldHarmless $31,914.0 $34,590.3 $34,687.9 $32,839.9 $31,430.7 $29,884.5
GRT $38,752.2 $42,002.5 $42,044.8 $40,395.1 $38,664.9 $36,427.2
$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,000
Expenditures(thousands)
HealthCarePractitionerServicesDeduction
2016NewMexicoTaxExpenditureReport Page92
HEARINGANDVISIONAIDSGRTDEDUCTION
Category: HealthCare
BriefDescription: Receiptsfromthesaleofvisionandhearingaidsorfromfittinganddispensingofthesetypesofaidsaredeductiblefromgrossreceipts.
Definitions:
(1) “visionaids”aredefinedasclosedcircuittelevisionsystems,monoculars,magnificationsystems,speechoutputdevicesorothersystemsspecificallydesignedforusebypersonswithlowvisionorvisualimpairmentandnotnormallyusedbyapersonwhodoesnothavelowvisionorvisualimpairment;
(2) “visualimpairment”isdefinedasacentralvisualacuityof20/200orlessinthebettereyewithuseofacorrectinglens,oralimitationinthefieldsofvisionsothewidestdiameterofvisualfieldsubtendsanangleof20degreesorless;and,
(3) “hearingaids”aredefinedassmallelectronicprescriptiondevicesthatamplifysoundandareusuallyworninorbehindtheearofapersonwithimpairedhearing.
StatutoryBasis: 7‐9‐111NMSA1978
IntendedPurpose: Presumablytobenefitpersonswho,duetomedicalconditions,areinneedofhearingandvisionaids.ThedeductionthenwouldreducethetaxburdenimposedbyGRTandincreasethetaxpayers’disposableincome.
History: Originallyenactedin2007.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page93
HIGH‐WAGEJOBSCREDITAGAINSTMODIFIEDCOMBINEDTAX
Category: EconomicDevelopment
BriefDescription: Eligibleemployerswhocreatehigh‐wagejobsinNewMexicomayapplyforataxcreditagainstGRT(lesslocaloptionGRT),compensatingtax,withholdingtax,E911,andCRStaxdue.
An“eligibleemployer”isanemployerthat:
(1) mademorethan50%ofitssalesofgoodsorservicesproducedinNewMexicotopersonsoutsideNewMexicoduringtheapplicablequalifyingperiod,or
(2) iseligiblefortheJobTrainingIncentiveProgramassistanceadministeredbyEDD.
Theamountofthehighwagejobstaxcredit(“HWJTC”)wouldbeequalto10%ofthequalifyingwagesandbenefitsinaneligiblejobupto$12,000foreachjob.Ifaneligibleemployermeetstherequirements,thereisnoupwardlimitonthepotentialnumberoftotalcreditsclaimed.
StatutoryBasis: 7‐9G‐1NMSA1978
IntendedPurpose: Toprovideanincentiveforurbanandruralbusinessestocreateandfillnewhigh‐wagejobsinNewMexico.
History: Originallyenactedin2004andamendedin2007,2008,2013,and2016.
The2013amendmentclarifiedtheapplicationofthehigh‐wagejobstaxcredit;defined“benefits”and“wages”;addedthepurposesection;clarifiedthatthe$12,000limitationappliedperjobperqualifyingperiod;limitedthetimeforwhichataxpayercanapplyforapprovalofthecredittonolaterthan12monthsfollowingtheendofthecalendaryearinwhichthetaxpayer'sfinalqualifyingperiodcloses;closedaloopholewithrespecttomergers,acquisitions,andreorganizations;changedthepopulationthresholdforrural/urbandistinctionfrom40,000to60,000;clarifiedthattheeligibleemployeemustbeemployedinNewMexico;clarifiedthatthegoodsorservicessoldmustbeproducedinNewMexico;addedarequirementthatthetaxpayerbecertifiedbyEDDaseligiblefordevelopmenttrainingprogramassistanceinordertobean“eligibleemployer”;clarifiedthata“newhigh‐wageeconomic‐basedjob”mustbea“new”jobandmustbeinNewMexico;extendedthedeadlinetohiretoJuly1,2020;increasedthewagesthatmustbepaidtoqualifyafterJuly1,2015(from$40,000to$60,000inurbancommunitiesandfrom$28,000to$40,000inruralcommunities).
2016NewMexicoTaxExpenditureReport Page94
Theamendmentthattookplaceduringthe20162ndSpecialLegislativesessionchangestheeligibilityrequirementstoqualifyforthecreditandrequiresannualfiling,whereaspre‐amendmentstatuteallowedfilingformultiplequalifyingperiodsatonce.Theamendment’sprimarypurposeistoclosegapsinthestatute’slanguagethatallowedunintendedrecipientstoreceivethecredit.Theamendmentalsoremovedemployeebenefitsfromthecalculationofthecreditvalue.
Evaluation: Becauseofthechangestothelawthatoccurredinthe2013sessionandtheflurryofclaimsthatprecededtheeffectivedateofthosechanges,TRDawardedsignificantamountsofHWJTCclaimsinFY2015andFY2016.TRDeconomists,aspartoftheConsensusRevenueEstimatingGroupanticipatedthatsignificantHWJTCclaimswouldbepaidoutduringFY2015andFY2016asaresultofthe2013flurryofclaims.TRDhasbeenoperatingontheassumptionthatthelawchangesthatwentintoeffectinJune2013wouldresultinareductioninHWJTCclaimsoncethebacklogofclaimsandprotests,whichwerefileddaysbeforetheeffectivedateofthosechanges,clearedlegalandthecourts.Basedonrecentlegislativechangesthattookplaceduring20162ndspeciallegislativesession,TRDestimatestheamountsofHWJTCclaimstodecreasesignificantlystartinginFY2017toanannualbaseof$15million(newapplications)withanestimatedtotalclaimedorpaidamountof$30million.
Recommendations: Eliminatethedeadlinebywhich“newhigh‐wageeconomic‐basedjobs”mustbecreated.Inthealternative,extendthedeadlinetoJuly1,2025.TheamendedeligibleemployerdefinitioncouldbedeemedtoorestrictivebyEDDstandards.Aswritten,thestatutedoesn’tallowforflexibilityincaseeconomicconditionschangeandthestatedesirestoattractadifferenttypeoftaxpayer;thefive‐yearbarforemploymentmaintenanceorcyclicalchangesandthetotalemploymentdropof5%mightbetoorestrictive.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
2016NewMexicoTaxExpenditureReport Page95
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Refunded $9,085.4 $21,023.4 $18,563.9 $45,278.5 $57,218.8 $47,784.0
Withholding $685.6 $1,032.8 $646.9 $1,117.0 $1,355.6 $625.0
CompTax $101.1 $305.2 $726.6 $227.2 $419.7 $337.0
GRT $438.8 $1,635.7 $1,528.5 $2,006.7 $6,924.5 $2,156.0
$‐
$10,000.0
$20,000.0
$30,000.0
$40,000.0
$50,000.0
$60,000.0
$70,000.0
Expenditures(thousands) High‐WageJobsCredit
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Refunded 48 66 76 101 151 110
Withholding 46 59 65 62 51 69
CompTax 31 47 46 49 53 87
GRT 46 70 71 58 93 88
‐50100150200250300350400
Claims
High‐WageJobsTaxCredit
2016NewMexicoTaxExpenditureReport Page96
HOSTINGWORLDWIDEWEBSITESGRTDEDUCTION
Category: EconomicDevelopment
BriefDescription: Receiptsfrominternetconnectedfacilitiesthatstoredataaredeductiblefromgrossreceipts.Despitethetitle,thestatuteindicatesthatanyfacilitystoringdataandconnectedtotheinternetqualifiesforthisdeduction,notjustweb‐hosting.
StatutoryBasis: 7‐9‐56.2NMSA1978
IntendedPurpose: PresumablytoincentivizedatacenterstorelocateinNewMexico.
History: Originallyenactedin1998.
Evaluation: AccordingtoDataCenterResearch’swebsite(datacenterresearch.com),therearecurrently6datacentersoperatinginthestate;4ofthemarelocatedinAlbuquerque,1inSantaFe,and1inTaos.BecausethemajorityofthesecompaniesstartedoperationsinNewMexicoafterthedeductionbecameeffective,itwouldbereasonabletobelievethedeductionhashadapositiveeffect.
Recommendations: None.
ReliabilityFactor: 2‐ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $220.0 $240.0 $290.0 $320.0 $350.0 $350.0
$‐
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$400.0
Expenditures(thousands)
HostingWorldWideWebSites Deduction
2016NewMexicoTaxExpenditureReport Page97
HYBRIDVEHICLEEXEMPTIONFROMMVX
Category: CitizenBenefits
BriefDescription: Gasoline‐electrichybridvehicleswitharangeofatleast27.5milespergallon,ascertifiedbytheU.S.EnvironmentalProtectionAgencyareeligibleforaone‐timeexemptionfromtheMVXatthetimeofissuanceoftheoriginaltitle.
TheexemptionwaseffectivefromJuly1,2004toJune30,2009.
StatutoryBasis: 7‐14‐6(G)NMSA1978
IntendedPurpose: Presumablytoincentivizethepurchaseofgasoline‐electrichybridvehiclesthatreducecarbonemissions.
History: Thesectionasoriginallyenactedin1988andamendedin1990,1994,2004,and2007.
Thissubsectionwasenactedbytheamendmentin2004.
Recommendations: RemovelanguageofSubsectionGfromSection7‐14‐6,asameasureofstatuteclarity.
ReliabilityFactor: 1‐ThisexemptionexpiredonJune30,2009.Sincethen,nohybridvehiclequalifiesfortheexemption.
FiscalImpact: None.
2016NewMexicoTaxExpenditureReport Page98
INVESTMENTCREDITAGAINSTGRT,COMPENSATINGTAX,ORWITHHOLDINGTAX
Category: EconomicDevelopment
BriefDescription: TheinvestmentcreditisforequipmentownedandintroducedintoNewMexicoforusebyataxpayerinaneworexpandedmanufacturingoperation.
Tobeeligibleforthecredit,untilJune30,2020,thetaxpayermustemployonefull‐timeequivalent(“FTE”)forevery$500,000ofqualifiedequipmentclaimed(upto$30million)andoneFTEforevery$1millionofqualifiedequipmentclaimed(over$30million).AfterJune30,2020,thetaxpayermustemployoneFTEforevery$100,000ofqualifiedequipmentclaimed.
Thecreditmaybeappliedagainstamaximumof85%ofataxpayer’sgrossreceipts,compensating,andwithholdingtaxliability,butmaynotbetakenagainstanylocaloptionGRTimposedbyacountyormunicipality.
Thecreditisrefundableonlyupto$250,000ifthetaxpayer’savailablecreditislessthan$500,000andthesumofthetaxpayer’sgrossreceipts,compensating,andwithholdingtaxdueforthepreviouscalendaryearwaslessthan35%ofthetaxpayer’savailablecreditbutmorethan$10,000.
Thereisnolimitonhowlongthecreditcanbecarriedforward.
StatutoryBasis: 7‐9A‐1etseq.NMSA1978
IntendedPurpose: ToprovideafavorabletaxclimateformanufacturingbusinessesandtopromoteincreasedemploymentinNewMexico.
History: Originallyenactedin1979andamendedin1983,1986,1990,1991,2001,2002,2003,and2009.
Evaluation: EDDreportsthatthankstoincentiveslikethis,thestatehasbeensuccessfulatattractingmanufacturingbusinessesfromkeyindustriessuchasoilandgasproducers,breweriesandwineries.
Recommendations: Establishproceduresforwhenthecreditshouldbeclaimed.Thecreditshouldbeclaimedinconsecutivemonthsoncethecompanystartsclaimingthecredit.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
2016NewMexicoTaxExpenditureReport Page99
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $1,889.2 $1,468.4 $10,147.9 $11,966.1 $3,647.1 $3,147.5
Claims 91 102 203 168 254 361
‐
50
100
150
200
250
300
350
400
$‐
$2,000.0
$4,000.0
$6,000.0
$8,000.0
$10,000.0
$12,000.0
$14,000.0
CombinedTaxes(thousands)
InvestmentTaxCredit
2016NewMexicoTaxExpenditureReport Page100
INVESTMENTMANAGEMENTORADVISORYSERVICESGRTDEDUCTION
Category: EconomicDevelopment
BriefDescription: Receiptsfromfeesreceivedforperformingmanagementorinvestmentadvisoryservicesforamutualfund,hedgefund,orrealestateinvestmenttrust,aredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐108NMSA1978
IntendedPurpose: PresumablytoincentivizefundmanagerstomovetoNewMexico,therebyincreasingincometaxrevenuesanddisposableincomethatwillcirculatethroughtheState’seconomy.
History: Originallyenactedin2007.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 4‐TRDdoesnothaveanydirectdatatoestimatethisdeduction.Becausetheservicesaredeductibleonlywhenperformedforspecifictypesofentities,industrysectordatacannotbeused.Thisestimateshouldbeunderstoodtorepresenttheestimatedgeneralmagnitudeofthededuction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $130.0 $135.0 $150.0 $155.0 $140.0 $140.0
$‐
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
Expenditures(thousands)
InvestmentManagementorAdvisoryServicesDeduction
2016NewMexicoTaxExpenditureReport Page101
JETFUELFIFTY‐FIVEPERCENTGRTANDCOMPENSATINGTAXDEDUCTION
Category: EconomicDevelopment
BriefDescription: FromJuly1,2003throughJune30,2017,55%ofthereceiptsfromthesalefuelspeciallypreparedandsoldforuseinturboproporjet‐typeengines,asdeterminedbyTRD,aredeductiblefromgrossreceipts.
FromJuly1,2003throughJune30,2017,55%ofthevalueofthefuelspeciallypreparedandsoldforuseinturboproporjet‐typeenginesasdeterminedbyTRD,maybedeductedincomputingcompensatingtax.
AfterJune30,2017,theamountofthedeductionsisreducedto40%ofthereceiptsfromthesaleorvalueofthefuel.
StatutoryBasis: 7‐9‐83and7‐9‐84NMSA1978
IntendedPurpose: PresumablytoincentivizeroutingofairtrafficthroughNewMexicobyreducingtheeffectivecostofrefuelinginNewMexico.
History: Originallyenactedin1993andamendedin2003,2006,and2011.
The2011amendmentextendedthe55%deductionuntil2017.
Evaluation: Forthelastseveralyears,totaldeparturesfromtheAlbuquerqueSunporthavebeendecreasing,about9%peryear.TherepealoftheWrightamendmentresultedinalargerdecreaseofabout12%forFY2015.However,theSunportisnottheonlyuserofjetfueland,asindicatedbelow,EIAshowsgenerallyincreasingjetfuelusageinthestate.ThereforeitisunclearifthisdeductionisexertinganyinfluenceonpurchasesofjetfuelinNewMexico.
Recommendations: None.
ReliabilityFactor: 3‐EIA’spublishedstatewideexpendituresonjetfuelwereusedforthisestimate.80%isassumedtobesubjecttoGRTatthestatewideaveragetaxrate;theremainderisassumedtofallundercompensatingtax.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $5,581.0 $4,500.0 $5,200.0 $6,000.0 $6,800.0 $6,800.0
$‐
$2,000.0
$4,000.0
$6,000.0
$8,000.0
CombinedTaxes
(thousands)
JetFuelDeduction
2016NewMexicoTaxExpenditureReport Page102
JOBMENTORSHIPCREDITAGAINSTPITANDCIT
Category: CitizenBenefits
BriefDescription: Businesseshiringqualifiedstudentsinaschool‐sanctioned,career‐preparationeducationprogrammayclaimacreditagainstPITandCIT.QualifyingbusinessesmustemploystudentsattendinganaccreditedNewMexicosecondaryschoolfull‐time.
Creditsarefor50%ofthegrosswagespaid,subjecttolimitations.Innoeventshallataxpayerclaimacreditinexcessoftwelvethousanddollars($12,000)inanytaxableyear.
StatutoryBasis: 7‐2‐18.11and7‐2A‐17.1NMSA1978
IntendedPurpose: ToencourageNewMexicobusinessestohireyouthparticipatingincareerpreparationeducationprograms.
History: Originallyenactedin2003.
Evaluation: Withverylittleactivityinthiscredit,thereiscausetobeconcernedaboutwhetherthecreditisservingitsintendedpurpose.
Recommendations: Whilethepurposeofthecreditispositiveintheory,itdoesnotappeartobeworkingasanincentivetobusinessesintheirhiringofqualifiedstudents.Itisworthmakingaconcertedoutreachefforttoensurethatbusinessesareawareofthiscredit.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:Someofthedatahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.FY2011hasbeenredacted.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $9.4 $15.1 $17.8 $13.1
Claims 3 5 6 6
0
1
2
3
4
5
6
7
$‐$2.0$4.0$6.0$8.0$10.0$12.0$14.0$16.0$18.0$20.0
CombinedTaxes(thousands)
JobMentorshipProgramsCreditDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page103
LABORATORYPARTNERSHIPWITHSMALLBUSINESSCREDITAGAINSTGRT
Category: EconomicDevelopment
BriefDescription: AnationallaboratorythatofferscertaintypesofeligibleassistancetoindividualsmallbusinessesinNewMexico,andincursexpensesfordoingso,maytakeacreditagainstthestateportionofGRTofupto$10,000perbusiness($20,000perbusinessinaruralarea).Thetaxcreditstakenbyanindividualnationallaboratoryshallnotexceed$2,400,000inagivencalendaryear.
StatutoryBasis: 7‐9E‐1etseq.NMSA1978
IntendedPurpose: TobringthetechnologyandexpertiseofthenationallaboratoriestosmallbusinessesinNewMexicotopromoteeconomicdevelopmentinthestate,withanemphasisonruralareas.
History: Originallyenactedin2000andamendedin2007.
Evaluation: SandiaandLosAlamosNationalLaboratories,throughNewMexicoSmallBusinessAssistance(“NMSBA”),fileanannualreportwiththeappropriatelegislativecommittee,documentingvariousprogrammetrics.NMSBAreportsthatsinceinception,theprogramhasassisted2,495smallbusinesseswith4,863jobscreatedandretained.ThefullreportpublishedinAprilof2016canbeobtainedthroughnmsbaprogram.org.Becausethecreditmaximumsarebasedonacalendaryear,itwouldseemthecapwasexceededinFY2014asshownonthechartbelow.Thisisnotthecaseastheamountsarereportedonafiscalyearbasis.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:Wearenotrequiredtoredactthisinformationeventhoughitrelatestofewerthanthreetaxpayersbecausethedataispublishedindependentlybybothtaxpayers.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $2,823.5 $4,383.9 $4,544.2 $5,065.4 $4,618.2 $4,721.7
Claims 7 5 9 4 6 5
0
2
4
6
8
10
$‐$1,000.0$2,000.0$3,000.0$4,000.0$5,000.0$6,000.0
GRT(thousands)
LaboratoryPartnershipwithSmallBusinessCredit
2016NewMexicoTaxExpenditureReport Page104
LOAN‐RELATEDCOSTSGRTDEDUCTION
Category: CitizenBenefits
BriefDescription: Receiptsfromchargesmadeinconnectionwiththeorigination,making,orassumptionofaloanorfromchargesmadeforhandlingloanpaymentsaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐61.1NMSA1978
IntendedPurpose: Presumablytoreducethecostsofborrowing.
History: Originallyenactedin1981.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: TRDdoesnothaveanydirectdatatoestimatethisdeduction.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page105
LOCOMOTIVEENGINEFUELGRTANDCOMPENSATINGTAXDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfromthesaleoffueltoacommoncarriertobeloadedorusedinalocomotiveenginearedeductiblefromgrossreceipts.
Thevalueoffueltobeloadedorusedbyacommoncarrierinalocomotiveengineinalocomotiveengineisdeductiblewhencomputingthecompensatingtaxdue.
StatutoryBasis: 7‐9‐110.1and7‐9‐110.2NMSA1978
IntendedPurpose: Toencouragetheconstruction,renovation,maintenanceandoperationofrailroadlocomotiverefuelingfacilitiesandotherrailroadcapitalinvestmentsinNewMexico.
History: Originallyenactedin2011;becameeffectiveJuly1,2013uponcertificationbyEDDthatconstructionhadcommenced.
Evaluation: ConstructionoftheUnionPacific(“UP”)intermodalrampandrefuelingfacilityinSantaTeresawascompletedinDecember2014andhasbeenfullyoperationalsinceAprilofthesameyear.AccordingtoUP’sannualreport,thecompanyhasinvested$350millioninthe2,200‐acrefacilitybetween2011and2014.Thecompanyreportstheyhavecreatedabout1,375constructionjobsoverthe3.5yearsconstructionperiod.AsofJune30,2016,UPreportedcreating434newpermanentsjobs(303UPemployeesand131contractors).BurlingtonNortherSantaFe(“BNSF”)reportsanincreaseof$8millioninoperatingrevenuein2015over2013andinearly2016thecompanyannounceda$100millioncapitalexpenditureplanthatwillinvolvereplacingandupgradingtherailtiesandballastsofthetracksusedinthestate.BNSFreportstheyhavecreated993permanentjobssincethebeginningofoperations.AccordingtotheBorderIndustrialAssociation,SantaTeresaisexperiencingrobusteconomicgrowththankstotherippleeffectassociatedwithincreaseineconomicactivity.
Recommendations: None.
ReliabilityFactor: 2‐TheamountofthisdeductionisseparatelyreporteddirectlybytaxpayerstoEDD.Whiletherewassomeestimationinthetaxpayer’sreports,noestimationisrequiredbyTRD.
2016NewMexicoTaxExpenditureReport Page106
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CompTax $‐ $‐ $‐ $13,240.0 $19,309.0 $11,400.0
GRT $‐ $‐ $‐ $1,925.0 $3,831.0 $4,600.0
$0.0
$5,000.0
$10,000.0
$15,000.0
$20,000.0
$25,000.0
Expenditures(thousands)
LocomotiveEngineFuel Deduction
2016NewMexicoTaxExpenditureReport Page107
LOTTERYRETAILERRECEIPTSGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: ReceiptsofalotterygameretailerfromsellingNewMexicolotteryticketsaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐87NMSA1978
IntendedPurpose: Presumablytoreducethecostoflotteryticketsinanefforttoincreaselotteryticketsales,aportionofwhichgoestotheLotteryScholarshipProgram.
History: Originallyenactedin1995.
Evaluation: GiventhefundingdifficultiesexperiencedbytheLotteryScholarshipProgram,itcanbeassertedthatthetaxdeductionisnotmeetingitspresumedgoalofincentivizingthepurchaseoflotteryticketsinsufficientamounttofundtheLotteryScholarshipProgram.
Recommendations: None.
ReliabilityFactor: 2–ThecostofthisdeductionwasestimatedusinggrossrevenuespublishedbytheNewMexicoLottery,multipliedbythestatewideaverageGRTrateforeachyear.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $9,300 $9,200 $9,700 $9,350 $9,450 $9,600
$8,900
$9,000
$9,100
$9,200
$9,300
$9,400
$9,500
$9,600
$9,700
$9,800
Expenditures(thousands)
LotteryRetailerReceiptsDeduction
2016NewMexicoTaxExpenditureReport Page108
LOW‐ANDMIDDLE‐INCOMETAXPAYERSEXEMPTIONFROMPIT
Category: CitizenBenefits
BriefDescription: Anindividualmayclaimanexemptionequaltothenumberofexemptionsclaimedontheirfederalreturnmultipliedby$2,500.Theamountoftheexemptionisdeductedfromtheirnetincome.
StatutoryBasis: 7‐2‐5.8NMSA1978
IntendedPurpose: Presumablytoprovideassistancetothatsegmentofthepopulationwhoseincomeisrelativelylowbyreducingtheirtaxliability.
History: Originallyenactedin2005,andamendedin2007.
The2007amendmentincreasedtheadjustedgrossincomethresholdamountsfortaxpayerseligiblefortheexemption.
Evaluation: Morethan$20millionhasremainedinthepocketsoftaxpayersthroughoutthestate.Giventhatthesavingsrateamongthispopulationisrelativelylow,thereisahighlikelihoodthatthismoneyiscirculatingthroughouttheNewMexicoeconomy.
Recommendations: None.
ReliabilityFactor: 1–Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $10,388.8 $9,956.7 $9,509.0 $9,005.8 $8,790.3
Claims 636,684 627,452 613,557 599,469 586,192
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
$‐
$2,000.0
$4,000.0
$6,000.0
$8,000.0
$10,000.0
$12,000.0
PIT(thousands)
Low‐ andMiddle‐IncomePersonsExemption
2016NewMexicoTaxExpenditureReport Page109
LOW‐INCOMECOMPREHENSIVETAXREBATEANDPROPERTYTAXREBATE
AGAINSTPIT
Category: CitizenBenefits
BriefDescription: Thisexpenditureconsistsoftwoseparatestatutoryprovisions.Thelow‐incomecomprehensivetaxrebate(“LICTR”)inintendedtopartiallyoffsetthestateandlocalsalestaxespaidbylowincometaxpayers.Itmaybeclaimedbytaxpayerswithamodifiedgrossincomeoflessthan$22,000.Therebateamountisdependentuponmodifiedgrossincomeandthenumberofexemptionsclaimed(itvariesbetween$10and$450).
Thelow‐incomepropertytaxrebateisintendedtopartiallyoffsettheamountofpropertytaxespaidbylowincomeresidents.Itmaybeclaimedbyindividualswith:
(1) aprincipalplaceofresidenceinacountythathasenactedanordinanceauthorizingtherebate(onlyLosAlamosandSantaFeCountieshaveenactedtherequiredordinances),and
(2) modifiedgrossincomeoflessthan$24,000.
Thisrebateiscalculatedasapercentageofthetaxpayer'spropertytaxliability;thepercentagedependsuponthetaxpayer'smodifiedgrossincome.Therebateamountcannotexceed$350or$175ifmarriedfilingseparately.
TheStateisreimbursedannuallybytheauthorizingcountyforanylow‐incomepropertytaxrebatesgrantedunderthissection10.
StatutoryBasis: 7‐2‐14(A)and7‐2‐14.3NMSA1978
IntendedPurpose: Presumablytoeasetheincometaxburdenforlow‐incometaxpayersandtooffsetpropertytaxesforthosewhoseincomeisinsufficienttocovertheirpropertytaxessothattheyarenotforcedoutoftheirhomes.
History: LICTRwasoriginallyenactedin1972andamendedin1973,1974,1975,1977,1978,1981,1986,1987,1990,1992,1994,and1998.Thelow‐incomepropertytaxrebatewasoriginallyenactedin1994,andamendedin1997,and2003.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1‐Theserebatesareseparatelyreported.Noestimationisrequired.
10Section7‐2‐14.3NMSA1978
2016NewMexicoTaxExpenditureReport Page110
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditure $22,662.2 $22,481.7 $21,490.2 $21,164.6 $20,187.6
Claims 267,676 264,807 256,809 256,306 247,938
235,000
240,000
245,000
250,000
255,000
260,000
265,000
270,000
$18,500.0$19,000.0$19,500.0$20,000.0$20,500.0$21,000.0
$21,500.0$22,000.0$22,500.0$23,000.0
LICTR(thousands)
Low‐IncomeComprehensiveTaxRebates
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditure $393.8 $534.8 $567.4 $612.3 $557.9
Claims 1,633 1,789 1,877 1,988 1,816
‐
500
1,000
1,500
2,000
2,500
$‐
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
Property(thousands)
Low‐IncomePropertyTaxRebates
2016NewMexicoTaxExpenditureReport Page111
MEDICALANDHEALTHCARESERVICESGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: ReceiptsfrompaymentsbytheU.S.governmentoranyagencythereofforMedicareservicesreceivedbycertainmedicalpractitionersandmedical‐relatedfacilities,receiptsofmedicaldoctorsandosteopathicphysiciansfrompaymentsbyathird‐partyadministratorofthefederalTRICAREprogram,andreceiptsofamedicaldoctororosteopathicphysicianfrompaymentsbyoronbehalfoftheIndianHealthServiceoftheU.S.DepartmentofHealthandHSDfortheprovisionofmedicalandotherhealthservicestocoveredbeneficiariesaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐77.1NMSA1978
IntendedPurpose: Presumablytoretainhealthcarepractitionersinthestate.AccordingtoDOHandtheIndianAffairsDepartment,thedeductionwouldmakeitmoreprofitableformedicalproviderstoserveNativeAmericanpopulationsinNewMexicoasthosecommunitiesfacedifficultiesinrecruitinghealthcarepractitionersduetobelow‐averagesalaries.
History: Originallyenactedin1998,amendedin2000,2003,2007,2014,and2016.
Evaluation: Becausemedicalservicesofthistypearetypicallyreimbursedbasedonpre‐establishedrateschedules,healthcareproviderswouldlikelynotbeabletorecoupthegrossreceiptstax,eveniftheirservicesweresubjecttoGRT.
Likewise,theout‐of‐pocketportionofthepaymentisalsopredetermined,leavingtheproviderunabletopasstheburdenofthetaxontotheconsumer.Unlikeinpreviousversionsofthisreport,thisversionshowsthedepartmentwasabletoobtaintheamountofdeductionsasreportedbytaxpayersforfiscalyears2015and2016.NodataareavailablepriortoFY2015usingthismethodology.
Recommendations: None.
ReliabilityFactor: 1‐Thisdeductionisseparatelyreported.Noestimationisrequired,makingthisdeductionmorereliablethaninpreviousyearswhenthedepartmentuseddatafromtheCentersforMedicare&MedicaidServicesincombinationwiththestatewideaveragetaxratetocalculatethecostofthededuction.
2016NewMexicoTaxExpenditureReport Page112
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $23,578.2 $38,496.1
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Expenditures(thousands)
MedicalandHealthCareServicesDeduction
2016NewMexicoTaxExpenditureReport Page113
MEDICALCARESAVINGSACCOUNTEXEMPTIONFROMPIT
Category: CitizenBenefits
BriefDescription: TheinterestearnedonmedicalcaresavingsaccountsandmoneyreimbursedtoanemployeeforeligiblemedicalexpensesfromthoseaccountsormoneyadvancedtotheemployeebytheemployerforeligiblemedicalexpensesareexemptfromPIT.
StatutoryBasis: 7‐2‐5.6NMSA1978
IntendedPurpose: Presumablytoincentivizetheinvestmentinmedicalcaresavingsaccounts.
History: Originallyenactedin1995.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1–Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $41.5 $34.8 $53.8 $61.4 $54.0
Claims 833 825 986 1,133 1,082
‐
200
400
600
800
1,000
1,200
$‐
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
PIT(thousands)
MedicalCareSavingsAccountExemption
2016NewMexicoTaxExpenditureReport Page114
MICROBREWERBEERANDSMALLWINERIESRATEDIFFERENTIALFROMLIQUOREXCISETAX
Category: HighlySpecializedIndustry
BriefDescription: Beginningin2013,beermanufacturedorproducedbyamicrobrewerandsoldinthisstateistaxedatarateof$0.08pergallononthefirst10,000gallonssoldand$0.28pergallononallgallonssoldmorethan10,000gallonsbutfewerthan15,000gallons.Forallgallonssold15,000ormore,thetaxrateis$0.41pergallon.
Until2013,beermanufacturedorproducedbyamicrobrewerandsoldinthisstatewastaxedatarateof$0.08pergallon;beerproducedbylargerbrewerswastaxedat$0.41pergallon.
Beginningin2013,ataxof$0.10perliteronthefirst80,000literssold,$0.20perliteronallliterssoldover80,000litersbutnotover950,000liters,and$0.30perliteroneachlitersoldover950,000litersbutnot1.5millionliters,isimposedonwinemanufacturedorproducedbyasmallwinegrowerandsoldinNewMexico;largerwinegrowersaresubjecttoanexcisetaxof$0.45perlitertax.
Priorto2013,ataxof$0.10perliteronthefirst80,000literssoldand$0.20perliteronallliterssoldover80,000litersbutlessthan950,000liters,wasimposedonwinemanufacturedorproducedbyasmallwinegrowerandsoldinNewMexicowhilelargerwinegrowersweresubjecttoanexcisetaxof$0.45perlitertax.
StatutoryBasis: 7‐17‐5(A)(5)and7‐17‐5(A)(6)NMSA1978
IntendedPurpose: PresumablytostimulatethemicrobreweryandsmallwineryindustryinNewMexicobyreducingtheirtaxexpense.
History: Originallyenactedin1993andamendedin1994,1995,1996,1997,2000,2000(2ndSpecialSession),2008,and2013.
The2013amendmentdecreasedthetaxrateongallonsofbeermanufacturedorproducedbyamicrobrewerandsoldbetween10,000and15,000barrels,andreducedthetaxrateonliterswinesoldbetween950,000and1.5million.
Evaluation: Preliminaryindicators,withrespecttomicrobreweriesandsmallwineries,suggeststhatthiscredithasbeeneffective.AccordingtoinformationpresentedtotheLegislaturebytheNewMexicoMicrobrewersGuild,thenumberofmicrobreweriesinNewMexicohasincreasedfrom23(with33locations)in2013toananticipated55(with70locations)by2016.Similarly,theGuildreportsthatbreweryexpansionsresultedin$14millionincapitalinvestmentinNewMexicoin2015.
2016NewMexicoTaxExpenditureReport Page115
Recommendations: None.
ReliabilityFactor: 1‐Qualifyingbeerandwineproductionisseparatelyreported.Noestimationisrequired.TheFY15estimateinthisreportishigherthanwhatwasreportedlastyearduetomicrobrewerdatanotavailableatthattime.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
SmallWineries $433.3 $433.2 $494.7 $494.7 $492.7 $482.4
Microbrewers $307.9 $313.6 $374.3 $419.9 $578.2 $806.7
$‐
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
Expenditures(thousands)
MicrobrewersandSmallWineries
2016NewMexicoTaxExpenditureReport Page116
MILITARYCONSTRUCTIONSERVICESGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: ReceiptsfrommilitaryconstructionservicesprovidedatNewMexicomilitaryinstallationslocatedinCurryCountyorOteroCountytoimplementspecialoperationsmissiontransitionprojectspursuanttocontractsenteredintowiththeUnitedStatesDepartmentofDefensearedeductiblefromgrossreceipts.
ThedeductionprovidedinthissectionappliestoreportingperiodsbeginningJuly1,2007andendingDecember31,2010.
StatutoryBasis: 7‐9‐106NMSA1978
IntendedPurpose: PresumablytoincentivizetheU.S.DepartmentofDefensetoimplement‐specialoperationsmissiontransitionprojectsatU.S.AirForcebaseslocatedinNewMexico.
History: Originallyenactedin2007throughreportperiodsendingDecember31,2010.
Evaluation: NotaxpayermaytakethisdeductionsinceitisnotavailableforreportingperiodsafterDecember31,2010.
Recommendations: RemovestatutorylanguagefromNMSAtopromotestatuteclarity.ThestatuteoflimitationsfortaxpayerstoamendreturnsforperiodsuptoandincludingDecember2010hasexpired.
ReliabilityFactor: 1‐SinceFY2011,noestimationisneededsincethedeductionisnolongeravailable.
FiscalImpact: None.
2016NewMexicoTaxExpenditureReport Page117
MILITARYTRANSFORMATIONALACQUISITIONPROGRAMSGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: ReceiptsfrommilitarytransformationalacquisitionprogramsperformingresearchanddevelopmentandtestandevaluationservicesatNewMexicomajorrangeandtestfacilitybasesaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐94NMSA1978
IntendedPurpose: PresumablytoincentivizethelocationofmilitarytransformationalacquisitionprogramsatU.S.AirForcebasesinNewMexico.
History: Originallyenactedin2005withanexpirationdateofJune30,2008.
Amendedin2006toextendtheexpirationdatetoJune30,2016.
Amendedin2015toextendtheexpirationdatetoJune30,2025.
Evaluation: Notaxpayershaveclaimedthisdeduction,andtheDepartmentischallengedtoestimateitsfutureuse.Obtaininginformationaboutfederalacquisitionsisextremelyarduous;NewMexicoranges,testfacilitiesandbasesaresupportedbycontractingofficesacrosstheUnitedStates.Itisverypossiblethatnon‐residenttaxpayersareunawareofthisdeduction,andNewMexicoresidenttaxpayershavenotparticipatedinqualifyingprocurementprograms.
Recommendations: None.
ReliabilityFactor: 1–Thisdeductionisseparatelyreported.
FiscalImpact: Notaxpayershaveclaimedthisdeduction.
2016NewMexicoTaxExpenditureReport Page118
NATURALGASEXEMPTIONFROMOILANDGASSEVERANCETAX
Category: HighlySpecializedIndustry
BriefDescription: ExemptsnaturalgasthatcomesfromaproductionrestorationprojectforthefirsttenyearsaftertherestorationofproductionwhentheannualaveragepriceofWTIcrudeoilwaslessthan$24perbarrel.Notethestatutespecifiesanon‐standardcalendarofJunethroughMaywhencalculatingtheaverageannualprice.
StatutoryBasis: 7‐29‐4(B)(1)NMSA1978
IntendedPurpose: Presumablytoincentivizethedevelopmentofnaturalgasfromaproductionrestorationprojectwhenpricesarelow.
History: Originallyenactedin1980andamendedin1987,1989,1992,1995,1999,and2005.
Evaluation: NowellshavequalifiedforthisincentiveinthepastsixyearsduetothepriceofWTIcrudeoilexceeding$24/barrel(exemptionthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilhasbeenlowenoughtosignificantlyaffectstateoperations.
Recommendations: Considerraisingthepricethresholdtofurtherincentivizeproduction.
ReliabilityFactor: 1–Therehavebeennoexpendituresresultingfromthisexemption.
FiscalImpact: None.
$‐
$20
$40
$60
$80
$100
$120
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
AverageAnnualPriceperBarrelofOil
WTI
ExemptionThreshold
2016NewMexicoTaxExpenditureReport Page119
NATURALGASRATEDIFFERENTIALFROMOILANDGASEMERGENCYSCHOOLTAX
Category: HighlySpecializedIndustry
BriefDescription: Theemergencyschooltaxrateonnaturalgasis4%,unlesstheproductistaxedpursuanttoadifferentrateasprovidedinstatute.
Whentheaverageannualtaxablevalueofnaturalgaswasequaltoorlessthan$1.15perthousandcubicfeetinthepreviouscalendaryear,thetaxrateonnaturalgasfromastripperwellpropertyis2%.
Whentheaverageannualtaxablevalueofnaturalgaswasgreaterthan$1.15perthousandcubicfeetbutnotmorethan$1.35perthousandcubicfeetinthepreviouscalendaryear,thetaxrateonnaturalgasfromastripperwellpropertyis3%.
StatutoryBasis: 7‐31‐4(A)(6)and7‐31‐4(A)(7)NMSA1978
IntendedPurpose: Presumablytoincentivizehigh‐cost,low‐yieldproductionwhenpricesarelow.
History: Thesectionwasoriginallyenactedin1959andamendedin1963,1983,1993,1999,and2005.
Evaluation: DatareportedinONGARDwereusedtodeterminetheaveragetaxablevalueofnaturalgas.Nowellsqualifiedforthisratedifferentialforthetimeperiodscoveredbythisreportduetothatvalueexceeding$1.35/mcf(ratedifferentialthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilandnaturalgashasbeenlowenoughtosignificantlyaffectstateoperations.
Recommendations: Considerraisingthepricethresholdtofurtherincentivizeproduction.
ReliabilityFactor: 1‐Therehavebeennoexpendituresresultingfromthisratedifferential.
FiscalImpact: None.
$‐
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
AverageTaxableValueofNaturalGas
NaturalGas
ExemptionThreshold
2016NewMexicoTaxExpenditureReport Page120
NATURALGASRATEDIFFERENTIALFROMOILANDGASSEVERANCETAX
Category: HighlySpecializedIndustry
BriefDescription: Theoilandgasseverancetaxrateonnaturalgasis3.75%unlesstheproductistaxedpursuanttoadifferentrateasprovidedinstatute.
WhentheaverageannualtaxablevalueofWTIcrudeoilwaslessthan$24perbarrelinthepreviousyear,thetaxrateonnaturalgasfromawellworkoverprojectis2.45%.Notethestatutespecifiesanon‐standardcalendarofJunethruMaywhencalculatingthisaverageannualprice.
Whentheaverageannualtaxablevalueofnaturalgaswasequaltoorlessthan$1.15perthousandcubicfeetinthepreviouscalendaryear,thetaxrateonnaturalgasfromastripperwellpropertyis1.875%.
Whentheaverageannualtaxablevalueofnaturalgaswasgreaterthan$1.15perthousandcubicfeetbutnotmorethan$1.35perthousandcubicfeetinthepreviouscalendaryear,thetaxrateonnaturalgasfromastripperwellpropertyis2.1875%.
StatutoryBasis: 7‐29‐4(A)(4),7‐29‐4(A)(6),and7‐29‐4(A)(7)NMSA1978
IntendedPurpose: Presumablytoincentivizehigh‐cost,low‐yieldproductionwhenpricesarelow.
History: Thesectionwasoriginallyenactedin1980andamendedin1987,1989,1992,1995,1999,and2005.
Evaluation: NowellshavequalifiedforthisincentiveforthetimeperiodscoveredbythisreportduetothepriceofWTIcrudeoilexceeding$24/barrel.Alsothetaxablevalueofnaturalgas(asreportedbytheONGARDsystem)hasexceeded$1.35/mcf(ratedifferentialthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilandnaturalgashasbeenlowenoughtosignificantlyaffectstateoperations.
Recommendations: Considerraisingthepricethresholdstofurtherincentivizeproduction.
ReliabilityFactor: 1‐Therewerenoexpendituresresultingfromthisratedifferential.
2016NewMexicoTaxExpenditureReport Page121
FiscalImpact:
$‐
$20
$40
$60
$80
$100
$120
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
AverageAnnualPriceperBarrelofOil
WTI
ExemptionThreshold
$‐
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
AverageTaxableValueofNaturalGas
NaturalGas
ExemptionThreshold
2016NewMexicoTaxExpenditureReport Page122
NEWSPAPERSALESGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfromsellingnewspapers,exceptfromsellingadvertisingspace,aredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐64NMSA1978
IntendedPurpose: Presumablytoincentivizegrowthandoperationsofnewspapercompaniesinthestateasthefinalsaleofnewspaperstotheconsumeristaxed.
History: Originallyenactedin1969.
Evaluation: AccordingtotheNewspaperAssociationofAmerica,nationwidedailynewspapercirculationin2014(themostrecentyearavailable)wasdownnearly10%from2011.Withtheproliferationofdigitalmobiledevices,thisexpendituremightnotbeenoughtocounterthemarketshiftfromprinttoelectronicmedia.
Recommendations: None.
ReliabilityFactor: 3‐TheNewspaperAssociationofAmericapublishesnationalannualnewspaperpaidcirculationdata.TheNewMexicoestimateisbasedonthenationaldataandNewMexico’spopulationinproportiontothatoftheUnitedStates.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $12,000.0 $11,800.0 $11,600.0 $11,400.0 $11,200.0 $10,000.0
$‐
$2,000.0
$4,000.0
$6,000.0
$8,000.0
$10,000.0
$12,000.0
$14,000.0
Expenditures(thousands)
NewspaperSalesDeduction
2016NewMexicoTaxExpenditureReport Page123
NEWMEXICONATIONALGUARDMEMBERPREMIUMSPAIDFORGROUPLIFEINSURANCEEXEMPTIONFROMPIT
Category: CitizenBenefits
BriefDescription: Paymentforaservicemembers'grouplifeinsurancepremiumfromtheNationalGuardServiceMember’sLifeInsuranceReimbursementFundareexemptfromPIT.
StatutoryBasis: 7‐2‐5.10NMSA1978
IntendedPurpose: PresumablytoequalizethepremiumsofNationalGuardmemberswithprivatepremiumplans.
History: Originallyenactedin2006.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1‐Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $8.5 $7.3 $6.0 $6.3 $11.6
Claims 1,086 1,048 1,182 1,172 1,103
0
200
400
600
800
1,000
1,200
1,400
$‐
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
PIT(thousands
NMNationalGuardMemberPremiumsExemption
2016NewMexicoTaxExpenditureReport Page124
NONATHLETICSPECIALEVENTATNEWMEXICOSTATEUNIVERSITYGRTDEDUCTION
Category: CitizenBenefits
BriefDescription: ReceiptsfromadmissionstononathleticspecialeventsheldatthePanAmericanCenteratNewMexicoStateUniversity(“NMSU”)aredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐104NMSA1978
IntendedPurpose: Presumablytobringnon‐athleticeventstoNMSUratherthanhavingthemgotoElPaso,TX.
History: Originallyenactedin2007withanexpirationofJune30,2012.
Amendedin2012toextendtheexpirationtoJune30,2017.
Evaluation: GrossticketsaledataprovideddirectlybyNMSUreflectsacyclicaltrend.AccordingtoNMSU,thevastmajorityofnon‐athleticeventsheldatthePanAmericanCenterwouldotherwisebeheldinvariousvenueslocatedinElPaso,TXifitwasnotfortheincentivegeneratedbythisdeduction.Theamountsshownherediffersubstantiallyfromtheamountsshowninthe2015bookbecauseofanerror.The2015editionshowedtotaldeductionamountsinsteadofestimatedtax.
Recommendations: AsthisdeductionisscheduledtoexpireonJune30,2017,areviewofwhetheranextensionisappropriateordesirableshouldbeconducted.
ReliabilityFactor: 3–GrossticketsalefiguresprovidedbyNMSU’sAuxiliaryBusinessSupportOfficewereusedtoestimatethecostofthisdeduction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.Thedeductionamountwasreportedinthe2015report.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $128.7 $113.0 $146.3 $111.8 $102.4 $171.4
Events 11 8 9 11 9 11
0
2
4
6
8
10
12
$‐$20.0$40.0$60.0$80.0$100.0$120.0$140.0$160.0$180.0
Expenditures(thousands)
NonathleticSpecialEventsDeduction
2016NewMexicoTaxExpenditureReport Page125
NONPROFITELDERLYCAREFACILITYEXEMPTIONFROMGRT
Category: CitizenBenefits
BriefDescription: ReceiptsofnonprofitentitiesfromtheoperationoffacilitiesdesignedandusedforprovidingaccommodationsforretiredelderlypersonsareexemptfromGRT.
StatutoryBasis: 7‐9‐16NMSA1978
IntendedPurpose: Presumablytoreducethecostofcaringforretiredelderlypersons.
History: Originallyenactedin1969andamendedin1970and1975.
Evaluation: AccordingtothemostrecentannualreportfromHSD(2015)ofthe69nursingfacilities(“NFs”)operatinginthestateasofJune30,2105,65wereprivatelyowned.ThenumberofprivatelyownedNFsdidnotchangebetween2014and2015whichcouldmeantheexemptionisnotsignificantenoughtofulfillitspresumableintendedpurpose.However,itisdifficulttoevaluatetheeffectivenessofthisexpenditurewithouttakingintoaccountthatoperatingexpensesper‐bedforprivately‐ownedNFscontinuetoincreaseyear‐over‐year,asthecostsofMedicaidincreaseaswellduetohigherdemand.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page126
NONPROFITORGANIZATIONSEXEMPTIONFROMGRT
Category: CitizenBenefits
BriefDescription: PurchasesandreceiptsofanorganizationthatwasgrantedataxexemptionunderSection501(c)(3)orSection501(c)(6)oftheU.S.InternalRevenueCodeareexemptfromGRTsolongasthereceiptsarenotderivedfromanunrelatedtradeorbusinessasdefinedinSection513oftheU.S.InternalRevenueCode.501(c)(3)organizationscomprisethemostcommonlyunderstoodtypeofnonprofitentities–healthcareservices,charities,churches,universities,scientificorganizations,animalshelters,andothers.501(c)(6)organizationsconsistofbusinessleaguesandassociations,chambersofcommerce,boardsoftrade,andothersimilarorganizations.Withrespecttobothtypesofentities,benefit(i.e.profits)cannotinuretoanymember,owner,directororofficer.
StatutoryBasis: 7‐9‐29NMSA1978
IntendedPurpose: PresumablytoeliminatetheGRTburdenonorganizationsthatcontributetotheoverallsocialandeconomicwelfareoftheircommunities.
History: TheexemptionfromGRTwasoriginallyenactedin1970andamendedin1983,1988,and1990.
Theexemptionfromcompensatingtaxwasoriginallyenactedin1969andamendedin1970,1983,and1990.
Evaluation: Toincreaseprecisionandclarity,theCompensatingTaxexemptionfornon‐profitsunder7‐9‐15wasde‐coupledfromthisexpenditurebecausethenon‐profitGRTexemptionunder7‐9‐29isanentity‐typeexemptionforallgrossreceiptsanon‐profitearnsfromsellinggoodsorservicesbarringincomecontribution.
Recommendations: None.
ReliabilityFactor: 4‐Therearenodirectdatatoestimatethisexemption.PriortoFY16,TRDtookintoaccountdatafromtheNationalCenterforCharitableStatisticswhichreportedinAugust2015thatofthe7,063registeredpubliccharitiesandprivatefoundations,thestatereceivedabout$4billionintotalrevenuesoverthepreceding24months.TRDassumedthat50%ofthosewouldhavebeenotherwisetaxablegrossreceipts,resultinginanestimateddeductionofabout$2.4billionorlostrevenueofabout$16.4millionovertwoyears.AccordingtoGuideStar.org—aself‐reportingdata‐collectionwebsite—thereareabout2,802nonprofitorganizationsregisteredinNewMexico.Ofthose,theaverageannualgrossincomereportedintaxyear2015obtainedthroughfinancialinformationincludedinForm990isabout$1.1million.Further,researchofpublicrecordsthatTRDperformedduringthe20162ndSpecialSessionyieldedthecostofthisdeductiontothegeneralfundisof
2016NewMexicoTaxExpenditureReport Page127
about$68.4million,basedsolelyonpubliclyreportedgrossrevenuenumbersfromChristusSt.Vincent'sandPresbyterian's2013IRSForms990.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $73,000 $78,000 $78,000 $82,000 $82,000 $90,000
$‐$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
Expenditures(thousands)
NonprofitOrganizationsExemption
2016NewMexicoTaxExpenditureReport Page128
NONPROFITORGANIZATIONSFUNDRAISERSGRTDEDUCTION
Category: CitizenBenefits
BriefDescription: OrganizationsexemptfromfederalincometaxunderSection501(c)oftheInternalRevenueCodemaydeductthereceiptsfromtwofund‐raisingeventseachcalendaryear.Thisdeductiondoesnotapplyto501(c)(3)organizations,astheirreceiptsareexemptunderSection7‐9‐29NMSA1978.Itdoesapplytothemyriadofother501(c)organizationslistedintheInternalRevenueCode,suchaspoliticalorganizationsandcivicleagues(501(c)(4)),agriculturalandhorticulturalorganizations(501(c)(5)),social,fraternal,andrecreationalclubs,andahostofretirementfundsorpensionplans.Itshouldbenotedthatcontributionstotheseorganizationsarenotgrossreceipts.Rather,thisdeductionappliestofundraisingevents,inwhichtheseorganizationsprovideagoodorserviceinordertogeneratefundingfortheirmissions.
StatutoryBasis: 7‐9‐85NMSA1978
IntendedPurpose: PresumablytoallowtheseorganizationstoconductrelativelyisolatedfundraisingeventstosupporttheirmissionswithoutincurringGRTobligations.
History: Originallyenactedin1994.
Evaluation: None.
Recommendations: Clarifythelawbyexcluding501(c)(6)organizationsthatcarryonchamberofcommerce,visitorbureauandconventionbureaufunctionsoftheorganization.Thisdeductionspecificallyexcludes501(c)(3)organizationsbecausetheirreceiptsarealreadyexemptunderSection7‐9‐29NMSA1978.However,itdoesnotexcludethose501(c)(6)organizationsthatconducttheabovementionfunctions,whosereceiptsarealsoexemptunderSection7‐9‐29NMSA1978.
ReliabilityFactor: 4‐DatafromtheNationalCenteronCharitableStatisticsonnonprofitrevenuesandfromtheUrbanInstituteCenteronNonprofitsandPhilanthropywasusedtoestimatethepercentageofrevenuegeneratedfromprivatecontributionstoestimatethesizeofthisdeduction.TRDassumedthat501(c)organizationsearn5%ofthoseamountsthroughfundraisers.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
2016NewMexicoTaxExpenditureReport Page129
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $1,010.0 $1,010.0 $1,065.0 $1,065.0 $1,075.0 $1,090.0
$‐
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
Expenditures(thousands)
FundraisersforNonprofitDeduction
2016NewMexicoTaxExpenditureReport Page130
OFFICIATINGATNEWMEXICOACTIVITIESASSOCIATIONEVENTSEXEMPTIONFROMGRT
Category: CitizenBenefits
BriefDescription: Receiptsfromrefereeing,umpiring,scoring,orotherofficiatingatschooleventssanctionedbytheNewMexicoActivitiesAssociationareexemptfromGRT.
StatutoryBasis: 7‐9‐41.4NMSA1978
IntendedPurpose: Presumablytoreducethecosttopubliceducationinstitutionsthatprovideathleticopportunitiestotheirstudents.
History: Originallyenactedin2009.
Evaluation: Thisexemptionreducestheburdenonthetaxpayer,astheofficialswouldotherwiseberequiredtoregisterandfileasGRTtaxpayersforarelativelysmallamountofreceipts.
Recommendations: None.
ReliabilityFactor: 3‐PayschedulespublishedbytheNewMexicoActivitiesAssociationareusedtoestimatetheimpactofthisexemption.BecauseGRTexemptionsarenotreportedatall,amoreaccurateestimationisproblematic.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $166.0 $169.0 $173.0 $177.0 $186.0 175.0
$155.0
$160.0
$165.0
$170.0
$175.0
$180.0
$185.0
$190.0
Expenditures(thousands)
OfficiatingaNewMexicoActivitiesAssociationEventsExemption
2016NewMexicoTaxExpenditureReport Page131
OILANDOTHERLIQUIDHYDROCARBONSEXEMPTIONFROMOILANDGASSEVERANCETAX
Category: HighlySpecializedIndustry
BriefDescription: ExemptsoilandotherliquidhydrocarbonsthatcomefromaproductionrestorationprojectforthefirsttenyearsaftertherestorationofproductionwhentheannualaveragepriceofWTIcrudeoilwaslessthan$24perbarrel.Notethestatutespecifiesanon‐standardcalendarofJunethroughMaywhencalculatingtheaverageannualprice.
StatutoryBasis: 7‐29‐4(B)(2)NMSA1978
IntendedPurpose: Presumablytoincentivizethedevelopmentofoilandotherliquidhydrocarbonfromaproductionrestorationprojectwhenpricesarelow.
History: Originallyenactedin1980andamendedin1987,1989,and1992,1995,1999,and2005.
Evaluation: Thisexemptionprovidesincentiveforwellrestorationactivity.NowellshavequalifiedforthisincentiveinthepastfewyearsduetothepriceofWTIcrudeoilexceeding$24/barrel(exemptionthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilhasbeenlowenoughtosignificantlyaffectstateoperations.
Recommendations: Considerraisingthepricethresholdtofurtherincentivizeproduction.
ReliabilityFactor: 1‐Therearenoexpendituresresultingfromthisexemption.
FiscalImpact:
$0
$20
$40
$60
$80
$100
$120
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
AverageAnnualPriceperBarrelofOil
WTI
ExemptionThreshold
2016NewMexicoTaxExpenditureReport Page132
OILANDOTHERLIQUIDHYDROCARBONSRATEDIFFERENTIALFROMOILANDGASEMERGENCYSCHOOL
TAX
Category: HighlySpecializedIndustry
BriefDescription: IfoilandotherliquidhydrocarbonsthatareremovedfromastripperwellandtheaverageannualtaxablevalueofoilinthecalendaryearprecedingJuly1ofthefiscalyearinwhichthetaxratewasimposedwasnotgreaterthan$15perbarrel,therateis1.58%andgreaterthan$15perbarrelbutnotgreaterthan$18perbarrel,therateis2.36%.Theseratescompareto3.15%fornon‐stripperwelloilandotherliquidhydrocarbons.
StatutoryBasis: 7‐31‐4(A)(4)and7‐31‐4(A)(5)NMSA1978
IntendedPurpose: Presumablytoincentivizetheremovalofoilandotherliquidhydrocarbonfromastripperwellwhenpricesarelow.
History: Originallyenactedin1959andamendedin1963,1983,1993,1999,and2005.
Evaluation: Thisexemptionprovidesincentiveforwellrestorationactivity.NowellshavequalifiedforthisincentiveinthepastfewyearsduetothepriceofWTIcrudeoilexceeding$18/barrel(ratedifferentialthreshold).Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilhasbeenlowenoughtosignificantlyaffectstateoperations.
Recommendations: Considerraisingthepricethresholdstofurtherincentivizeproduction.
ReliabilityFactor: 1‐Therearenoexpendituresresultingfromthisratedifferentialprovision.
FiscalImpact:
$0
$20
$40
$60
$80
$100
$120
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
AverageAnnualPriceperBarrelofOil
WTI
ExemptionThreshold
2016NewMexicoTaxExpenditureReport Page133
OILANDOTHERLIQUIDHYDROCARBONSRATEDIFFERENTIALFROMOILANDGASSEVERANCETAXRATE
Category: HighlySpecializedIndustry
BriefDescription: Theoilandgasseverancetaxrateonoilandotherliquidhydrocarbonsis3.75%unlesstheproductistaxedpursuanttoadifferentrateasprovidedinstatute.
WhentheaverageannualtaxablevalueofWTIcrudeoilwaslessthan$28perbarrelinthepreviousyear,thetaxrateonoilandotherliquidhydrocarbonsfromaqualifiedenhancedrecoveryprojectis1.875%.
WhentheaverageannualtaxablevalueofWTIcrudeoilwaslessthan$24perbarrelinthepreviousyear,thetaxrateonoilandotherliquidhydrocarbonsfromawellworkoverprojectis2.45%.
Whentheaverageannualtaxablevalueofoilwasequaltoorlessthan$15perbarrelinthepreviouscalendaryear,thetaxrateonoilandotherliquidhydrocarbonsfromastripperwellpropertyis1.875%.
Whentheaverageannualtaxablevalueofoilwasgreaterthan$15perbarrelbutnotmorethan$18perbarrelinthepreviouscalendaryear,thetaxrateonoilandotherliquidhydrocarbonsfromastripperwellpropertyis2.8125%.
StatutoryBasis: 7‐29‐4(A)(3),7‐29‐4(A)(5),7‐29‐4(A)(8),and7‐29‐4(A)(9)NMSA1978
IntendedPurpose: Presumablytoincentivizehighcostproductionwhenpricesarelow.
History: Originallyenactedin1980andamendedin1987,1989,1992,1995,1999,and2005.
Evaluation: NowellshavequalifiedforthisincentiveinthepastfewyearsduetothepriceofWTIcrudeoilexceeding$28perbarrel(ratedifferentialthreshold).AlthoughthedifferentstatutesusetwoslightlydifferentcalendarsfortheaverageannualtaxablevalueofWTIcrudeoil,bothcalculationsgiveapricethatexceedstheexemptionthreshold.Thereforenoproductionhasbeenincentivizedeventhoughthepriceofcrudeoilhasbeenlowenoughtosignificantlyaffectstateoperations.
Recommendations: Considerraisingthepricethresholdstofurtherincentivizeproduction.
ReliabilityFactor: 1‐Therearenoexpendituresresultingfromthisratedifferentialprovision.
FiscalImpact: None.RefertochartforOilandOtherLiquidHydrocarbonsExemptionOilandGasSeveranceTax,andOilandOtherLiquidHydrocarbonsRateDifferentialfromOilandGasEmergencySchoolTax.
2016NewMexicoTaxExpenditureReport Page134
ORGANDONATIONDEDUCTIONFROMPIT
Category: CitizenBenefits
BriefDescription: Ataxpayermayclaimadeductionfromnetincomeinanamountnottoexceed$10,000oforgandonation‐relatedexpenses,includinglostwages,lodgingexpensesandtravelexpenses,incurredduringthetaxableyearbythetaxpayerorthetaxpayer'sdependentasaresultofthetaxpayer'sordependent'sdonationofahumanorgantoanotherpersonfortransferofthathumanorgantothebodyofanotherperson.
StatutoryBasis: 7‐2‐36NMSA1978
IntendedPurpose: Presumablytohelpremoveobstaclesthatpreventpeoplefrommakinglivingorgandonationsbyreducingtheassociatedfinanciallosses.
History: Originallyenactedin2005.
Evaluation: Whilefactorslikebloodtypeserveasanunchangeablebarriertodonatingorgans,forthosewhoarematches,thiscredithelpstooffsetrelatedexpenses.
Recommendations: None.
ReliabilityFactor: 1–Thedeductionamountsforeachtaxpayerclaimingthisdeductionwerecomputed,makingthisdatamorereliablethaninpastyears,whenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $2.0 $2.6 $2.5 $2.4 $3.4
Claims 66 73 74 73 69
62
64
66
68
70
72
74
76
$‐
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
PIT(thousands)
OrganDonationDeduction
2016NewMexicoTaxExpenditureReport Page135
PENALTYPURSUANTTOSECTION7‐1‐71.2NMSA1978CREDITAGAINSTGRT,COMPENSATINGTAXANDWITHHOLDING
TAX
Category: HealthCare
BriefDescription: PriortoJuly1,2010,taxpayerswhopaidthedoublelocaloptionpenaltyineffectpriortoJuly1,2007—imposedforincorrectlyreportingfoodandmedicalGRTdeductionscreatedin2004—couldclaimthiscredit.Thecreditisequaltotheamountofthepenaltypaid.
StatutoryBasis: 7‐9‐105NMSA1978
IntendedPurpose: Torefundpenaltiespaidforincorrectlyreportingthefooddeduction11orthehealthcarepractitionerservicesdeduction12.
History: Originallyenactedin2007.
Evaluation: ThiscredithasnocurrenteffectasallclaimsweresubmittedpriortoJuly1,2010.
Recommendations: Repeal.ThecredithasnotbeenavailablesinceJuly1,2010.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact: Nopossiblefiscalimpact.
11Section7‐9‐92NMSA197812Section7‐9‐93NMSA1978
2016NewMexicoTaxExpenditureReport Page136
PERSONSONEHUNDREDANDOLDEREXEMPTIONFROMPIT
Category: CitizenBenefits
BriefDescription: Theincomeofanindividualwhois(1)anaturalperson,(2)onehundredyearsofageorolder,and(3)notadependentofanotherindividualisexemptfromPIT.
StatutoryBasis: 7‐2‐5.7NMSA1978
IntendedPurpose: Presumablytoreducetheadministrativeburdenandfinancialburdenonthisagingpopulation.
History: Originallyenactedin2002.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1–Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $4.4 $7.1 $3.1 $2.3 $2.2
Claims 104 78 78 77 106
0
20
40
60
80
100
120
$‐
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
PIT(thousands)
PersonsOneHundredandOlderExemption
2016NewMexicoTaxExpenditureReport Page137
PERSONSSIXTY‐FIVEANDOLDERORBLINDEXEMPTIONFROMPITANDACOMPREHENSIVETAXREBATE
Category: CitizenBenefits
BriefDescription: Anindividualwhois65yearsorolderorwhoisblindmayclaimanexemptionfromPITbasedonaslidingscale(nottoexceed$8,000).
Anindividualwhois65yearsoroldermayclaimadditionalexemptionsforthelow‐incomecomprehensivetaxrebate,thusqualifyingforahigherrebate.
StatutoryBasis: 7‐2‐5.2and7‐2‐14(C)NMSA1978
IntendedPurpose: Presumablytoreducethefinancialburdenonthosewhoarelikelytobelivingonfixedincomes.
History: ThePITexemptionwasoriginallyenactedin1985andamendedin1987.
Thecomprehensivetaxrebatewasoriginallyenactedin1972andamendedin1973,1974,1975,1977,1978,1981,1986,1987,1990,1992,1994,and1998.
Evaluation: Thenumberofclaimshasremainedrelativelyconstantoverthelastfourfiscalyears,whiletheamountoftheexpenditurehasdecreasedduetotheslidingscaleamountoftheexemption.Bothnumberofclaimsandexpendituresmayincreaseinkeepingwithtrendstowardanolderpopulation.
Recommendations: None.
ReliabilityFactor: 1‐Fortherebatecomponent,theinformationisseparatelyreported.Noestimationisrequired.Fortheexemption,theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyears,whenanaveragerateforalltaxpayerswasused.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
2016NewMexicoTaxExpenditureReport Page138
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $1,058.8 $1,046.7 $1,029.0 $1,000.6 $983.1
Claims 88,674 90,241 92,321 99,487 97,225
82,00084,00086,00088,00090,00092,00094,00096,00098,000100,000102,000
$940.0
$960.0
$980.0
$1,000.0
$1,020.0
$1,040.0
$1,060.0
$1,080.0
PIT(thousands)
PersonsSixty‐FiveandOlderorBlindExemption
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $3,359.4 $3,429.2 $3,372.2 $3,375.6 $3,374.3
Claims 17,233 17,423 16,913 16,823 16,552
16,000
16,200
16,400
16,600
16,800
17,000
17,200
17,400
17,600
$3,320.0
$3,340.0
$3,360.0
$3,380.0
$3,400.0
$3,420.0
$3,440.0
Comprehensive(thousands)
PersonsSixty‐FiveandOlderorBlindRebate
2016NewMexicoTaxExpenditureReport Page139
PHYSICIANPARTICIPATINGINCANCERTREATMENTCLINICALTRIALSCREDITAGAINSTPIT
Category: HealthCare
BriefDescription: AlicensedoncologistwhopracticesinruralNewMexicomayclaimacreditof$1,000foreachpatientparticipatinginacancerclinicaltrialundertheoncologist’ssupervision.RuralNewMexicoisdefinedasaclass‐Bcountyinwhichnomunicipalityhasapopulationover60,000accordingtothemostrecentdecennialcensus.
Thecreditiscappedat$4,000perphysicianperyear.
StatutoryBasis: 7‐2‐18.27NMSA1978
IntendedPurpose: ToincentivizetheparticipationincancerclinicaltrialsbyoncologistsworkinginruralNewMexico.
History: Originallyenactedin2011.Peritsoriginalenactment(SB282,§2),thecreditisnotavailablefortaxyearsbeginningafterDecember31,2014
Evaluation: Thecredithasneverbeentaken.ItcouldbethattherearenooncologistsparticipatingincancerclinicaltrialsinruralNewMexicoorthatthecreditisnotlargeenoughtoincentivizetheirparticipation.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.NotaxpayermayclaimthiscreditfortaxyearsbeginningafterDecember31,2014.
FiscalImpact: None.
2016NewMexicoTaxExpenditureReport Page140
PRESCRIPTIONDRUGSANDOXYGENGRTANDGGRTDEDUCTION
Category: HealthCare
BriefDescription: Receiptsfromthesaleofprescriptiondrugs,oxygen,andoxygenservicesprovidedbyalicensedMedicaredurablemedicalequipmentprovideraredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.
StatutoryBasis: 7‐9‐73.2NMSA1978
IntendedPurpose: Presumablytoreducetheeffectivecostofprescriptiondrugsandoxygenasapublicwelfaremechanism.
History: Originallyenactedin1998andamendedin2003and2007.
Evaluation: Thisdeductionremovesthegrossreceiptstaxburdenfromsellers,whowouldotherwisepassitontoconsumersofthesemedicallynecessarygoods.
Recommendations: None.
ReliabilityFactor: 3‐StatespecificdatapublishedbytheKaiserFamilyFoundationontotalretailsalesofprescriptiondrugswasusedtocalculatethisdeduction.(Datasourcesforoxygenandoxygenserviceshaveyettobeascertained.)ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CombinedTaxes $58,000.0 $61,000.0 $63,000.0 $65,000.0 $68,000.0 $74,000.0
$‐
$10,000.0
$20,000.0
$30,000.0
$40,000.0
$50,000.0
$60,000.0
$70,000.0
$80,000.0
Expenditures(thousands)
PrescriptionDrugsandOxygenDeduction
2016NewMexicoTaxExpenditureReport Page141
PRESERVATIONOFCULTURALPROPERTYCREDITAGAINSTPITANDCIT
Category: CitizenBenefits
BriefDescription: TaxpayersmaytakeacreditonaPITorCITreturnof50%ofthecostofrestoring,rehabilitating,orpreservingpropertieslistedontheNewMexicoRegisterofCulturalProperties.
Thecreditmaynotexceed$25,000unlessthepropertyislocatedwithinadesignatedartsandculturaldistrict.Thecreditiscappedat$50,000forpropertieslocatedwithinanartsandculturaldistrict.
Thecreditisnotrefundable,butmaybecarriedforwarduptofouryears.
StatutoryBasis: 7‐2‐18.2and7‐2A‐8.6NMSA1978
IntendedPurpose: Toencouragetherestoration,rehabilitationandpreservationofculturalproperties.
History: ThePITcreditwasoriginallyenactedin1984andamendedin2007.
TheCITcreditwasoriginallyenactedin1984andamendedin1986and2007.
Evaluation: Theactivityonthecredithasbeenfairlyconsistent.Thiscreditisnotrefundable;therefore,ataxpayermusthaveenoughtaxliabilitytotakethecredit.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $163.3 $155.1 $185.3 $233.4 $170.4
Claims 68 71 75 65 51
01020304050607080
$‐
$50.0
$100.0
$150.0
$200.0
$250.0
CombinedTaxes(thousands) CulturalPropertyPreservationCredit
2016NewMexicoTaxExpenditureReport Page142
PRODUCTIONORSTAGINGOFPROFESSIONALCONTESTSGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfromproducingorstagingprofessionalboxing,wrestling,ormartialartsconteststhatoccurinNewMexico,includingreceiptsfromticketsalesandbroadcasting,aredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐107NMSA1978
IntendedPurpose: Presumablytoincentivizeprofessionalboxing,wrestling,andmartialartsconteststotakeplaceinNewMexico.
History: Originallyenactedin2007.
Evaluation: ThenumberofapplicableeventssanctionedbytheNewMexicoAthleticCommissionhasincreasedsincetheenactmentofthisdeduction.
Recommendations: None.
ReliabilityFactor: 3‐TheNewMexicoAthleticCommissionreportsthatin2015,30sanctionedeventswereheld,accountingforapproximately$1.5millioningrossreceiptsandforegonerevenueofabout$103,000.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $84.0 $102.0 $84.0 $120.0 $103.1 $97.2
$‐
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
GRT(thousands)
ProductionorStagingofProfessionalContestsDeduction
2016NewMexicoTaxExpenditureReport Page143
PUBLICATIONSALESGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfrompublishingnewspapersormagazinesaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐63NMSA1978
IntendedPurpose: Presumablytoincentivizegrowthandoperationsofpublishingcompaniesinthestate.
History: Originallyenactedin1969.
Evaluation: Withtheproliferationofdigitalmobiledevices,thisexpendituremightnotbeenoughtocounterthemarketshiftfromprinttoelectronicmedia.
Recommendations: None.
ReliabilityFactor: 2‐Taxpayerreporteddeductionsfiledbypublishing‐relatedNAICSsectorswereusedtoestimatethecostofthisdeduction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $200.0 $230.0 $280.0 $250.0 $240.0 $210.0
$‐
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
Expenditures(thousands)
PublicationServicesDeduction
2016NewMexicoTaxExpenditureReport Page144
PURSESANDJOCKEYREMUNERATIONATNEWMEXICORACETRACKSEXEMPTIONFROMGRT
Category: HighlySpecializedIndustry
BriefDescription: Thereceiptsofhorsemen,jockeys,andtrainersfromracepursesatNewMexicohorseracetrackssubjecttothejurisdictionofthestateracingcommissionareexemptfromGRT.
StatutoryBasis: 7‐9‐40(A)NMSA1978
IntendedPurpose: Presumablytoreducethetaxburdenofhorsemen,jockeysandtrainers.
History: Originallyenactedin1970andamendedin1971,1985,and1989.
Evaluation: Althoughhorseracingattendanceandtotalnumberofhorseracingeventsaredownstatewideandnationwide,annualpurseshavenotdecreasedinNewMexico.
Recommendations: None.
ReliabilityFactor: 3–YearlydatatrackedbytheJockeyClubforNewMexicotrackswascombinedwithanindustrystandardrateof10%ofpursesgoingtojockeysandtrainerseach.TheexemptionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.Thepursesin2015were$28,896,169for1,463racesforanaveragepurseof$19,751.TheFY2016costwasextrapolatedfrompartial2016data.Thefindingofadditionalexternaldatasourcesallowedthisnewestimatetobeprovidedthisyear.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $213.2 $217.5 $206.5 $201.6 $200.4 $210.7
$190.0
$195.0
$200.0
$205.0
$210.0
$215.0
$220.0
Expenditures(thousands)
PursesandJockeyRemunerationatNMRacetracksExemption
2016NewMexicoTaxExpenditureReport Page145
RAILROADEQUIPMENT,AIRCRAFT,ANDSPACEVEHICLESEXEMPTIONFROMCOMPENSATINGTAX
Category: HighlySpecializedIndustry
BriefDescription: Theuseofrailroadlocomotives,trailers,containers,tendersorcarsprocuredorboughtforuseinrailroadtransportation;theuseofcommercialaircraftboughtorleasedprimarilyforuseinthetransportationofpassengersorpropertyforhireininterstatecommerce;andtheuseofspacevehiclesfortransportationofpersonsorpropertyin,to,orfromspaceareexemptfromcompensatingtax.
StatutoryBasis: 7‐9‐30NMSA1978
IntendedPurpose: Presumablytoreducethecostofrailroadtransportation,aircrafttransportation,andspacetransportation;potentiallytocomplywiththepreemptiondoctrine.
History: Originallyenactedin1969andamendedin1988and2003.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page146
REALESTATETRANSACTIONSGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: ReceiptsfromrealestatecommissionsonthesaleofrealpropertywhichissubjecttotheGRT(newconstructionunderSection7‐9‐53(A)NMSA1978)aredeductiblefromgrossreceipts.Typically,brokeragecommissionsaredeductiblefromgrossreceiptswhentheunderlyingsalesarenotsubjecttotax.Withrespecttonewconstruction,thepartofthesalethatreflectsthevalueofthenewlyconstructedimprovementsistaxable,butthevalueoftheunderlyingrealestateisdeductible.
StatutoryBasis: 7‐9‐66.1NMSA1978
IntendedPurpose: Presumablytoincentivizethegrowthandoperationsofrealestatecompaniesinthestate.
History: Originallyenactedin1984andamendedin1990.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page147
RENEWABLEENERGYPRODUCTIONCREDITAGAINSTPITANDCIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: TaxpayersareabletoreceiveacreditagainstPITandCITforproducingelectricityusingsolarlightorheat,wind,orbiomass.Thecreditonlyappliestotaxpayersthatgeneratetheelectricityforsaletothirdparties.
Theamountofthecreditisequaltoonecentperkilowatt‐hourupto400,000megawatt‐hoursannuallypertaxpayerforwind‐orbiomass‐derivedelectricity.Theaggregatecapforallwindprojectsissetat2millionmegawatt‐hours.
Theamountofthecreditisequaltoanywherefromoneandahalfcentstofourcentsperkilowatt‐hourupto200,000megawatt‐hoursannuallypertaxpayerforsolar‐light‐derivedorsolar‐heat‐derivedelectricitydependingontheconsecutivetaxableyearforwhichthecreditisbeingclaimed.Theaggregatecapforallsolarprojectsissetat500,000megawatt‐hours.
Thewindandsolarproductioncapsmaybemonetizedbymultiplyingthekilowatt‐hourratestimesthesetaggregatecaps.Thewindaggregatecapmaximizedat2millionmegawatt‐hoursrepresentsacreditof$20million.Thesolarcreditvariesbyyear,onaveragetheyearlycreditis$0.0275perkilowatt‐hour.Thesolarcreditrangesfrom$0.015inthefirstyearofproductionto$0.04inthesixthyearofproduction,downto$0.02inthetenthyear.Wheneverthe500,000megawatt‐hoursareused,theaverageaggregatecreditis$13.75million.
Aqualifiedtaxpayeriseligiblefortherenewableenergyproductiontaxcreditfortenconsecutiveyears,beginningonthedatethequalifiedenergygeneratorbeginsproducingelectricity.
StatutoryBasis: 7‐2‐18.18and7‐2A‐19NMSA1978
IntendedPurpose: PresumablytoencouragetheconstructionanddevelopmentofrenewableenergygeneratingfacilitiesinNewMexico,andtosequesterorcontrolcarbondioxideemissions.
History: ThePITcreditwasoriginallyenactedin2007.TheCITcreditwasoriginallyenactedin2002andamendedin2003,2005and2007.
Evaluation: Becauseprogramimplementation,sometaxpayersproduceelectricity,butareprecludedfromclaimingthecredit.
Forthosewhobeganproducingbefore2008,thecreditisnotrefundable,butmaybecarriedforwardforfiveyears.Thishasresultedinasignificantamountofunclaimedcreditbuildingupovertime.
2016NewMexicoTaxExpenditureReport Page148
TheEconomicAnalysisofNewMexicoRenewableEnergyProductionTaxCredit(2015)studyconductedbyHDR,Inc.13withthecollaborationofEMNRDandTRD,presentsfindingsaboutthelevelofinvestmentinrenewableenergyfacilities.Thestudysummarizestheeffectsofprivateinvestmentandthiscredit,onjobcreation,wages,andpollutionreduction.
HDR,Inc.(2015)developedeconomicmultiplierstoestimatethelaborincomeandemploymentimpactsassociatedwiththeconstructionandoperationofREPTCfacilitiesfrom2003through2012.Totallaborincomeisestimatedat$434million,orabout$43millionperyearonaverage.Theemploymentimpactisestimatedtobeover9,000jobs,orabout900peryearonaverage.Thegrossreceiptstaxgeneratedasaresultofwindandsolardevelopmentandoperationsisabout$92,000overthe10‐yearperiodofthecredit.
HDR,Inc.(2015)estimatesthelabor‐to‐taxexpenditureratioat14%,whichmeansthatforevery$0.14intaxexpenditure,REPTCprojectsgenerated$1inlaborincome.Also,forevery$0.15intaxexpenditure,REPTCprojectsgenerated$1worthofmonetizedreductioninpollution.Overthe10‐yearperiod,pollutionwasreducedbyover11milliontonsofCO₂,whichinmonetarytermsrepresentspollutionreductionvaluedat$400million.
Thiscreditmeetsitsintendedpurposeofincentivizingtheproductionofrenewableenergyandreducingpollution,whilecreatingjobs.
Recommendations: Restructuretheprogramsothatthosewhohavemadeinvestmentsbasedonthepromiseofreceivingthecreditaregiventhefull10‐yearbenefitofthecredit.Ascostsofgeneratingrenewableenergyhavereportedlydecreased,considerloweringtheper‐megawatthourcreditrate,butexpandingtheaggregatecap.Thesechangesmayresultinhighervolumesofrenewableenergyproductionovershorterperiodsoftime.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.FiscalImpact:
13HDR,Inc.2015.“EconomicAnalysisoftheNewMexicoRenewableEnergyProductionTaxCredit.”http://www.emnrd.state.nm.us/ECMD/CleanEnergyTaxIncentives/documents/REPTCFinalReportFeb2015.pdf(accessedSeptember24,2015).
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $3,340.2 $17,340.5 $12,833.8 $13,912.7 $15,075.5
Claims 6 21 33 18 19
0
5
10
15
20
25
30
35
$‐$2,000.0$4,000.0$6,000.0$8,000.0$10,000.0$12,000.0$14,000.0$16,000.0$18,000.0$20,000.0
CombinedTaxes(thousands)
RenewableEnergyProductionCredit
2016NewMexicoTaxExpenditureReport Page149
RESEARCHANDDEVELOPMENTSMALLBUSINESSCREDITAGAINSTGRTORFIFTYPERCENTCREDITAGAINST
WITHHOLDINGTAX
Category: EconomicDevelopment
BriefDescription: Aqualifiedresearchanddevelopmentsmallbusinessesmayclaimacreditequaltothesumofallgrossreceiptsor50%ofwithholdingtaxesowedtoNewMexicoforthereportingperiodinwhichthebusinessqualifiesforthecredit.
Aqualifiedbusinessisacorporation,generalpartnershiporsimilarentitywith25orfeweremployees,withannualrevenuesunder$5million,andwhosequalifiedresearchanddevelopmentexpendituresfortheprior12monthswasequaltoatleast20%oftotalexpendituresforthosecalendarmonths.
StatutoryBasis: 7‐9H‐1etseq.NMSA1978(repealed).
IntendedPurpose: Presumablytoincentivizethefoundationandexpansionofsmallresearchanddevelopmentbusinesses.
History: Originallyenactedin2005tobeeffectiveagainstGRTandcompensatingtaxwithanexpirationdateofJune30,2009.Thecreditwasnotextendedpriortoitsexpirationdate.
Reenactedin2011,withanexpirationdateofJune30,2015removedcompensatingtax,andtoreducethewithholdingtaxcreditto50%.
Evaluation: ThiscreditexpiredforasecondtimeonJune30,2015andwasunderutilized.Itsrelationshiptosimilarcreditsanddeductionsshouldbestudiedtounderstandhowtheyinteract.Alternativeapproachestostimulatingsmallbusinessescriticaltothemoderneconomy,suchasresearchanddevelopmentbusiness,shouldbeexplored.
Recommendations: None
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:Someofthedatahavebeenredactedduetofewerthan3taxpayersclaimingthecredit.FY2014hasbeenredacted.Noclaimsotheryears.
2016NewMexicoTaxExpenditureReport Page150
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $‐ $‐ $‐ $‐ $‐
Claims 0 0 0 0 0
00.20.40.60.81
$‐$0.2$0.4$0.6$0.8$1.0
CombinedTaxes
(thousands)
ResearchandDevelopmentSmallBusinessCreditDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page151
RURALHEALTHCAREPRACTITIONERCREDITAGAINSTPIT
Category: HealthCare
BriefDescription: Licenseddoctors,osteopathicphysicians,dentists,clinicalpsychologists,podiatristsandoptometristswhoprovidehealthcareservicesinNewMexicoinaruralhealthcare,underservedareainataxableyearmayclaimacreditofupto$5,000againstPIT.
Licenseddentalhygienists,physicianassistants,certifiednursemidwives,certifiedregisterednurseanesthetists,certifiednursepractitionersandclinicalnursespecialistswhoprovidehealthcareservicesinNewMexicoinaruralhealthcare,underservedareainataxableyearmayclaimacreditofupto$3,000againstPIT.
Toqualifyforthefullcredit,apractitionermustprovidehealthcarefor2,080hoursatapracticesiteinanapprovedarea.Ifthepractitionerprovidedhealthcareforatleast1,040hours,thepractitioneriseligiblefor50%ofthecredit.
StatutoryBasis: 7‐2‐18.22NMSA1978
IntendedPurpose: Presumablytoimproveaccesstohealthcareinruralorunderservedareasofthestate,byprovidingataxbenefittohealthcarepractitionerswhoworkinthoseareas.
History: Originallyenactedin2007.
Evaluation: ExceptforaslightdecreaseinFY2013,thenumberofclaimsincreasedsteadilybetweenFY2011andFY2015.Thisincreasemaybeanindicationthatthiscreditisanincentivetomovepractitionerstoruralareas.AreportbytheNewMexicoHealthcareWorkforceCommissionindicatesthatwhile“financialincentivessuchas…taxcreditshavebeenimportantrecruitmentandretentiontools”,therecontinuestobeashortageofphysiciansinmanyruralpartsofthestate.(NewMexicoHealthCareWorkforceCommitteeReport,October1,2014,pg.4).
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
2016NewMexicoTaxExpenditureReport Page152
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $6,387.4 $6,583.8 $6,504.1 $6,132.4 $6,547.7
Claims 1,639 1,719 1,719 1,933 2,002
0
500
1,000
1,500
2,000
2,500
$5,900.0
$6,000.0
$6,100.0
$6,200.0
$6,300.0
$6,400.0
$6,500.0
$6,600.0
$6,700.0
PIT(thousands)
RuralHealthCarePractitionersCredit
2016NewMexicoTaxExpenditureReport Page153
RURALJOBCREDITAGAINSTMODIFIEDCOMBINEDTAX,PIT,ANDCIT
Category: EconomicDevelopment
BriefDescription: EligibleemployersmayearntheruraljobtaxcreditforeachqualifyingjobcreatedafterJuly1,2000,applyingittoGRT(lesslocaloptionGRT),compensatingtax,withholdingtax,PIT,orCIT.
AneligibleemployerisonewhomEDDhasapprovedforJobTrainingIncentiveProgramassistance.
Aqualifyingjobmeansajobfilledbyaneligibleemployeefor48weeksina12‐monthqualifyingperiod.
Thetotalcreditauthorizedis25%ofthefirst$16,000ofwagespaid,ifthejobisperformedorbasedinaTier1Areaand12.5%ofthefirst$16,000ofwagespaid,ifthejobisperformedorbasedinaTier2Area.However,thecreditistakeninannualincrements:6.25%ofthefirst$16,000inwagespaidoverfourqualifyingperiods(years)ifthejobisperformedatalocationinaTier1Area;6.25%ofthefirst$16,000inwagespaidovertwoqualifyingperiodsifthejobisperformedatalocationinaTier2Area.
StatutoryBasis: 7‐2E‐1.1NMSA1978
IntendedPurpose: Toencouragebusinessestoexpandintoruralareasofthestate.
History: Originallyenactedin2007,thecreditwasamendedin2013totightenthedefinitionofqualifyingjobsandtoclarifythedefinitionofwages.
Evaluation: StagnantemploymentgrowthinruralNewMexicoisaplausibleexplanationforthedecreasesincreditamountsfromFY2010toFY2012;inFY2014anincreaseinclaimswasfollowedbyasharpdeclineinFY2015.ThecreditutilizationreportedforFY2016representsthelargestamountofthiscreditinrecentyears.AccordingtoUNM’sBureauofBusinessandEconomicResearch(BBER)quarterlyforecastoftheNewMexicoEconomy(October2016),thestate’sAgricultural,Forestry,Fishing,andHuntingexperiencedanincreaseof7%fromcalendaryear2015to2016intermsofwageandsalarydisbursements.Atthesametime,BBERreportsNMfarmproprietor’sincomeincreasedby22%inthesameperiod.Further,theincreaseincreditscanbeattributedtoanincreaseinprivatesectoremploymentof2.3%in2016versusthepreviousyear.
Recommendations: None.
ReliabilityFactor: 2–Althoughthiscreditisseparatelyreported,itsreliabilityhasbeentemporarilymovedfrom1to2becauseofacertainissuewithinthereportingmechanism,whichiscurrentlyunderreviewbytheDepartment’sAuditandComplianceDivision(ACD).Therefore,thisexpenditurerequiresanadjustmentbasedonrecommendationprovidedbyACD.
2016NewMexicoTaxExpenditureReport Page154
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $457.4 $242.8 $82.5 $502.9 $132.0 $532.3
Claims 51 26 24 85 9 38
0102030405060708090
$‐$100.0$200.0$300.0$400.0$500.0$600.0$700.0$800.0$900.0
$1,000.0
CombinedTaxes(thousands)
RuralJobTaxCredit
2016NewMexicoTaxExpenditureReport Page155
SALEANDUSEOFAGRICULTURALIMPLEMENTS,FARMTRACTORS,AIRCRAFT,ANDMOTORVEHICLESTHATDON’THAVETOBE
REGISTEREDGRTANDCOMPENSATINGTAXDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: (A)50%ofthereceiptsfromselling,orofthevalueof,farmtractorsandagriculturalimplementswhenusedbypersonsengagedinthebusinessoffarmingorranching,aredeductiblefromgrossreceiptsandfromthetotalvaluebeforecomputingcompensatingtax.
50%ofthereceiptsfromselling,orofthevalueof,vehiclesnotrequiredtoberegisteredundertheMotorVehicleCodearedeductiblefromgrossreceiptsandfromthetotalvaluebeforecomputingcompensatingtax.
50%ofthereceiptsfromselling,orofthevalueof,aircraftnotboughtorleasedprimarilyforuseinthetransportationofpassengersorpropertyforhireininterstatecommercearedeductiblefromgrossreceiptsandfromthetotalvaluebeforecomputingcompensatingtax.
(B)Receiptsofanaircraftmanufactureroraffiliatefromsellingaircraft,orfromsellingaircraftflightsupport,pilottrainingormaintenancetrainingservicesaredeductiblefromgrossreceipts.
(C)ReceiptsfromsellingaircraftpartsormaintenanceservicesforaircraftoraircraftpartsaredeductiblefromGRT.
StatutoryBasis: 7‐9‐62and7‐9‐77NMSA1978
IntendedPurpose: Presumablytoincentivizeagriculturalactivitiesbyreducingtheeffectivecostofagriculturalimplementsandfarmtractors.PresumablytoincentivizethedevelopmentoftheaircraftindustryinNewMexicobyreducingrelatedcostsofsellingandusingaircraftforthingsotherthantransportationofpassengersorpropertyforhireinintrastatecommerce.
History: TheGRTdeductionwasoriginallyenactedin1969andamendedin1975,1998,2000,2007,and2014.The2014amendmentexpandedthedeductiontoallowanyentitysellingaircraftpartsormaintenanceservicesforaircraftoraircraftpartstotakethedeductionstartingJuly1,2015.
Thecompensatingtaxdeductionwasoriginallyenactedin1966andwasamendedin1969,1975,1988,and1998.
Evaluation: Totheextentthattheagriculturalimplementsareusedintheproductionofagriculturalgoodsintendedforsale,thisdeductioncouldbeviewedasreducingtheeffectsofpyramiding.
Totheextentthattheaircraftareusedintheproductionofagriculturalgoodsintendedforsale,thisdeductioncouldbeviewedasananti‐
2016NewMexicoTaxExpenditureReport Page156
pyramidingdevice.FromFY2015forward,taxpayerswishingtotakethisdeductionwillberequiredtoseparatelystatetheamountdeducted.However,becausethissectioncontainsseveraldifferentdeductions,separatingeachsubsectionfromthewholeisnotpossible.
Recommendations: None.
ReliabilityFactor: 2‐ThisestimateisbasedonreporteddeductionsfromselectedNAICSindustrygroups,calculatedatthestatewideaverageeffectivetaxrate.Thecompensatingtaxportionisestimatedusingtheamountofcompensatingtaxpaidintheapplicablesectors.Assumingthatallcompensatingtaxeligiblepurchasesmadewithinthesectorwouldhavebeendeductedat50%,thepaidremainderwouldbeequaltotheamountdeducted.
2‐GrossreceiptsdeductionsreportedbytaxpayersclassifiedasSupportforAirTransportationwereusedtoestimatetheimpactofthisdeduction.Alldeductionsreportedbytheselectedsectorswereassumedtoresultfromthisdeduction.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CompTax $118.0 $67.0 $377.0 $679.0 $906.0 $816.0
GRT $2,000.0 $2,300.0 $2,000.0 $2,100.0 $2,100.0 $2,100.0
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
Expenditures(thousands)
(A)SaleandUseofAgriculturalImplements,FarmTractors,AircraftorUnregisteredVehicles50%Deduction
2016NewMexicoTaxExpenditureReport Page157
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CombinedTaxes $1,200.0 $1,400.0 $1,500.0 $1,600.0 $1,800.0 $1,700.0
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
Expenditures(thousands)
(C)SaleofAircraftPartsandMaintenanceServicesDeduction
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $2,400.0 $2,800.0 $3,000.0 $3,300.0 $3,600.0 $3,500.0
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
$4,000.0Expenditures(thousands)
(B)SaleofAircraftManufacturer,etal.,Deduction
2016NewMexicoTaxExpenditureReport Page158
SALEOFCERTAINSERVICESTOANOUT‐OF‐STATEBUYERGRTDEDUCTION
Category: EconomicDevelopment
BriefDescription: ReceiptsfromperformingaserviceinNewMexicoaredeductiblefromgrossreceiptsifthesaleoftheserviceismadetoanout‐of‐statebuyer.TheproductoftheservicemustbedeliveredtothebuyeroutsideofNewMexicoandtheproductoftheservicemustbeinitiallyusedbythebuyeroutsideofNewMexicotoqualifyforthededuction.
ThebuyermustpresentanappropriatenontaxabletransactioncertificateorotherevidenceacceptabletotheTRDSecretary.
StatutoryBasis: 7‐9‐57NMSA1978
IntendedPurpose: Presumablytoencourageserviceexportationbyequalizingtaxtreatmentwithout‐of‐stateserviceproviders,mostofwhicharenotsubjecttoasalestaxonservices.
History: Originallyenactedin1969andamendedin1973,1977,1983,1988,1989,1998,and2000.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page159
SALEOFFOODATRETAILFOODSTORESGRTDEDUCTIONANDHOLDHARMLESSDISTRIBUTION
Category: CitizenBenefits
BriefDescription: Receiptsfromqualifyingfoodsalesatretailfoodstoresasdefinedunderthefederalfoodstampprogramaredeductiblefromgrossreceipts.
Thedeductionisrequiredtobeseparatelystatedbythetaxpayer.
TheoriginallegislationenactedprovisionsintheTaxAdministrationActstatingthattherevenuesofmunicipalandcountygovernmentswouldbeheldharmlessfromanylostrevenueresultingfromthededuction.
StatutoryBasis: 7‐9‐92,7‐1‐6.46and7‐1‐6.47NMSA1978
IntendedPurpose: Presumablytoreducetheburdenoftaxingfood.
History: TheGRTdeductionwasoriginallyenactedin2004andhasnotbeenamended.
Theholdharmlessprovisionwasoriginallyenactedin2004.Amendedin2006,2007and2013.The2013amendmentphased‐outtheholdharmlessdistributiontolargercountiesandmunicipalitiesovera15‐yearperiodstartingJuly1,2015.Duringthe20162ndspecialsessionthestatutewasamendedtoaddapenaltyforincorrectlyfilingforthefoodandmedicaldeductionsthatresultinholdharmlessdistributionsinsteadofotherexemptionsordeductionswhichmustbetakenfirst.Thepenaltyisequalto20%ofthevalueoftheholdharmlessdistributionresultingfromtheincorrectdeduction.
Evaluation: AsevidencedbythesizeoftheGRTdeduction,thisreducesthecostsoffood.Becauseoftheholdharmlessprovisionandthelossoftherevenuebeingmadeupthroughothertaxburdens,thisreductionhasasignificantcosttoboththeGeneralFundandthetaxpayersitbenefits.
Recommendations: None.
ReliabilityFactor: 1‐Thisdeductionisseparatelyreported.TheestimatereflectstheamountsofGRTrevenueforgonebymultiplyingtheGRTdeductionamountsbythestatewideaverageGRTrateforeachyear.Thehold‐harmlessisreportedseparatelyandnoestimationisrequired.
2016NewMexicoTaxExpenditureReport Page160
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
HoldHarmless $98,808.0 $103,153.6 $104,484.2 $107,063.8 $107,059.1 $108,850.0
GRT $121,013.7 $126,180.5 $128,644.0 $131,884.4 $131,878.7 $133,755.2
$‐
$50,000.0
$100,000.0
$150,000.0
$200,000.0
$250,000.0
$300,000.0
Expenditures(thousands)
SaleofFoodatRetailFoodStoresDeduction
2016NewMexicoTaxExpenditureReport Page161
SALEOFSOFTWAREDEVELOPMENTSERVICESGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfromthesaleofsoftwaredevelopmentservicesthatareperformedinaruralareabyaneligiblesoftwarecompanyaredeductiblefromgrossreceipts.Aruralareaisanywhereexceptanincorporatedmunicipalitywithapopulationofmorethan50,000
StatutoryBasis: 7‐9‐57.2NMSA1978
IntendedPurpose: Tostimulatenewbusinessdevelopmentinruralareas.
History: Originallyenactedin2002.
Evaluation: Determiningwhetherthisdeductionisthecauseofanyexpansioninthetargetedlocationsorforthetargetedindustriesisimpossible,but,basedonTRD’sestimatemethodology,theamountoftheapplicabledeductionshasincreasedsignificantlyinrecentyears.
Recommendations: None.
ReliabilityFactor: 2‐Grossreceiptsdeductionsfortaxpayersclassifiedassoftwarepublishersandcomputerprogrammersreportedoutsideofincorporatedmunicipalitiesareassumedtofallintothiscategory.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $580.0 $650.0 $1,150.0 $1,480.0 $2,240.0 $2,357.0
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
Expenditures(thousands)
SaleofSoftwareDevelopmentServicesDeduction
2016NewMexicoTaxExpenditureReport Page162
SALEOFTEXTBOOKSINCERTAINBOOKSTORESEXEMPTIONFROMGRT
Category: CitizenBenefits
BriefDescription: Receiptsofcertainbookstoresfromsellingtextbooksandothermaterialsrequiredforcoursesatapublicpost‐secondaryeducationalinstitutiontoastudentenrolledattheinstitutionareexemptfromGRT.Onlybookstoreslocatedonthecampusoftheinstitutionandoperatedpursuanttoacontractualagreementwiththeinstitutionareeligible.
StatutoryBasis: 7‐9‐13.4NMSA1978
IntendedPurpose: Presumablytoreducethecostofeducationalmaterialstothoseattendinghighereducationalinstitutions.
History: Originallyenactedin2002.
Evaluation: Whilethecostoftextbooksisonlyonecomponentoftheoverallcostofacollegeeducation,theexemptionprovidessomerelief.
Recommendations: Considerexpandingtheexemptionsothatitisnotlimitedtobookstoresoperatedbyapost‐secondaryeducationinstitution.Off‐campusschoolbookstoresfrequentlystockrequiredtextbooksandmaterialsforuniversitycourses.
ReliabilityFactor: 4‐ThetextbookcomponentoftheestimatedcostofattendancedataformajorNewMexicopublicuniversitieswereusedtoestimatetheimpactofthisexemption.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $7,100.0 $7,500.0 $7,900.0 $8,300.0 $8,700.0 $8,800.0
$‐
$1,000.0
$2,000.0$3,000.0
$4,000.0
$5,000.0
$6,000.0
$7,000.0
$8,000.0
$9,000.0
$10,000.0
Expenditures(thousands)
SaleofTextbooksExemption
2016NewMexicoTaxExpenditureReport Page163
SALESTONONPROFITORGANIZATIONSGRT,GGRT,ANDCOMPENSATINGTAXDEDUCTION
Category: CitizenBenefits
BriefDescription: Grossreceiptsfromsellingtangiblepersonalpropertyto501(c)(3)organizationsforuseintaxexemptfunctions,andgrossreceiptsfromthesaleofconstructionmaterialstoa501(c)(3)organizationformedforthepurposeofprovidinghomeownershipopportunitiestolow‐incomefamiliesaredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.Also,out‐of‐statepurchasesofanorganizationthatwasgrantedataxexemptionunderSection501(c)(3)orSection501(c)(6)oftheU.S.InternalRevenueCodeareexemptfromtheCompensatingTaxsolongasthereceiptsarenotderivedfromanunrelatedtradeorbusinessasdefinedinSection513oftheU.S.InternalRevenueCode.
StatutoryBasis: 7‐9‐60and7‐9‐15NMSA1978
IntendedPurpose: Presumablytosubsidizetheactivitiesofcertaintypesofnonprofitentities.
History: Originallyenactedin1970andamendedin1992,1995,2001,and2007.
Evaluation: Thistaxexpenditureprovidesgovernmentsupporttononprofitentitiesintheformofreducedtaxburden.
Recommendations: None.
ReliabilityFactor: 4‐Nodirectdatawithwhichtoestimatetheimpactofthisdeductionexists.Theestimateshowsanupdatedmethodologycomparedtothe2015TaxExpenditureReport.Inthisversion,TRDtookintoaccounttheaveragegrossincomeofasampleof2,802nonprofitorganizationsinNewMexicoobtainedthroughGuideStar.org—aself‐reportingweb‐baseddatabase.TRDassumedthataportionofthegrossincomeinthesamplewouldbeusedforthepurposesofthisdeduction.ThedeductionamountisthenmultipliedbythestatewideaverageGRTrateforFY2014–FY2016toestimatethecostusing50%ofthegrossincomedataasreportedthroughForm990infederalincometaxreturnsforeachyearavailable.ThisestimatedoesnottakeintoaccountthesplitbetweenGRTandCompensatingtaxdeductions.
2016NewMexicoTaxExpenditureReport Page164
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CombinedTaxes $15,000.0 $15,000.0 $15,000.0
0
2000
4000
6000
8000
10000
12000
14000
16000
Expenditures(thousands)
SalestoNonprofitOrganizationsDeduction
2016NewMexicoTaxExpenditureReport Page165
SALESTOQUALIFIEDFILMPRODUCTIONCOMPANYGRTANDGGRTDEDUCTION
Category: EconomicDevelopment
BriefDescription: Receiptsfromsellingorleasingpropertyto,andfromperformingservicesfor,aqualifiedproductioncompanyaredeductiblefromgrossreceiptsorfromgovernmentalgrossreceipts.
Thebuyer(afilmproductioncompany)mustpresentanontaxabletransactioncertificate(NTTC)tothesellerandcanonlydeliveronewithrespecttoproductioncosts.
ThisdeductioncannotbeusedinconjunctionwiththefilmproductiontaxcreditasdescribedinSection7‐2F‐1(L).
StatutoryBasis: 7‐9‐86NMSA1978
IntendedPurpose: PresumablytoincentivizeoperationsofthefilmindustryandfilmproductionsinNewMexicopriortotheexistenceofthefilmproductiontaxcredit(Section7‐2F‐1etseq.NMSA1978).
History: Originallyenactedin1995andamendedin2003.
Evaluation: None.
Recommendations: Basedonthevaluetothetaxpayer,thepossibilityofclaimingthisdeductioninsteadoftheFilmProductionTaxCreditisverysmall.Forthisreason,TRDrecommendsthisstatutetoberepealed.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page166
SALESTOSTATE‐CHARTEREDCREDITUNIONSGRTANDGGRTDEDUCTION
Category: EconomicDevelopment
BriefDescription: Receiptsfromsellingtangiblepersonalpropertytostate‐charteredcreditunionsaredeductiblefromgrossreceiptstothesameextentthatreceiptsfromthesaleoftangiblepersonalpropertytofederalcreditunionsaredeductible.
StatutoryBasis: 7‐9‐61.2NMSA1978
IntendedPurpose: Presumablytoprovideequitabletaxtreatmentbetweenfederally‐charteredcreditunionsandstate‐chartedcreditunionsandtreatstate‐charteredcreditunionsasaninstrumentalityofstategovernment.
History: Originallyenactedin2000.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 3‐AccordingtotheNationalCreditUnionAdministration(NCUA),NewMexicohad20statecharteredcreditunionsin2016.NCUAalsopublishesadocumentonoperatingcostsforastatecharteredcreditunion.Fromthisdocumentthetangiblepropertycostsestimate(includinganestimated20%of“OtherOperatingCosts”and“MarketingCosts”)wasscaledagainstthecompensationdatashownforeachofthestatecharteredcreditunions.ThetotalofthesedeductionsismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.Thisestimatechangedsignificantlybecauseofmoreaccurateestimationoftangibleproperty.
FiscalImpact:
FY2012 FY2013 FY2014 FY2015 FY2016
CombinedTaxes $238.8 $255.2 $261.4 $285.4 $477.4
CreditUnions 23 23 22 20 20
1415161718192021222324
$‐
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
Expenditures(thousands)
SalestoState‐CharteredCreditUnionsDeduction
2016NewMexicoTaxExpenditureReport Page167
SOLARENERGYSYSTEMSGRTDEDUCTION
Category: Environment,Conservation&RenewableEnergy
BriefDescription: Receiptsfromthesaleorinstallationofsolarenergysystems,includingsolarpanels,solarhotwaterheaters,andtrombewalls,aredeductiblefromgrossreceiptsiftheequipmentisusedtogeneratepowerforon‐siteconsumption.
StatutoryBasis: 7‐9‐112NMSA1978
IntendedPurpose: Presumablytoincentivizetheinstallationofandusesolarenergysystemsattheconsumerlevel.
History: Originallyenactedin2007.
Evaluation: ThesteadygrowthrateinTRD’sestimateddeductionutilizationsuggeststhatthisdeductioncontinuestobenefitsolarpurchasers.
Recommendations: None.
ReliabilityFactor: 3‐Thesolarmarketdevelopmentcredit,authorizedinSection7‐2‐18.14NMSA1978,isusedasaproxytoestimatethesizeofthisdeduction.Averagegrowthrateswereusedtoestimate2013through2016impacts.ThedeductionamountismultipliedbythestatewideaverageGRTrateforeachyeartoestimatethecost.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $1,830.0 $1,930.0 $2,000.0 $2,100.0 $2,200.0 $2,600.0
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
Expenditures(thousands)
SolarEnergySystemsDeduction
2016NewMexicoTaxExpenditureReport Page168
SOLARMARKETDEVELOPMENTCREDITAGAINSTPIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: Taxpayerswhopurchaseandinstallasolarthermalsystemoraphotovoltaicsysteminaresidence,business,oragriculturalenterpriseownedinNewMexicomayapplyforasolarmarketdevelopmenttaxcreditofupto10%ofthepurchaseandinstallationcostofthesystemagainsttheirPIT.ThispurchasemustbemadeafterJanuary1,2006butbeforeDecember31,2016.
Thecreditshallnotexceed$9,000.Themaximumaggregateamountofcreditsallowedinanytaxyearis$2millionforsolarthermalsystemsand$3millionforphotovoltaicsystems.
Thecreditisnotrefundablebutmaybecarriedforwardforuptotenyears.
StatutoryBasis: 7‐2‐18.14NMSA1978
IntendedPurpose: PresumablytoincentivizethegrowthofthesolarindustrybysubsidizingaportionofthepurchaseandinstallationcostsofsolarsystemsinNewMexico.
History: Originallyenactedin2006andamendedin2009.
Amendedin2009toreducethecreditfrom30%to10%andremovethecumulativefederalandstatecapof30%.
Evaluation: Aplausibleexplanationforthesteadyincreaseinthenumberandsizeofclaimsandtherelativeplateauoverthelastthreefiscalyearsmayindicatethatthesolarmarketisbeginningtomature.Assumingthatthenumberofclaimscorrespondstothenumberofsystems,5,675systemswereinstalledbetweenFY2010andFY2014atatotalfive‐yearexpenditurecostof$11,649,400,whichatthe10%ofcostcreditallowance,reflects$116,494,000indirecteconomicactivitywithrespecttosolarinstallers.AsTRDdoesnotcollectinformationregardingindividualsystemsandsystemcapacity,theenergycostsavingscannotyetbedetermined.
Recommendations: (1)TheprogramexpiredDecember31,2016.Iftheprogramisextended/renewed,thenamendmentsshouldbeconsideredtoindicatewhichbusinessinstallationsqualifyforthecredit,asthereistensionbetweenbusinesseseligibilityandthestatutoryineligibilityforcommercialorindustrialuse.
(2)Thestatuteshouldexpresslyrequirethepowerbeusedprimarilyforon‐siteconsumption.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
2016NewMexicoTaxExpenditureReport Page169
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $2,242.5 $2,651.5 $2,832.1 $2,671.3 $2,583.8
Claims 1,014 1,231 1,362 1,367 1,386
0
200
400
600
800
1,000
1,200
1,400
1,600
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
PIT(thousands)
SolarMarketDevelopmentCredit
2016NewMexicoTaxExpenditureReport Page170
SPACEPORT‐RELATEDACTIVITIESGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: DeductiblefromGRTarereceiptsfrom:
(1) launching,operatingorrecoveringspacevehiclesorpayloads;
(2) preparingapayload; (3) operatingaspaceport;or
(4) providingresearch,development,testing,andevaluationservicesfortheU.S.AirForceOperationallyResponsiveSpaceProgram.
StatutoryBasis: 7‐9‐54.2NMSA1978
IntendedPurpose: PresumablytoencouragethedevelopmentofthespaceindustryinNewMexico.
History: Originallyenactedin1995andamendedin1997,2001,2003,and2007.The2007amendmentaddedadeductionforreceiptsfromtheprovisionofresearch,development,testing,andevaluationservicesfortheU.S.AirForceOperationallyResponsibleSpaceProgram.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.Previouslythisestimateallowedforconstructionactivitiestobededucted.Thoseactivitiesarenotavaliddeductionandhavenotbeenincludedthisyear.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page171
SPACE‐RELATEDTESTARTICLESDEDUCTIONFROMCOMPENSATINGTAX
Category: HighlySpecializedIndustry
BriefDescription: Thevalueofspace‐relatedtestarticlesusedinNewMexicoexclusivelyforresearchortestingplacedonpublicdisplayafterorstoredforfutureuse.ThevalueofequipmentandmaterialsusedinNewMexicoforresearchortestingtosupporttheresearchortestingofspace‐relatedtestarticles,orforstorageofsuchequipmentormaterialstosupporttheresearchandtestingofspace‐relatedtestarticles,isdeductibleincomputingcompensatingtaxdue.
StatutoryBasis: 7‐9‐54.4NMSA1978
IntendedPurpose: PresumablytoincentivizethedevelopmentofthespaceindustryinNewMexico.
History: Originallyenactedin2003.
Evaluation: Accordingtopubliclyavailableinformation,currentlyonlyonecompanywiththeexplicitgoalofconductingspace‐relatedtestingoperatesinNewMexico.Thecompanyperformsperhapsonelaunchayear.Threecompanieshaveindicatedadesiretoperformspace‐relatedtestingattheSpaceport;onemadeinvestmentsofapproximately$2million,andanothermoveditsheadquarterstothestate.ThisdeductionmustbeevaluatedinconjunctionwithoverarchingstatepolicywithrespecttoSpaceportAmericasstatus,feasibility,completion,andoperation.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page172
SPECIALNEEDSADOPTEDCHILDCREDITAGAINSTPIT
Category: CitizenBenefits
BriefDescription: Ataxpayerwhohasadoptedaspecialneedschild(anindividualcertifiedasa"difficulttoplacechild")mayclaimacreditagainstPITintheamountof$1,000.
Iftheamountofcreditduetoataxpayerexceedsthetaxpayer'sPITliability,theexcessisrefunded.
StatutoryBasis: 7‐2‐18.16NMSA1978
IntendedPurpose: Presumablytoprovidetaxreliefforthosewhoadoptedaspecialneedschild.
History: Originallyenactedin2007.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $1,579.5 $1,667.0 $1,707.0 $1,777.0 $1,761.0
Claims 896 921 936 976 967
840
860
880
900
920
940
960
980
1000
$1,450.0
$1,500.0
$1,550.0
$1,600.0
$1,650.0
$1,700.0
$1,750.0
$1,800.0
PIT(thousands)
SpecialNeedsAdoptedChildCredit
2016NewMexicoTaxExpenditureReport Page173
SUSTAINABLEBUILDINGCREDITAGAINSTPITANDCIT
Category: Environment,Conservation&RenewableEnergy
BriefDescription: Enactedin2007,Sections7‐2A‐21and7‐2‐18.19NMSA1978providethesustainablebuildingtaxcredit.Sections7‐2A‐28and7‐2‐18.29NMSA1978,enactedin2015andapplicabletotaxyearsbeginningonorafterJanuary1,2017,providethenewsustainablebuildingtaxcredit.UntilDecember31,2016,ataxpayermayclaimacreditagainstPITandCITforinvestmentsinconstructingorrenovatingsustainableresidentialorcommercialbuildingsthatmeetspecific“green”buildingstandards.
Theamountofthecreditthatmaybeclaimedrangesfrom$0.70persquarefootto$9.00persquarefootdependingonthesquarefootageofthebuilding,thetypeofbuilding,andthecertificationlevelthebuildinghasachievedintheLEEDgreenbuildingratingsystem.
Forcreditsthatarelessthan$100,000,amaximumof$25,000willbeappliedagainstthetaxpayer’sliabilityeachyearasneeded;forcreditsof$100,000andmore,amaximumof25%willbeappliedagainstthetaxpayer’sliabilityeachyear.
Thecreditisnotrefundable,butistransferable.Itmayalsobecarriedforwarduptosevenyears.
StatutoryBasis: 7‐2‐18.19and7‐2A‐21NMSA1978
IntendedPurpose: Toencouragetheconstructionofsustainablebuildingsandtherenovationofexistingbuildingsintosustainablebuildings.
History: Originallyenactedin2007andamendedin2009and2013.
The2013amendmentextendedtheexpirationdate,changedtheaggregatecapforcommercialbuildingfrom$5millionto$1millionandfrom$5millionto$4millionforresidentialbuildings,andestablishedthresholdsforhowmuchofthecreditcanbeclaimedineachyear.
In2015legislationwaspassedtore‐enactanewsustainablebuildingtaxcredit14,which:(1)providedthenewcreditthrough2026;(2)loweredthequalifiedsquarefootageandcreditamountforresidentialbuildings;and(3)reinstatedaper‐credit(asopposedtoanaggregatedcredit)methodologyfordeterminingannualizedcreditclaimamounts.
Evaluation: AccordingtoEMNRD,thesustainablebuildingtaxcreditreacheditscapinFY2015andFY2016.Inthe12‐monthperiodthroughOctober2013,EMNRDreceived,reviewed,andprocessed1,078applicationscomprising2.7millionsquarefeetoffloorarea,including:sixcommercialbuildingsof
14Sections7‐2‐18.29and7‐2A‐28NMSA1978
2016NewMexicoTaxExpenditureReport Page174
663,970squarefeet;216multifamilyhousingunitsof201,763squarefeet;67manufacturedhomesof111,082squarefeet;and795single‐familyhomesof1,787,047squarefeet.TheconstructionofbuildingsthatmeetENERGYSTAR,LEED,orBuildGreenNewMexicostandards,providedjobsin22NewMexicocounties.
TRDuseddataprovidedbyEMNRDinthousandsofBTU’s(BritishThermalUnits)toestimatethesavingsindollaramounts.UsingthePublicServiceCompanyofNewMexico’smonthlyratesperkilowatt‐hour(“kWh”),theDepartmentmonetizedthesavingsinenergyasaresultofthecredit.InFY2014,thetotalsavingsinresidentialhomeswasabout$570,000.Thefutureenergysavingsprojectionsover10yearswereestimatedtobe$27million,comparedto$18millionintaxcredits.Totalsavingsforcommercialbuildingsover10yearswereestimatedat$30million,comparedtoa$2.2millionintaxcredits.Itshouldbenotedthatthemonetizedenergysavingsareannualsavingsanddonotprojectorconsiderthecumulativeenergysavingsovertheusefullifeoftheproperties.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.DifferencesbetweenannualexpenditurereportsareattributedtoupdatesinGenTaxastaxfilersprovidelateand/oramendedreturns.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $2,289.1 $4,372.9 $2,549.1 $2,987.6 $2,686.8
Claims 307 429 358 417 473
‐50100150200250300350400450500
$‐$500.0
$1,000.0$1,500.0$2,000.0$2,500.0$3,000.0$3,500.0$4,000.0$4,500.0$5,000.0
CombinedTaxes(thousands)
SustainableBuildingCredit
2016NewMexicoTaxExpenditureReport Page175
TAXSTAMPSRATEDIFFERENTIALINCIGARETTETAX
Category: HealthCare
BriefDescription: TRDsellstaxstampsatfacevaluetodistributorsofcigarettes.Unlessthefacevalueoftaxstampssoldinasinglesaleislessthan$1,000,adiscountof0.55%isappliedforthefirst$30,000ofstampspurchasedinonecalendarmonth.A0.;44%discountisappliedforthenext$30,000ofstampspurchasedinthatmonth,anda0.27%discountisappliedforanystampspurchasedinexcessof$60,000.
StatutoryBasis: 7‐12‐7(D)NMSA1978
IntendedPurpose: Presumably,thisprovidesascaledincreaseofthepriceofstamps.Ratherthanprovidingforafloorwithincreasesatcertainthresholds,itprovidesaceilingwithdecreasesatcertainthresholds.Thismeetsthedefinitionofataxexpenditurebuttheintenttomakeitoneisunclear.
History: Originallyenactedin1943andamendedin1947,1949,1953,1963,1968,1970,1971,1988,2006,and2010.The2010amendmentreducedthediscounts.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1‐Thediscountedamountsarereportedseparately.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $268.8 $249.3 $262.8 $247.8 $260.7 $248.6
Claims 22 19 21 20 21 20
17.51818.51919.52020.52121.52222.5
$235.0
$240.0
$245.0
$250.0
$255.0
$260.0
$265.0
$270.0
$275.0
CigaretteTax(thousands)
TaxStampsRateDifferential
2016NewMexicoTaxExpenditureReport Page176
TECHNOLOGYJOBSANDRESEARCHANDDEVELOPMENTCREDITAGAINSTGRT,COMPENSATINGTAX,WITHHOLDINGTAX,PIT,OR
CIT
Category: EconomicDevelopment
BriefDescription: AtaxpayerwhoconductsqualifiedresearchanddevelopmentatafacilityinNewMexico,exceptatafacilityoperatedfortheU.S.government,mayclaimabasiccreditequalto5%(4%beforeJanuary1,2016)ofqualifiedexpenditures(thisisdoubledto8%whenthequalifiedfacilityisinaruralarea)againstGRT,compensatingtax,orwithholdingtax.
Thetaxpayermayqualifyforanadditional4%creditagainstPITandCITliabilitiesbyraisingitsin‐statepayrollby$75,000forevery$1millioninqualifiedexpendituresclaimed.Thiscreditdoublesifthequalifiedfacilityisinaruralarea.
A2015amendmentexcludedlocaloptiongrossreceiptstaxfromthetaxesthatthebasiccreditmaybeclaimedagainst.Thelegislationalsorequiredseparatereportingbythetaxpayer.
Qualifiedresearchanddevelopmentsmallbusinessisdefinedasataxpayerthat:
(1)employednomorethanfiftyemployeesasdeterminedbythenumberofemployeesforwhichthetaxpayerwasliableforunemploymentinsurancecoverageinthetaxableyearforwhichanadditionalcreditisclaimed;
(2)hadtotalqualifiedexpendituresofnomorethanfivemilliondollars($5,000,000)inthetaxableyearforwhichanadditionalcreditisclaimed;and
(3)didnothavemorethan50%ofitsvotingsecuritiesorotherequityinterestwiththerighttodesignateorelecttheboardofdirectorsorothergoverningbodyofthebusinessowneddirectlyorindirectlybyanotherbusiness;PriortoJanuary1,2016thecreditisnotrefundablebutmaybecarriedforwardaslongasneeded.
StartingJanuary1,2016thecreditisrefundableifthetaxpayer'stotalqualifiedexpendituresforthetaxableyearforwhichtheclaimismadeis:
(1)lessthan$3million,theexcessadditionalcreditshallberefundedtothetaxpayer;
(2)greaterthanorequalto$3millionandlessthan$4million,two‐thirdsoftheexcessadditionalcreditshallberefundedtothetaxpayer;and
(3)greaterthanorequalto$4millionandlessthanorequalto$5million,one‐thirdoftheexcessadditionalcreditshallberefundedtothetaxpayer.
2016NewMexicoTaxExpenditureReport Page177
StatutoryBasis: 7‐9F‐1etseq.NMSA1978
IntendedPurpose: Toincentivizethegrowthoftechnology‐basedbusinessesengaginginresearch,developmentandexperimentationbyprovidingafavorabletaxclimateandtopromoteincreasedemploymentandhigherwagesinthosefieldsinNewMexico.
History: Originallyenactedin2000andamendedin2015,HB2Sections10through18amendedtheTechnologyJobsTaxCreditActtocreatetheTechnologyJobsandResearchandDevelopmentTaxCreditAct.Section7‐9F‐9NMSA1978wasamendedtosetforththemechanismforclaimingthebasiccredit,andtoexcludelocaloptiongrossreceiptstaxfromthetaxesthatthebasiccreditmaybeclaimedagainst.Ataxpayerreportingrequirementwasalsocreated.
Evaluation: TheuseofthistaxcreditincreasedinFY2014.
Recommendations: Raisethevalueofthecreditandmakeitrefundableforsmallbusinessessothatthecreditcanactasastimulanttoqualifyingresearchanddevelopmentactivitiesbythesesmallbusinesses.
ReliabilityFactor: 2–Althoughthiscreditisseparatelyreported,itsreliabilityhasbeentemporarilymovedfrom1to2becauseofacertainissuewithinthereportingmechanism,whichiscurrentlyunderreviewbytheDepartment’sAuditandComplianceDivision(ACD).Therefore,thisexpenditurerequiresanadjustmentbasedonrecommendationprovidedbyACD.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Expenditures $3,168.7 $7,742.0 $8,323.6 $7,007.4 $5,382.6 $4,468.2
Claims 333 275 252 454 497 327
‐
100
200
300
400
500
600
$‐$1,000.0
$2,000.0$3,000.0$4,000.0$5,000.0$6,000.0$7,000.0
$8,000.0$9,000.0
CombinedTaxes(thousands)
TechnologyJobsCredit
2016NewMexicoTaxExpenditureReport Page178
TESTARTICLEDEDUCTIONFROMCOMPENSATINGTAX
Category: HighlySpecializedIndustry
BriefDescription: ThevalueoftestarticlesuponwhichresearchortestingisconductedinNewMexicopursuanttoacontractwiththeU.S.DepartmentofDefenseisdeductibleincomputingthecompensatingtaxdue.ThedeductionprovideddoesnotapplytothevalueofpropertypurchasedbyaprimecontractoroperatingafacilitydesignatedasanationallaboratorybyanactofCongress.
StatutoryBasis: 7‐9‐54.5NMSA1978
IntendedPurpose: PresumablytoincentivizetheretentionofU.S.AirForcebasesinNewMexicobyallowingacompensatingtaxdeductionfortheuseoftestarticlesuponwhichresearchortestingisconductedinNewMexicopursuanttoacontractwiththeU.S.DepartmentofDefense.
History: Originallyenactedin2004.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page179
TIDD–TAXINCREMENTFORDEVELOPMENTDISTRICTDEDICATEDINCREMENTS
Category: EconomicDevelopment
BriefDescription: StateandlocalgovernmentsmaydedicateaportionofGRTincrementsandpropertytaxincrementsforusebyaTIDDtofundeligibleactivitiesoftheTIDD.
StatutoryBasis: 5‐15‐15NMSA1978
IntendedPurpose: TocreateamechanismforprovidingGRTandpropertytaxfinancingforpublicinfrastructuretoincentivizethesupportofeconomicdevelopmentandjobcreation.
History: Originallyenactedin2006andamendedin2009and2014.
The2009amendmentclarifiedthefollowing:thatapprovaloftheplanisbythegoverningbodyofthemunicipalityorcountywithinwhichtheTIDDprojectsareproposed,thatthedepositthepetitionersputdownmaybereimbursedfromtheproceedsfromthesaleofbondsissuedbytheTIDD,todirectthegoverningbodyofthelocalgovernmenttonotifyTRD,DepartmentofFinanceandAdministration,andtheLFCwhenaresolutionisadopted,andtoaddrequirementsforthecontentofthenoticeofhearing,andtoclarifysomeadministrativeprovisions.
The2014amendmentcreatedamechanismforadjustingabaseyearonetime.
Evaluation: TIDDsallowforstateandlocalgovernmentstocontributetaxrevenuetodevelopmentsthataredeemedtobemutuallybeneficial.Administratively,TIDDsrequiregreatcareintheinitialsetupandbaselinesettingstage.Ifthebaselineissetcorrectlyfromthestart,taxpayerlocationmisfilingissuesareeasilycorrectedthroughthenetreceiptsprocess.
Recommendations: None.
ReliabilityFactor: 1–GRTreportingwithinTIDDsarereportedseparately.Noestimationisrequired.InFY15newTIDDsexistedthatwerenotincludedinthe2015report.Theyhavebeenincludethisyear.
FiscalImpact:
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Municipalities $836.1 $1,496.3 $1,414.3 $2,842.3 $1,460.7 $1,936.9 $1,884.3
Counties $97.9 $172.5 $135.6 $641.4 $228.4 $302.7 $294.5
State $436.9 $2,141.9 $2,290.4 $4,803.9 $2,351.8 $3,118.3 $3,033.6
$‐
$2,000.0$4,000.0$6,000.0$8,000.0$10,000.0
TIDD(thousands)
TIDDDedicatedGRTIncrements
2016NewMexicoTaxExpenditureReport Page180
URANIUMENRICHMENTPLANTEQUIPMENTDEDUCTIONFROMCOMPENSATINGTAX
Category: HighlySpecializedIndustry
BriefDescription: Thevalueofequipmentandreplacementpartsforthatequipmentmaybedeductedincomputingthecompensatingtaxdueifthepersonusestheequipmentorreplacementpartstoenrichuraniuminauraniumenrichmentplant.
StatutoryBasis: 7‐9‐78.1NMSA1978
IntendedPurpose: PresumablytoincentivizeenrichmentplantstolocateinNewMexico.
History: Originallyenactedin1999.
Evaluation: Operatingasintended.TheonlycurrentcommercialenrichmentfacilityintheUnitedStatesopenedinNewMexicoadecadeafterthisstatutewasenacted.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page181
URANIUMHEXAFLUORIDEANDURANIUMENRICHMENTGRTDEDUCTION
Category: HighlySpecializedIndustry
BriefDescription: Receiptsfromsellinguraniumhexafluorideanduraniumenrichmentaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐90NMSA1978
IntendedPurpose: PresumablytoincentivizetheuraniumhexafluorideindustryanduraniumenrichmentplantstolocateinNewMexico.
History: Originallyenactedin1999andamendedin2012.The2012amendmentallowedthedeductionforthesaleofuraniumhexafluoride.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1‐Thisdeductionisseparatelyreported.Noestimationisrequired.
NOTE:DataforFY2014‐FY2016havebeenredactedduetofewerthan3taxpayerstakingthededuction.Noclaimsotheryears.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $‐ $‐ $‐
$‐
$20.0
$40.0
$60.0
$80.0
$100.0
Expenditures(thousands)
UraniumHexafluorideandEnrichmentGRTDeductionDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page182
UNREIMBURSEDORUNCOMPENSATEDMEDICALCAREEXPENSESCREDITFROMPIT
Category: CitizenBenefits
BriefDescription: Ataxpayerwhois65yearsofageoroldermayclaimacreditof$2,800formedicalcareexpensespaidbythetaxpayerequalto$28,000ormore,ifthoseexpensesarenotreimbursedorcompensatedforbyinsuranceorotherwise.Thiscreditisrefundableifthecreditexceedstheincometaxliabilityforthetaxableyear.
StatutoryBasis: 7‐2‐18.13NMSA1978
IntendedPurpose: ToaccommodatetaxpayersbydeductingmedicalexpensesnototherwisereimbursedorcompensatedbyreducingNMtaxableincome.
History: Originallyenactedin2005withnoexpiration.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1–Theexpenseiscalculateddirectlyfromtaxpayerdata.Noestimationisrequired.
FiscalImpact:
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $4,088.0 $5,198.2 $5,366.2 $5,868.8 $6,147.4 $5,793.2
Claims 1,463 1,860 1,923 2,101 2,200 2,073
‐
500
1,000
1,500
2,000
2,500
$‐
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
$7,000.0
PIT(thousands)
UnreimbursedMedicalCareExpenseCredit
2016NewMexicoTaxExpenditureReport Page183
UNREIMBURSEDORUNCOMPENSATEDMEDICALCAREEXPENSESDEDUCTIONFROMPIT
Category: CitizenBenefits
BriefDescription: Ataxpayermayclaimadeductionfromnetincomeanamountdeterminedformedicalcareexpensespaidduringthetaxyearformedicalcareofthetaxpayer,thetaxpayer’sspouseordependent(s)iftheexpensesarenotreimbursedorcompensatedforbyinsuranceorotherwise.
StatutoryBasis: 7‐2‐37NMSA1978
IntendedPurpose: ToaccommodatetaxpayersbydeductingmedicalexpensesnototherwisereimbursedorcompensatedbyreducingNMtaxableincome.
History: Originallyenactedin2005.ThisdeductionhasasunsetprovisionofJanuary1,2025.
Evaluation: Thisisoneofseveralcitizenbenefitexpendituresrelatedtounreimbursedmedicalexpenses.Thisprogramisavailabletoalltaxpayers,subjecttopercentagesdeterminedbyadjustedgrossincomethresholds.Onaverageapproximately30%oftaxpayersusethisbenefit.
Recommendations: None.
ReliabilityFactor: 1–Theexemptionamountsforeachtaxpayerclaimingthisexemptionwerecomputed,makingthisdatamorereliablethaninpastyearswhenanaveragerateforalltaxpayerswasused.
FiscalImpact:
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $2,664.0 $2,736.0 $2,873.0 $3,063.0 $3,286.0 $3,283.0
Claims 315,472 315,251 320,120 315,013 318,418 322,585
200,000
220,000
240,000
260,000
280,000
300,000
320,000
$‐
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
PIT(thousands)
UnreimbursedMedicalCareExpenseDeduction
2016NewMexicoTaxExpenditureReport Page184
UNREIMBURSEDORUNCOMPENSATEDMEDICALCAREEXPENSESEXEMPTIONFROMPIT
Category: CitizenBenefits
BriefDescription: Anyindividualwhois65yearsoroldermayclaimanadditionalexemptionfromnetincomeinanamountequalto$3,000formedicalcareexpensespaidduringthetaxableyearifthosemedicalexpensesexceed$28,000andarenotreimbursedorcompensatedbyinsuranceorotherwise.Medicalexpensescouldbefortheindividual,theindividual’sspouse,ortheindividual’sdependents.
StatutoryBasis: 7‐2‐5.9NMSA1978
IntendedPurpose: ToaccommodatetaxpayersbydeductingmedicalexpensesnototherwisereimbursedorcompensatedbyreducingNMtaxableincome.
History: Thisexemptionwasenactedin2005anddoesnothaveasunsetprovision
Evaluation: Thisisoneofseveralcitizenbenefitexpendituresrelatedtounreimbursedmedicalexpenses.
Recommendations: None.
ReliabilityFactor: 1–Thisexpenditureiscalculateddirectlyusingtaxpayerdata.Noestimatingisrequired.
FiscalImpact:
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $50.0 $73.0 $86.0 $100.0 $115.0 $106.0
Claims 1,736 2,414 2,643 2,790 2,815 2,765
‐
500
1,000
1,500
2,000
2,500
3,000
$‐
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
PIT(thousands)
UnreimbursedMedicalCareExpenseExemption
2016NewMexicoTaxExpenditureReport Page185
VEHICLESTITLEDBEFOREJULY1,1991EXEMPTIONFROMLVGRT
Category: CitizenBenefits
BriefDescription: ReceiptsfromleasingbytheownerofvehiclesthatwereacquiredbytheownerpriortoJuly1,1991areexemptfromtheLVGRTaslongastheMVXwaspaidandacertificateoftitlewasissuedpriortoJuly1,1991.
StatutoryBasis: 7‐14A‐9NMSA1978
IntendedPurpose: Presumablytoavoidretroactivityoftaxesonvehiclestitledbeforetheenactmentdate.
History: Originallyenactedin1991.
Evaluation: Themajorityofleasesare3yearsandarefornewvehicles.Thelikelihoodthatsomeonewouldleasea25yearoldcarisverylowduetoitsageandhighmileageunlesstheyarebeingleasedasvintagevehicles.
Recommendations: Repeal.Atthispointintimetheexemptionappliestoveryfew,ifany,vehicles.
ReliabilityFactor: TRD’sinternaldatabasedoesnothaverecordsofleasesonvehicleswhichweretitledbeforeJuly1,1991.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page186
VENTURECAPITALINVESTMENTCREDITAGAINSTPIT
Category: EconomicDevelopment
BriefDescription: AtaxpayermayclaimacreditagainstPITliabilityequaltoacapitalgaintaxdifferential(typically50%ofthefederalincometaxpaidbythetaxpayeronqualifieddiversifyingbusinessnetcapitalsgains)ifthetaxpayerallocatesthequalifieddiversifyingbusinessnetcapitalgaintoNewMexico.
Thecreditisnotrefundablebutmaybecarriedforwardindefinitely.
StatutoryBasis: 7‐2D‐8.1NMSA1978
IntendedPurpose: Presumablytoencouragestrategicadvancesofthecurrentbusinesstofacilitateexplorationsofpotentialnewbusinesses.
History: Originallyenactedin1995.
Evaluation: Thiscreditisnotbeingclaimed.
Recommendations: Thiscreditappearstomirrorthenetcapitalgainincomededuction,anditsuseisprecludedifthenetcapitalgaindeductionistaken.Astudytodeterminewhythecreditisunusedisrecommended.Recommendrepealingthecredit.
ReliabilityFactor: 1‐Thiscreditisrequiredtobeseparatelyreported.Noestimationisrequired.
FiscalImpact: Notaxpayershaveclaimedthiscredit.
2016NewMexicoTaxExpenditureReport Page187
VETERANEMPLOYMENTCREDITAGAINSTPITANDCIT
Category: CitizenBenefits
BriefDescription: AtaxpayerwhoemploysaqualifiedmilitaryveteraninNewMexicoiseligibleforacreditagainstthetaxpayer'sPITandCITliabilitiesinanamountupto$1,000ofthegrosswagespaidduringthetaxableyearforwhichthereturnisfiledforeachmilitaryveteranwhoishiredwithintwoyearsofbeinghonorablydischarged,whoworksatleast40hoursperweek,andwhowasnotpreviouslyemployedbythetaxpayerpriortothedeployment.
Thecreditcanonlybeclaimedforoneyearperindividualveteran.
Thecreditisnotrefundablebutmaybecarriedforwardforthreeyears.
ApplicabletotaxableyearsbeginningJanuary1,2012andendingJanuary12017.
StatutoryBasis: 7‐2‐18.28and7‐2A‐27NMSA1978
IntendedPurpose: Toencouragethefull‐timeemploymentofqualifiedmilitaryveteranswithintwoyearsofdischargefromthearmedforcesoftheUnitedStates.
History: Originallyenactedin2012.
Evaluation: Thecreditisunderutilized.Possibleexplanationsarethattaxpayersareunawareofthecreditorthecreditistoosmalltoincentivizethehiringofqualifiedveterans.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact: NOTE:DataforFY2011andFY2012havebeenredactedduetofewerthan3taxpayersclaimingthecredit.Noclaimsotheryears.
FY2011 FY2012 FY2013 FY2014 FY2015
CombinedTaxes $‐ $‐ $‐
0
20
40
60
80
100
Expenditures(thousands)
VeteranEmploymentCreditDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page188
WELFARE‐TO‐WORKCREDITAGAINSTPITANDCIT
Category: CitizenBenefits
BriefDescription: PriortoJanuary1,2008,certainbusinesses,locatedinmostlyruralcounties,thatqualifiedforthefederalwelfare‐to‐workcreditprovidedby26USC§51A,mayalsohavebeeneligiblefortheNewMexicowelfare‐to‐workcreditagainstPITandCIT.BeginningJanuary1,2008,26USC§51Awasrepealedandreplacedbyfederalworkopportunitycredit.EmployersqualifyingforthenewfederalworkopportunitycreditwillnotqualifyfortheNewMexicocredit.
Thecreditmaybecarriedforwardforuptothreeyears.
StatutoryBasis: 7‐2‐18.5and7‐2A‐8.8NMSA1978
IntendedPurpose: Presumablytoencouragebusinessestohireemployeeswhohavebeenlong‐termfamilyassistancerecipientsandwhoresideinhigh‐unemploymentcounties.
History: Originallyenactedin1998.
Evaluation: Thiscreditisrarelyused.Nowthatthefederalprogramtowhichthiscreditwastiednolongerexists,taxpayersareabletoclaimthiscredittotheextentthatataxpayereithercarriedforwardthecreditoramendedareturnforactivitythathappenedwhilethefederalcreditwasstillineffect.Presumablythisaccountsforthelackofactivitysincethecreditexpired.
Recommendations: Repeal.Thiscreditistiedtoafederalprogramthatnolongerexists,andthus,thiscredithasnoeffect.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
NOTE:DataforFY2011andFY2012havebeenredactedduetofewerthan3taxpayersclaimingthecredit.Therehavebeennoclaimssince2012forthereasonsstatedabove.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
CombinedTaxes $‐ $‐ $‐ $‐
0
20
40
60
80
100
Expenditures(thousands)
Welfare‐to‐WorkCreditDatahavebeenredacted
2016NewMexicoTaxExpenditureReport Page189
WINDANDSOLARGENERATIONEQUIPMENTGRTDEDUCTION
Category: Environment,Conservation&RenewableEnergy
BriefDescription: Receiptsfromsellingwindgenerationequipmentorsolargenerationequipmenttoafederalorstategovernmentoragencyforthepurposeofinstallingawindorsolarelectricgenerationfacilityaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐54.3NMSA1978
IntendedPurpose: Presumablytoincentivizethedevelopmentofwindandsolarenergysources.
History: Originallyenactedin2002andamendedin2010.
Amendedin2010toexpandthedeductiontoincludesolargenerationequipment.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: Nodataareavailabletoestimatethefiscalimpact.
FiscalImpact: Unknown.
2016NewMexicoTaxExpenditureReport Page190
WORKINGFAMILIESCREDITAGAINSTPIT
Category: CitizenBenefits
BriefDescription: IndividualsmayclaimacreditagainstPITequalto10%oftheirfederalearnedincometaxcredit.
Thecreditisrefundable.
StatutoryBasis: 7‐2‐18.15NMSA1978
IntendedPurpose: Presumablytoreducethetaxburdenonworkingfamiliesmakingbelow$51,567(asdefinedbyInternalRevenueCode).
History: Originallyenactedin2007andamendedin2008.
Evaluation: None.
Recommendations: None.
ReliabilityFactor: 1‐Thiscreditisseparatelyreported.Noestimationisrequired.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015
Expenditures $47,968.1 $49,299.8 $50,338.5 $51,513.4 $51,552.1
Claims 213,788 214,120 214,120 215,020 212,587
150,000
160,000
170,000
180,000
190,000
200,000
210,000
220,000
$46,000.0
$47,000.0
$48,000.0
$49,000.0
$50,000.0
$51,000.0
$52,000.0
PIT(thousands)
WorkingFamiliesCredit
2016NewMexicoTaxExpenditureReport Page191
NOTTAXEXPENDITURES
Whilealmostanythingwithrespecttotaxexpenditurescanbedebated,littleargument15surroundsthefollowingdeviationsfromthetaxcode;thereforewearecomfortableclassifyingthemas“NotTaxExpenditures”.
Manyofthesedeviationsfallintooneoftwobroadcategories:1)reducingtheeffectsofpyramidingor2)allowingdeductionsorexemptionsunderonetaxprogrambecausetheLegislaturehaselectedtoimposetaxunderanotherprogram.OneofthedetrimentalimpactsofaGRTsystemisthat,absentadeviation,externalcostsofproductionaretaxedatthetimetheproduceracquiresthemandthenagainwhentheproducersellsthefinalproduct.Whencomparedtoasalestaxsystem,thismakesthecostofagoodorservicemoreexpensiveevenwhenallfactorsotherthanthetypeoftaxsystemareequal.ManyofthedeductionsinNewMexico’sGRTaredesignedtoeliminatethetaxationontheinputssothatthetaxisonlyappliedtothefinalproduct.
Furthermore,NewMexicopolicymakershavedecidedtousedifferenttaxstructurestotaxdifferentactivities(e.g.,MVXforthesaleofmotorvehicles).Deviationsfromonestructurewhentheactivityistaxedunderadifferentstructure(e.g.,GRTdeductionforthesaleofmotorvehicles)preventdoubletaxation.
Severalotherdeviationsareinthecodebecauseofthefederalpreemptiondoctrine.Becausestatesareprohibitedfromtaxingthefederalgovernment,NewMexicoisunabletoimposeataxinthesecasesregardlessofwhetherthedeviationwasplacedinthecode.IncludingitsimplyprovidessomemeasureofclaritytothetaxpayerandtheTaxationandRevenueDepartment.
InformationaboutthiscategoryisnotspecificallyrequiredbyExecutiveOrder2011‐071.However,wehaveincludedsomedescriptiveinformationabouttheminordertogivethereaderamorecompletepictureoftheNewMexicotaxlandscape.
15Notethatthisisintentionallydifferentfromsayingthat“thereisnoargument”;judgmentcallsareaninherentfeatureoftaxexpenditureanalysisandtheeconomistsattheNewMexicoTaxationandRevenueDepartmenthaveusedtheirbestjudgementindeterminingwhatisandwhatisnotataxexpenditure.
2016NewMexicoTaxExpenditureReport Page192
ACCREDITEDDIPLOMATSANDMISSIONSGRTDEDUCTION
BriefDescription: Receiptsfromthesaleorleaseofpropertyto,orfromperformingservicesfor,accreditedforeignmissionsordiplomatsaredeductiblefromgrossreceiptswhenrequiredbyatreatytowhichtheU.S.Governmentisasignatory.
StatutoryBasis: 7‐9‐89NMSA1978
IntendedPurpose: Presumablytocomplywiththepreemptiondoctrine.
History: Originallyenactedin1998.
ACQUISITIONOFVEHICLEFORSUBSEQUENTLEASEEXEMPTIONFROMMVX
BriefDescription: ApersonwhoacquiresavehicleforsubsequentleaseisexemptfromtheMVXif:
(1) thepersondoesnotusethevehicleinanymannerotherthanholdingitforleaseorsaleorleasingorsellingitintheordinarycourseofbusiness;
(2) theleaseisforatermofmorethan6months;
(3) thereceiptsfromthesubsequentleasearesubjecttoGRT;and
(4) thevehicledoesnothaveagrossvehicleweightofover26,000pounds.
StatutoryBasis: 7‐14‐6(F)NMSA1978
IntendedPurpose: PresumablytodefinethetaxbaseandavoidpyramidingasthereisarequirementthesubsequentleasebesubjecttoGRT.
History: Thesectionwasoriginallyenactedin1988andwasamendedin1990,1994,2004,and2007.Thelanguageinthissubsectionwasaddedaspartoftheamendmentin1994.
2016NewMexicoTaxExpenditureReport Page193
ACQUISITIONOFVEHICLEMORETHAN30DAYSBEFOREMOVINGTONM
EXEMPTIONFROMMVX
BriefDescription: Apersonwhoacquiresavehicleoutofstatethirtyormoredaysbeforeestablishingadomicileinthisstateisexemptfromthetaxifthevehiclewasacquiredforpersonaluse.
StatutoryBasis: 7‐14‐6(A)NMSA1978
IntendedPurpose: Presumablytoeliminateanunreasonabletaxburdenonnon‐residentsrelocatingtoNewMexicoonpersonallyownedandoperatedvehicles.
History: Originallyenactedin1988.
ATHLETICFACILITYSURCHARGEEXEMPTIONFROMGRTANDGGRT
BriefDescription: ExemptedfromtheGRTandfromtheGGRTarethereceiptsofauniversityfromanathleticfacilitysurchargeimposedpursuanttotheUniversityAthleticFacilityFundingAct.
StatutoryBasis: 7‐9‐41.1NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipleprograms.BecausetheUniversityAthleticFundingActallowsauniversitytoimposeanathleticfacilitysurchargeonproductsandservicessoldatorrelatedtothefacility,thisexemptsthosesalesfromtheGRTandGGRTsothattheyarenottaxedtwice.
History: Originallyenactedin2007aspartofthelegislationthatenactedtheUniversityAthleticFacilityFundingAct.
2016NewMexicoTaxExpenditureReport Page194
BADDEBTSDEDUCTIONFROMITGRT
BriefDescription: RefundsandallowancesmadetobuyersofinterstatetelecommunicationsservicesoramountswrittenoffthebooksasanuncollectibledebtbyapersonreportingITGRTonanaccrualbasisaredeductiblefrominterstatetelecommunicationsgrossreceipts.
Ifdebtsreportedasuncollectiblearesubsequentlycollected,thereceiptsmustbeincludedininterstatetelecommunicationsgrossreceiptswhentheyarecollected.
StatutoryBasis: 7‐9C‐9NMSA1978
IntendedPurpose: Presumablytoproperlydefinethetaxbaseandavoidrequiringataxpayertopaytaxesonnon‐existentreceipts.
History: Originallyenactedin1992.
BIODIESELFORSUBSEQUENTBLENDINGORRESALEBYARACKOPERATORDEDUCTIONFROMPETROLEUMPRODUCTSLOADING
FEEBriefDescription: BiodieselloadedinorimportedintoNewMexicoanddeliveredtoarack
operatorforsubsequentblendingorresalebyarackoperatorisdeductiblefromgallonsusedtodetermineloadsforthepurposesofcalculatingthepetroleumproductsloadingfee.
StatutoryBasis: 7‐13A‐5(B)NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Thesectionwasoriginallyenactedin1990.Thissubsectionwascreatedbyanamendmentin2014.
2016NewMexicoTaxExpenditureReport Page195
BOATSEXEMPTIONFROMGRTANDCOMPENSATINGTAX
BriefDescription: Boththereceiptsfromselling,andtheuseof,boatsonwhichanexcisetaxisimposedareexemptfromtheGRTandthecompensatingtax.
StatutoryBasis: 7‐9‐22.1and7‐9‐23.1NMSA1978
IntendedPurpose: PresumablytoavoidtaxationundermultipleprogramsastheseexemptionsonlyapplytothoseboatsonwhichataxisimposedpursuanttoSection66‐12‐6.1NMSA1978.
History: Originallyenactedin1987.
BUSINESSLOCATEDONLANDOWNEDBYTHEMUNICIPALITYBUTOUTSIDETHEMUNICIPALBOUNDARIES
EXEMPTIONFROMSUPPLEMENTALMUNICIPALGRTANDMUNICIPALLOCALOPTIONGRT
BriefDescription: AbusinesslocatedoutsideoftheboundariesofamunicipalityonlandownedbythatmunicipalityisexemptfromthesupplementalmunicipalGRTandthemunicipallocaloptionGRT.
StatutoryBasis: 7‐19‐14(B)and7‐19D‐5(B)NMSA1978
IntendedPurpose: Presumablytoresolveajurisdictionalquestionandprovidecertaintyaboutthetaxratethatappliesinthissituation(withoutthisclarification,therecouldbeargumentsaboutwhichtaxrateapplies).
History: Originallyenactedin1979andamendedin1983and1994.
2016NewMexicoTaxExpenditureReport Page196
CERTAINRETAILSALESOFGASOLINEONANINDIANRESERVATION,PUEBLOGRANTORTRUSTLAND
DEDUCTIONFROMGASOLINETAX
BriefDescription: ApersonmaydeductapercentageequaltotheratetheIndiannation,tribe,orpueblochargesdividedbytheratethestatechargesfromthegasolinegallonsreceivedthataresoldatretailonIndiannation,tribe,orpuebloland.
StatutoryBasis: 7‐13‐4.4NMSA1978
IntendedPurpose: Presumablytoaddressmulti‐jurisdictionaltaxationasthedeductionmayonlybetakeniftheIndiannation,tribe,orpueblohascertifiedthatithasineffectanexcise,privilege,orsimilartaxongasoline.
History: Originallyenactedin2000.
CHARITABLEORGANIZATIONSEXEMPTIONFROMPIT
BriefDescription: Religious,educational,benevolent,orotherorganizationsnotorganizedforprofitwhichareexemptfromincometaxationundertheInternalRevenueCodeareexemptfromPITandCIT;however,PITandCITapplytotheunrelatedbusinessincomeoftheorganization.
StatutoryBasis: 7‐2‐4(B)and7‐2A‐4(C)NMSA1978
IntendedPurpose: Presumablytodefinethetaxbase.
History: ThePITexemptionwasoriginallyenactedin1965andamendedin1969,1971,and1981.
TheCITexemptionwasoriginallyenactedin1981andamendedin1986and1989.
2016NewMexicoTaxExpenditureReport Page197
CHEMICALSANDREAGENTSGRTDEDUCTION
BriefDescription: Receiptsfromsellingchemicalsorreagentstoanymining,milling,oroilcompanyforuseinprocessingoresoroilinamill,smelter,orrefineryorinacidizingoilwells,andreceiptsfromsellingchemicalsorreagentsinlotsinexcessofeighteentonsaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐65NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969.
CONSTRUCTIONMATERIALGRTDEDUCTION
BriefDescription: Receiptsfromsellingconstructionmaterialaredeductiblefromgrossreceiptsifthesaleismadetoapersonengagedintheconstructionbusiness.
Thebuyermustpresentanontaxabletransactioncertificatetothesellerandincorporatetheconstructionmaterialas:
(1) aningredientorcomponentpartofaconstructionprojectthatissubjecttotheGRTuponitscompletionoruponthecompletionoftheoverallconstructionprojectofwhichitisapart;
(2) aningredientorcomponentpartofaconstructionprojectthatissubjecttotheGRTuponthesaleintheordinarycourseofbusinessoftherealpropertyuponwhichitwasconstructed;or
(3) aningredientorcomponentpartofaconstructionprojectthatislocatedonthetribalterritoryofanIndiannation,tribeorpueblo.
StatutoryBasis: 7‐9‐51NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin2000and2001.
2016NewMexicoTaxExpenditureReport Page198
CONSTRUCTIONSERVICESANDCONSTRUCTION‐RELATEDSERVICEGRTDEDUCTION
BriefDescription: Receiptsfromsellingaconstructionserviceoraconstruction‐relatedservicearedeductiblefromgrossreceiptsifthesaleismadetoapersonengagedintheconstructionbusiness.
Thebuyermustpresentanontaxabletransactioncertificatetothesellerandhavetheconstructionservicesorconstruction‐relatedservicesdirectlycontractedfororbilledto:
(1) aconstructionprojectthatissubjecttotheGRTuponitscompletionoruponthecompletionoftheoverallconstructionprojectofwhichitisapart;
(2) aconstructionprojectthatissubjecttotheGRTuponthesaleintheordinarycourseofbusinessoftherealpropertyuponwhichitwasconstructed;or
(3) aconstructionprojectthatislocatedonthetribalterritoryofanIndiannation,tribeorpueblo.
StatutoryBasis: 7‐9‐52NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin2000and2012.The2012amendmentincludedthedeductionforconstructed‐relatedservices.
DIVIDENDSANDINTERESTEXEMPTIONFROMGRT
BriefDescription: Interestonmoneyloanedordeposited;dividendsorinterestfromstocks,bonds,orsecurities;andreceiptsfromthesaleofstocks,bonds,orsecuritiesareexemptfromGRT.Thisexemptionexistsbecausetheabovearetaxedunderthepersonalincometax.
StatutoryBasis: 7‐9‐25NMSA1978
IntendedPurpose: Presumablyenactedasabasedefiningmeasure.
History: Originallyenactedin1969.
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DYEDGASOLINEUSEDFOROFF‐ROADTRANSPORTATIONDEDUCTIONFROMGASOLINETAX
BriefDescription: GasolinethatisdyedinaccordancewithTRDregulationsandisnotusedinmotorvehiclesoperatingonthehighwaysofNewMexicoisdeductiblefromthegasolinetaxbutissubjecttoGRT.
StatutoryBasis: 7‐13‐4(D)NMSA1978
IntendedPurpose: Presumablytorecognizethatoff‐roadvehiclesdon’tcontributetothedeteriorationoftheroads,themaintenanceofwhichisfundedthroughthegasolinetaxdistributionstotheStateRoadFund.
History: Thesectionwasoriginallyenactedin1991andamendedin1997,1998,1999,and2007.
Thelanguageinthissubsectionwascreatedbyanamendmentin1998.
DYEDSPECIALFUELDEDUCTIONFROMSPECIALFUELEXCISETAX
BriefDescription: Specialfuelsdyedinaccordancewithfederalregulationsaredeductiblefromthespecialfuelexcisetax.
StatutoryBasis: 7‐16A‐10(E)NMSA1978
IntendedPurpose: Presumablytorecognizethatoff‐roadvehiclesdonotcontributetothedeteriorationoftheroads,themaintenanceofwhichisfundedthroughthespecialfuelexcisetaxdistributionstotheStateRoadFund.
History: Thissectionwasoriginallyenactedin1992andamendedin1993,1997,1998,2001,2005,2006,2007,2009,and2013.
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EVENTCENTERSURCHARGEEXEMPTIONFROMGRTANDGGRT
BriefDescription: Receiptsfromsellingtickets,parking,souvenirs,concessions,programs,advertising,merchandise,corporatesuitesorboxes,broadcastrevenues,andallotherproductsorservicessoldatorrelatedtoamunicipaleventcenteronwhichaneventcentersurchargeisimposedpursuanttotheMunicipalEventCenterFundingActareexemptfromGRTandGGRT.
StatutoryBasis: 7‐9‐13.5NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprogramsasthereceiptshavetobesubjecttoaneventcentersurchargeinordertobeexempt.
History: Originallyenactedin2005aspartofthelegislationthatenactedtheMunicipalEventCenterFundingAct.
Evaluation: TheMunicipalEventCenterFundingActprovidesanadditionalmethodofaccessingthecapitalmarketstomeettheneedforacompletefundingpackageforfunctionalandmodernmunicipaleventcenters.BecausetheMunicipalEventCenterFundingActallowsamunicipalitytoimposeaneventcentersurchargeonproductsandservicessoldatorrelatedtothestadium,theseexemptionsfromtheGRTandGGRTpreventthemfrombeingtaxedtwice.
FILMSANDTAPESGRTDEDUCTION
BriefDescription: Receiptsfromleasingtheatricalandtelevisionfilmsandtapestomovietheatersorsimilarfacilitieswhenthetheater'sreceiptsaresubjecttoGRTaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐76.2NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1984.
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FOODSTAMPS/SNAPEXEMPTIONFROMGRT
BriefDescription: ReceiptsofretailersfromtheredemptionoffoodstampsareexemptfromGRT.
StatutoryBasis: 7‐9‐18.1NMSA1978
IntendedPurpose: ThisprogramisnotconsideredataxexpenditurebecauseoftheCodeofFederalRegulationsTitle7,SubtitleB,ChapterIIC,§278.2prohibitsthestatefromtaxingfoodpurchasedwithSNAPcoupons.Thestatute’sintendedpurposeispresumablytolowerthecostoffoodforthosewhoqualifyforandusefoodstamps(akaSupplementalNutritionAssistanceProgramor“SNAP”).
History: Originallyenactedin1987.
Evaluation: Presumablytocomplywiththefederalpreemptiondoctrine.ThisexemptiononlyapplieswhenaSNAPrecipientdoesnotbuyfoodfromoneof1,541qualifiedSNAPpointsofsaleinthestate.Becauseofthis,theestimatedamountsforthisexemptionarerelativelysmallwhencomparedtothetotalamountofSNAPexemptions,asreportedbyHSD.
Recommendations: None.
ReliabilityFactor: 3–UsingexpenditureandcasenumberdatafromHSDbetweenFY2011andFY2016,theannualaverageGRTratewasappliedtotheannualdollaramountsofSNAPexpenditures.ToestimatetheamountsoftheseexpendituresTRDassumedamaximumexemptionrateof9%startinginFY2010anda4%exemptionrateendinginFY2014.ThisexemptionapplieswhenSNAPbenefitsareusedtopurchasefoodfromaqualifiedretailfoodstore.Therefore,receiptsunderSection7‐9‐92NMSA1978maynotbedeductediftheyareexemptedbySection7‐9‐18.1NMSA1978.
FiscalImpact:
FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
GRT $3,800.0 $3,700.0 $3,300.0 $2,600.0 $2,300.0 $1,900.0
$‐$500.0
$1,000.0$1,500.0$2,000.0$2,500.0$3,000.0$3,500.0$4,000.0
Expenditures(thousands)
FoodStamps(SNAP)Exemption
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FUELEXEMPTIONFROMGRTANDCOMPENSATINGTAX
BriefDescription: Thesellingandtheuseofgasoline,specialfuel,oralternativefuelonwhichthetaximposedbyotheractshavebeenpaidareexemptfromGRTandcompensatingtax.
StatutoryBasis: 7‐9‐26NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprogramsasthefuelsmustbetaxedpursuanttothegasolinetax,thespecialfuelexcisetax,ortheAlternativeFuelTaxActinordertoqualifyfortheexemption.
History: Originallyenactedin1969andamendedin1971,1980,1981,1983,1993,and1995.
GASOLINEORSPECIALFUELSRETURNEDTOTHEREFINERASUNCOLLECTIBLE
DEDUCTIONFROMPETROLEUMPRODUCTSLOADINGFEE
BriefDescription: Gasolineandspecialfuelsthatarereturnedtotherefiner,pipelineterminaloperator,ordistributoraredeductiblefromthegallonsusedtodetermineloadsforpurposesofcalculatingthePPLFwhenrefundsandallowancesaremadetobuyersforthereturnedfuel.
Gasolineandspecialfuels,thepaymentforwhichhasnotbeencollectedandhasbeendeterminedtobeuncollectible,aredeductiblefromthegallonsusedtodetermineloadsforpurposesofcalculatingthePPLF.
StatutoryBasis: 7‐13A‐5(A)NMSA1978
IntendedPurpose: Presumablytoensurethattaxesarenotpaidongasolineandspecialfuelwhichthetaxpayerisunabletomarket.
History: Originallyenactedin1990andamendedin2014.
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INCOMEALLOCATIONANDAPPORTIONMENTCREDITAGAINSTCIT
BriefDescription: NetincomeofanytaxpayerhavingincomethatistaxablebothwithinandwithoutthisstateshallbeapportionedandallocatedpursuanttotheUniformDivisionofIncomeforTaxPurposesAct.
StatutoryBasis: 7‐2A‐8NMSA1978
IntendedPurpose: PresumablytopreventNewMexicofromtaxingincomethatisproperlyattributedtoanotherstatepertheU.S.CommerceClause.
History: Originallyenactedin1981andamendedin1983,1986,1990,1995,and1996.
INDIANSEXEMPTIONFROMPIT
BriefDescription: IncomeearnedbyamemberofaNewMexicofederally‐recognizedIndiannation,tribe,bandorpueblo,themember’sspouseordependent,whoisamemberofaNewMexicofederally‐recognizedIndiannation,tribe,bandorpueblo,isexemptfromPITiftheincomeisearnedfromworkperformedwithinandthemember,spouseordependentliveswithintheboundariesoftheIndianmember'sorthespouse'sreservationorpueblograntorwithintheboundariesoflandsheldintrustbytheU.S.forthebenefitofthememberorspouseorhisnation,tribe,bandorpueblo,subjecttorestrictionagainstalienationimposedbytheU.S..
StatutoryBasis: 7‐2‐5.5NMSA1978
IntendedPurpose: PresumablytocomplywithfederalrestraintsonstatetaxationunderfederalIndianlaw.Duringtaxyear2014approximately$624millionofIndianIncomewasexemptfromNMtaxation.Theamountoftaxnotcollectedforfederalcomitywasapproximately$1.5million.
History: Originallyenactedin1995.
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INSURANCECOMPANIESEXEMPTIONFROMCIT
BriefDescription: InsurancecompaniesthatpayapremiumtaxtothestateareexemptfromCIT.
StatutoryBasis: 7‐2A‐4(A)NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipleprogramsasqualificationfortheexemptionisdependentuponpayingapremiumtax.
History: Originallyenactedin1981andamendedin1986and1989.
INTERGOVERNMENTALCOALSEVERANCECREDITAGAINSTCOALSEVERANCETAX
BriefDescription: ApersonwhoseverscoalfromtriballandmayclaimacreditagainstthecoalseverancetaxandthecoalsurtaximposedunderSection7‐26‐6NMSA1978.
Thecreditiscalculatedmonthlyandisequalto75%ofthelesserof:
(1) theaggregateamountoftaxesineffectonMarch1,2001imposedbytheIndiannation,tribe,orpueblo;or
(2) theaggregateamountofcoalseverancetaxandthecoalsurtaxduetoNM.
StatutoryBasis: 7‐29C‐2NMSA1978
IntendedPurpose: PresumablyindeferencetothesovereigntyofIndiannation,tribes,andpueblosandaddressissueswithmulti‐jurisdictionaltaxation.
History: Originallyenactedin2001.
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INTERGOVERNMENTALCREDITAGAINSTCIT
BriefDescription: AnewbusinesswhichopensonIndianlandafterJuly1,1997mayclaimacreditagainsttheCIT.
Thecreditiscalculatedforeachreportingperiodandisequalto50%ofthelesserof:
(1) theaggregateamountoftaxpaidbythetaxpayer;or
(2) theamountofthetaxpayer’sCITduefromthenewbusiness’activityonIndianland.
StatutoryBasis: 7‐2A‐16NMSA1978
IntendedPurpose: Presumablytoaccommodateprinciplesoffairapportionmentbetweenthetribesandthestate.
History: Originallyenactedin1997.
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INTERGOVERNMENTALPRODUCTIONANDINTERGOVERNMENTALPRODUCTIONEQUIPMENTCREDITAGAINSTOILANDGAS
SEVERANCETAX,OILANDGASCONSERVATIONTAX,OILANDGASEMERGENCYSCHOOLTAX,ANDOILANDGASADVALOREM
PRODUCTIONTAXBriefDescription: Apersonwhoseversproductsfromtriballandmayclaimacreditagainst
theoilandgasseverancetax,theoilandgasconservationtax,theoilandgasemergencyschooltax,ortheoilandgasadvaloremproductiontax.
Thecreditiscalculatedmonthlyandisequalto75%ofthelesserof:
(1) theaggregateamountoftaxesineffectonMarch1,1995imposedbytheIndiannation,tribe,orpueblo;or
(2) theaggregateamountofoilandgasseverancetax,theoilandgasconservationtax,theoilandgasemergencyschooltax,ortheoilandgasadvaloremproductiontaxduetoNM.
ApersonwhoisliableforthepaymentoftheoilandgasproductionequipmentadvaloremtaximposedonequipmentlocatedonIndiantriballandmayclaimacredit.
Thecreditiscalculatedmonthlyandisequalto75%ofthelesserof:
(1) theaggregateamountoftaxesineffectonMarch1,1995imposedbytheIndiannation,tribe,orpueblo;or
(2) theaggregateamountofoilandgasproductionequipmenttaxduetoNM.
StatutoryBasis: 7‐29C‐1NMSA1978
IntendedPurpose: PresumablyindeferencetothesovereigntyofIndiannations,tribes,andpueblosandtoaddressthecumulativetaxburdenofmultijurisdictionaltaxation.
History: Originallyenactedin1995andamendedin1999.
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INTERNETSERVICESGRTDEDUCTION
BriefDescription: Receiptsfromprovidingtelecommunications,Internet,orInternetaccessservicestointernetserviceprovidersaredeductible.
StatutoryBasis: 7‐9‐56.1NMSA1978
IntendedPurpose: PresumablytoreducetaxpyramidingasthefinalusermustbesubjecttotheGRTorITGRT.
History: Originallyenactedin1998andamendedin2000.
INTERSTATESALESOFSPIRTUOUSLIQUORS,BEER,&WINEANDWINEGROWER‐TO‐WINEGROWERTRANSFERS
DEDUCTIONFROMLIQUOREXCISETAX
BriefDescription: Awholesalerwhosellsandshipsliquor,beer,orwineoutofstatemayclaimadeductionforthoselitersfromtheunitsofalcoholicbeveragessubjecttotheliquorexcisetax.
Awinegrowerwhotransferswinetoanotherwinegrowerforprocessing,bottling,orstorageandsubsequentlyreturnsthewinetotheoriginalwinegrowermayclaimadeductionforthoselitersfromtheunitsofwinesubjecttotheliquorexcisetax.
StatutoryBasis: 7‐17‐6NMSA1978
IntendedPurpose: PresumablytoincreaseNewMexicowinegrowers’competitivenessinotherstateswithrespecttotheout‐of‐statedeductionandtoensurethattheproductisnottaxedtwice(onceinNewMexicoandonceintheotherstate);andtoreducetaxpyramidingwithrespecttothewinegrower‐to‐winegrowertransfers.
History: Originallyenactedin1984andamendedin1995and2008.
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INTERSTATESALESOFTOBACCODEDUCTIONAGAINSTTOBACCOPRODUCTSTAX
BriefDescription: ThevalueoftobaccoproductssoldandshippedorgivenandshippedtoapersoninanotherstateisdeductiblefromtheproductvaluesubjecttotaximposedbytheTobaccoProductsTaxAct.
StatutoryBasis: 7‐12A‐5NMSA1978
IntendedPurpose: Presumablytoensurethattheproductisnottaxedtwice(onceinNewMexicoandagainintheotherstate).
History: Originallyenactedin1986.
INTERSTATETELECOMMUNICATIONSSERVICESEXEMPTIONFROMGRT
BriefDescription: ReceiptsfromsellingorprovidinginterstatetelecommunicationsservicesthataresubjecttoITGRTareexempt
StatutoryBasis: 7‐9‐38.1NMSA1978
IntendedPurpose: PresumablytoavoidtaxationundermultipleprogramsastheexemptiononlyappliestothesaleorprovisionofinterstatetelecommunicationsservicessubjecttothetaximposedbytheInterstateTelecommunicationsGrossReceiptsTaxAct16.
History: Originallyenactedin1992andamendedin1993.
INTERSTATECOMMERCETRANSACTIONSDEDUCTIONFROMLVGRT
BriefDescription: ReceiptsfromtransactionsininterstatecommercearedeductiblefromgrossreceiptstotheextentthattheimpositionoftheleasedvehiclegrossreceiptstaxwouldbeunlawfulundertheUnitedStatesConstitution.
StatutoryBasis: 7‐14A‐7NMSA1978
IntendedPurpose: TocomportwithU.S.ConstitutionallimitationsonstatetaxationundertheCommerceClause.
History: Originallyenactedin1991.
16Section7‐9C‐1NMSA1978
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JEWELRYMANUFACTURINGGRTDEDUCTION
BriefDescription: Receiptsfromsellingtangiblepersonalpropertyaredeductiblefromgrossreceiptsifitisincorporatedasaningredientorcomponentpartofthejewelrythebuyerisinthebusinessofmanufacturing.
Thedeductionallowedasellerunderthissectionshallnotexceed$5,000duringanytwelve‐monthperiodattributabletopurchasesbyasinglepurchaser.
StatutoryBasis: 7‐9‐74NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramidingasthedeductiononlyappliesifthesaleismadetoapersonwhousesthepropertyasaningredientorcomponentpartofthejewelrythebuyermanufactures.
History: Originallyenactedin1971andamendedin1975and1994.
JICARILLAAPACHETRIBALCAPITALIMPROVEMENTSTAXCREDITAGAINSTOILANDGASEMERGENCYSCHOOLTAX
BriefDescription: ApersonwhoisliableforthepaymentoftheoilandgasemergencyschooltaximposedonproductsseveredfromJicarillaApachetriballandshallbeentitledtoacreditagainsttheoilandgasemergencyschooltaxforqualifyingproducts.
Thecreditiscalculatedmonthlyandisequaltothelesserof:
(1) theJicarillaApachetribalcapitalimprovementstax;or
(2) .007%ofthetaxablevalueoftheproductsseveredfromqualifiedwells.
StatutoryBasis: 7‐31‐27NMSA1978
IntendedPurpose: PresumablyindeferencetothesovereigntyofIndiannations,tribes,andpueblosandaddressissueswithmulti‐jurisdictionaltaxation.TheJicarillaApachetribalcapitalimprovementstaxisexclusivelydedicatedtofundcapitalimprovementsprojectsonJicarillaApachetriballandandisnotavailabletofinancetheconstructionofbuildingsusedforcommercialactivity.
History: Originallyenactedin2002.
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LEASEFORSUBSEQUENTLEASEGRTDEDUCTION
BriefDescription: Receiptsfromleasingtangiblepersonalpropertyorlicensesusedforsubsequentleaseintheordinarycourseofbusinessaredeductiblefromgrossreceipts.
Thelesseemustprovideanontaxabletransactioncertificatetothelessor.
StatutoryBasis: 7‐9‐50NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin1972,1975,1979,1983,1991,and1992.
LEASEOFCONSTRUCTIONEQUIPMENTGRTDEDUCTION
BriefDescription: Receiptsfromleasingconstructionequipmentaredeductiblefromgrossreceiptsiftheleaseismadetoapersonengagedintheconstructionbusiness.
Thelesseemustpresentanontaxabletransactioncertificatetothelessorandusetheconstructionequipmentatthelocationof:
(1) aconstructionprojectthatissubjecttotheGRTuponitscompletionoruponthecompletionoftheoverallconstructionprojectofwhichitisapart;
(2) aconstructionprojectthatissubjecttotheGRTuponthesaleintheordinarycourseofbusinessoftherealpropertyuponwhichitwasconstructed;or
(3) aconstructionprojectthatislocatedonthetribalterritoryofanIndiannation,tribe,orpueblo.
StatutoryBasis: 7‐9‐52.1NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin2012.
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NATURALGASALREADYTAXEDEXEMPTIONFROMNATURALGASPROCESSORSTAX
BriefDescription: Thetaxshallnotbeleviedmorethanonceonthesamenaturalgas.
StatutoryBasis: 7‐33‐7NMSA1978
IntendedPurpose: Presumablytoavoiddoubletaxation.
History: Originallyenactedin1963andamendedin1998.
NATURALRESOURCESSUBJECTTORESOURCESEXCISETAXEXEMPTIONFROMGRT
BriefDescription: Receiptsfromthesaleorprocessingofnaturalresourcestheseveranceorprocessingofwhicharesubjecttotheresourcesexcisetaxareexemptfromgrossreceipts.
StatutoryBasis: 7‐9‐35NMSA1978
IntendedPurpose: PresumablytoavoidtaxationundermultipletaxprogramsastheexemptiononlyappliestonaturalresourcestheseveranceofwhicharesubjecttothetaxesimposedbytheResourcesExciseTaxAct.
History: Originallyenactedin1969andamendedin1984and1989.
“NETINCOME”EXEMPTIONSFROMPIT
BriefDescription: Income(intheformofinterest)derivedfromU.S.governmentobligationsisexcludedfromthedefinitionof“netincome”andthereforeexemptfromPIT.
StatutoryBasis: 7‐2‐2(N)NMSA1978
IntendedPurpose: Presumablytocomplywiththepreemptiondoctrine.
History: Originallyenactedin1991.
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NONRESIDENTEXEMPTIONFROMESTATETAX
BriefDescription: Thetransferofthepersonalpropertyofanonresidentisexemptfromtheestatetaxtotheextentthatthepersonalpropertyofresidentsisexemptfromtaxationunderthelawsofthestateinwhichthenonresidentisdomiciled.
StatutoryBasis: 7‐7‐4(D)NMSA1978
IntendedPurpose: Presumablytoreducetheadministrativecommitmentbetweenstates.
History: Originallyenactedin1973andamendedin1999.
OCCASIONALSALEOFPROPERTYORSERVICESEXEMPTIONFROMGRT
BriefDescription: ReceiptsfromtheisolatedoroccasionalsaleorleasingofpropertyoraservicebyapersonwhoisnotinthebusinessofsellingorleasingthesameorsimilarpropertyorserviceareexemptfromGRT.
StatutoryBasis: 7‐9‐28NMSA1978
IntendedPurpose: Presumablytoproperlydefinethetaxbase.
History: Originallyenactedin1969.
OILANDGASORMINERALINTERESTSEXEMPTIONFROMGRT
BriefDescription: Receiptsfromthesaleorleaseofoil,naturalgas,ormineralinterestsareexemptfromGRT.
StatutoryBasis: 7‐9‐32NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969.
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ONE‐WAYHAULANDEMPTYTRAVELRATEDIFFERENTIALFROMWDT
BriefDescription: If(1)amotorvehicleiscustomarilyusedforone‐wayhaul,(2)themotorvehicletravelsemptyofallloadforatleast45%ofthemileagetraveledduringaregistrationyear,and(3)theregistrantofthevehiclehasmadeaswornapplication,thetaxistwo‐thirdsofthestandardWDT.
StatutoryBasis: 7‐15A‐6(B)NMSA1978
IntendedPurpose: PresumablytoappropriatelytaxvehiclesaccordingtotheirwearandtearonNewMexicoroads.
History: Originallyenactedin1988andamendedin2003(1stSS),and2004.
PERSONALEFFECTSEXEMPTIONFROMCOMPENSATINGTAX
BriefDescription: Theusebyanindividualofpersonalorhouseholdeffectsbroughtintothestateinconnectionwiththeestablishmentbytheindividualofaninitialresidenceinthisstateandtheuseofpropertybroughtintothestatebyanonresidentforhis/herownnonbusinessusewhiletemporarilywithinthisstateareexemptfromcompensatingtax.
StatutoryBasis: 7‐9‐27NMSA1978
IntendedPurpose: PresumablytoavoidataxburdenonanyonerelocatingtoNewMexico.
History: Originallyenactedin1969.
PETROLEUMPRODUCTSEXPORTEDFORRESALEEXEMPTIONFROMPETROLEUMPRODUCTSLOADINGFEE
BriefDescription: PetroleumproductsthatareeitherloadedintocargotanksinNewMexicoandexportedforresaleandconsumptionoutsideofNewMexicoorareimportedintoNewMexicoandsubsequentlyexportedforresaleandconsumptionoutsideofNewMexicoareexemptfromthePPLF.
StatutoryBasis: 7‐13A‐4(A)NMSA1978
IntendedPurpose: PresumablytoproperlydefinethetaxbaseandtheloadingfeetypicallysupportsenvironmentalissuesrelatedtothestorageoffuelinNewMexico.
History: Originallyenactedin1991.
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PROCESSORSTAXPAIDONNATURALRESOURCESEXEMPTIONFROMRESOURCESTAX
BriefDescription: ThetaxablevalueofanynaturalresourcethatisprocessedinNewMexicoandonwhosetaxablevaluetheprocessorstaxispaidisexemptfromtheresourcestax.
StatutoryBasis: 7‐25‐7NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms,astheprocessorstaxontheprocessednaturalresourcemustbepaidtoqualifyfortheexemption.
History: Originallyenactedin1966.
PRODUCTSSUBJECTTOOILANDGASEMERGENCYSCHOOLTAXEXEMPTIONFROMGRT
BriefDescription: Unlessthesaleofproductsisfor:(1)subsequentresaleintheordinarycourseofbusiness,(2)consumptionoutsidethestate,or(3)useasaningredientorcomponentpartofamanufacturedproduct,receiptsfromthesaleofproductsareexemptfromGRTwhentheyaresubjecttotheoilandgasemergencyschooltax.
Thestorageoruseofcrudeoil,naturalgasorliquidhydrocarbonsforfuelintheoperationofaproductionunit,asdefinedintheOilandGasEmergencySchoolTaxAct,willnotbesubjecttogrossreceiptstaxorcompensatingtax.
StatutoryBasis: 7‐9‐33NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms,astheexemptiononlyappliestothoseproductstheseveranceofwhichissubjecttothetaximposedbytheOilandGasEmergencySchoolTaxAct.
History: Originallyenactedin1969andamendedin1975,1984,and1989.
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PURCHASEFORRESALEEXEMPTIONFROMLOCALLIQUOREXCISETAX
BriefDescription: Purchasesforsaletoretailersforresaleareexemptfromthelocalliquorexcisetax.
StatutoryBasis: 7‐24‐13NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramidinganddefinethetaxbase.
History: Originallyenactedin1989.
PURCHASEOFUNDYEDGASOLINEFORCERTAINOFF‐ROADUSEREFUNDOFGASOLINETAX
BriefDescription: Apersonusinggasolineintheoperationofaclothescleaningestablishment,instovesorotherappliancesburninggasoline,oroperatorsofaircraftusingaviationgasolineexclusivelyintheoperationofaircraftmaypurchaseundyedgasolineandmayclaimarefundofgasolinetaxpaid.
StatutoryBasis: 7‐13‐17NMSA1978
IntendedPurpose: Presumablytorecognizethattheseactivitiesdonotcontributetothedeteriorationoftheroads,themaintenanceofwhichisfundedthroughthegasolinetaxdistributionstotheStateRoadFund.
History: Originallyenactedin1998.
PURCHASESBYORONBEHALFOFTHESTATEGRTDEDUCTION
BriefDescription: ReceiptsfromthesaleofpropertyorservicespurchasedbyoronbehalfoftheStateofNewMexicofromfundsobtainedfromtheforfeitureoffinancialassurancepursuanttotheNewMexicoMiningActortheforfeitureoffinancialresponsibilitypursuanttotheWaterQualityActaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐97NMSA1978
IntendedPurpose: Presumablytorelieveminingcompaniesfromtheobligationtoestimate(andpotentiallyoverpay)theGRTcostincurredbyathird‐partycontractorthatwouldcompletethereclamationworkonbehalfofthestateintheeventthecompanyfailedtoconductthereclamationwork.
History: Originallyenactedin2005.
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REFINERSANDPERSONSSUBJECTTONATURALGASPROCESSORSTAXEXEMPTIONFROMGRTANDCOMPENSATINGTAX
BriefDescription: Unlessthesaleorprocessingofproductsarefor(1)subsequentresaleintheordinarycourseofbusiness,(2)consumptionoutsidethestate,or(3)useasaningredientorcomponentpartofamanufacturedproduct,receiptsfromthesaleorprocessingofproductsthataresubjecttothenaturalgasprocessorstaxareexemptfromtheGRT.
Receiptsfromstoringorusingcrudeoil,naturalgas,orliquidhydrocarbonswhenstoredorusedinNewMexicobya"processor"orbyapersonengagedinthebusinessofrefiningoil,naturalgas,orliquidhydrocarbonswhostoresorusesthecrudeoil,naturalgas,orliquidhydrocarbonsintheregularcourseofhisrefiningbusinessareexemptfromGRTandcompensatingtax.
StatutoryBasis: 7‐9‐34NMSA1978
IntendedPurpose: Presumablytodefinethetaxbasewithrespecttothefirstpartoftheexemptionwhichonlyappliestothesaleorprocessingofproductstheprocessingofwhichissubjecttothenaturalgasprocessorstax.Thesecondpartoftheexemptionispresumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin1970,1975,1984,and1989.
RELIGIOUSACTIVITIESEXEMPTIONFROMGRT
BriefDescription: Receiptsofaministerofa501(c)(3)religiousorganizationfromperformingreligiousservicestoanindividualrecipientoftheserviceareexemptfromGRT.
StatutoryBasis: 7‐9‐41NMSA1978
IntendedPurpose: Presumablytopreventtaxationofexpensesthatareeffectivelybusinessinputsofa501(c)(3)religiousorganization.
History: Originallyenactedin1972.
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RESALEACTIVITIESOFANARMEDFORCESINSTRUMENTALITYEXEMPTIONFROMGRTANDCOMPENSATINGTAX
BriefDescription: ReceiptsfromsellingtangiblepersonalpropertyandtheuseofpropertybyanyinstrumentalityofthearmedforcesoftheUnitedStatesengagedinresaleactivitiesareexemptfromGRTandcompensatingtax.
StatutoryBasis: 7‐9‐31NMSA1978
IntendedPurpose: Presumablytocomplywiththepreemptiondoctrineandtoreducetaxpyramiding.
History: Originallyenactedin1969.
RETURNEDORDESTROYEDTOBACCOPRODUCTSREFUNDORCREDITAGAINSTTOBACCOPRODUCTSTAX
BriefDescription: Taxpayerswhohavepaidthetobaccoproductstaxontobaccoproductsthataredestroyedorreturnedtothesellerbythefirstpurchaserasspoiledorotherwiseunfitforsaleorconsumptionareentitledtoarefundoforcreditagainstthetobaccoproductstax.
StatutoryBasis: 7‐12A‐6NMSA1978
IntendedPurpose: Presumablytodefinethetaxbaseandavoidrequiringataxpayertopaytaxesonunusabletobaccoproductsthathavenovalue.
History: Originallyenactedin1986andamendedin1988.
SALEOFASERVICEFORRESALEGRTANDGGRTDEDUCTION
BriefDescription: Receiptsfromsellingaserviceforresalearedeductiblefromgrossreceiptsorgovernmentalgrossreceipts.
StatutoryBasis: 7‐9‐48NMSA1978
IntendedPurpose: Presumablytodefinethetaxbaseandavoidtaxpyramiding.
History: Originallyenactedin1969andamendedin1992,and2000.
The2000amendmentclarifiedthattheresalemustbesubjecttotheGRTorGGRTinordertoqualifyforthedeductionandremovedtherequirementthatthebuyerseparatelystatethevalueoftheservicepurchasedinhischargefortheserviceonitsubsequentsale.
2016NewMexicoTaxExpenditureReport Page218
SALEOFASERVICEFORRESALEDEDUCTIONFROMITGRT
BriefDescription: Receiptsfromprovidinganinterstatetelecommunicationsservicethatwillbeusedbyotherpersonsinprovidingtelephoneortelegraphservicestothefinaluseraredeductiblefrominterstatetelecommunicationsgrossreceipts.
StatutoryBasis: 7‐9C‐7NMSA1978
IntendedPurpose: Presumablytodefinethetaxbase.
History: Originallyenactedin1992andamendedin1998.
SALEOFAEROSPACESERVICESFORTHEU.S.AIRFORCEGRTDEDUCTION
BriefDescription: ReceiptsfromperformingorsellingaerospaceresearchanddevelopmentforresaletoanorganizationforresaletotheU.S.,otherthananationallaboratory,aredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐54.1NMSA1978
IntendedPurpose: ToincentivizetheU.S.AirForcetorelocatetheSpaceSystemsDivision)toNewMexico.
History: Originallyenactedin1992andamendedin1993,1994,and1995.
2016NewMexicoTaxExpenditureReport Page219
SALEOFGASOLINEATRETAILBYAREGISTEREDINDIANTRIBALDISTRIBUTOR
DEDUCTIONFROMGASOLINETAX
BriefDescription: GasolinereceivedinNewMexicoandsoldatretailbyaregisteredIndiantribaldistributorisdeductiblefromthegasolinetax,totheextentit’staxedbytheIndiannation,tribe,orpueblo,if:
(1) thesaleoccursonthedistributor’sIndianreservation,pueblogrant,ortrustland,
(2) thegasolineisplacedintothefuelsupplytankofamotorvehicleonthatreservation,pueblogrant,ortrustland,and
(3) theIndiannation,tribe,orpueblohascertifiedthatithasineffectanexcise,privilege,orsimilartaxonthegasoline
StatutoryBasis: 7‐13‐4(E)NMSA1978
IntendedPurpose: Presumablytopreventorreducetheeffectsofmulti‐jurisdictionaltaxation.
History: Thesectionwasoriginallyenactedin1991andamendedin1997,1998,1999and2007.
Thelanguageinthissubsectionwascreatedbyanamendmentin1999.
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SALEOFGASOLINEBYAREGISTEREDINDIANTRIBALDISTRIBUTORFROMANON‐MOBILESTORAGECONTAINER
DEDUCTIONFROMGASOLINETAX
BriefDescription: GasolinethatisreceivedinNewMexicoandsoldbyaregisteredIndiantribaldistributorfromanon‐mobilestoragecontainerwithinthatdistributor’sIndianreservation,pueblogrant,ortrustlandforresaleoutsidetheIndianreservation,pueblogrant,ortrustlandisdeductiblefromthegasolinetaxaslongasthedistributorsoldatleast1milliongallonsofgasolinebetweenMayandAugust1998andthattheamountofgasolinedeductedbyaregisteredIndiantribaldistributordoesn’texceed2.5milliongallonspermonth.
StatutoryBasis: 7‐13‐4(F)NMSA1978
IntendedPurpose: Presumablytopreventandreducetheeffectsofmulti‐jurisdictionaltaxation.
History: Thesectionwasoriginallyenactedin1991andamendedin1997,1998,1999,and2007.
Thelanguageinthissubsectionwascreatedbyanamendmentin1999.
SALEOFTANGIBLEPERSONALPROPERTYFORLEASINGGRTDEDUCTION
BriefDescription: Receiptsfromsellingtangiblepersonalpropertyandlicensestoabuyerwholeasesorsellsthetangiblepersonalpropertyorlicensearedeductiblefromgrossreceipts.
Thebuyermustpresentanontaxabletransactioncertificatetotheseller.
StatutoryBasis: 7‐9‐49NMSA1978
IntendedPurpose: Presumablytodefinethetaxbaseandavoidtaxpyramiding.
History: Originallyenactedin1969andamendedin1972,1975,1979,1983,1989,1991,and1992.
2016NewMexicoTaxExpenditureReport Page221
SALEOFTANGIBLEPERSONALPROPERTYFORRESALEGRTANDGGRTDEDUCTION
BriefDescription: Receiptsfromsellingtangiblepersonalpropertyorlicensestoabuyerwhoresellsthetangiblepersonalpropertyorlicensearedeductiblefromgrossreceiptsorfromgovernmentalgrossreceipts.
Thebuyermustpresentanontaxabletransactioncertificatetotheseller.
StatutoryBasis: 7‐9‐47NMSA1978
IntendedPurpose: Presumablytodefinethetaxbaseandavoidtaxpyramiding.
History: Originallyenactedin1969andamendedin1992and1994.
SALESTHROUGHWORLDWIDEWEBSITESGRTDEDUCTION
BriefDescription: ReceiptsderivedfromthesaleofaserviceorpropertymadethroughawebsitetoapersonwithabillingaddressoutsideNewMexicoaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐57.1NMSA1978
IntendedPurpose: PresumablybecausetaxationofinterstatecommerceisprohibitedbytheU.S.Constitution’sCommerceClause.
History: Originallyenactedin1998.
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SALESTOMANUFACTURERSGRTANDGGRTDEDUCTION
BriefDescription: Receiptsfromsellingtangiblepersonalpropertythatwillbeincorporatedasaningredientorcomponentparttoapersoninthemanufacturingbusinessaredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.
Receiptsfromsellingtangiblepersonalpropertythatisconsumedinthemanufacturingprocesstoapersoninthemanufacturingbusinessaredeductiblefromgrossreceiptsandgovernmentalgrossreceiptsaccordingtothefollowingschedule:
20%ofreceiptsreceivedbeforeJanuary1,2014; 40%ofreceiptsreceivedincalendaryear2014; 60%ofreceiptsreceivedincalendaryear2015; 80%ofreceiptsreceivedincalendaryear2016; 100%ofreceiptsreceivedonorafterJanuary1,2017.
StatutoryBasis: 7‐9‐46NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin1992,2012and2013.
The2012amendmentprovidedthephase‐indeductionforthesaleoftangiblepersonalpropertyconsumedinthemanufacturingprocess(SubsectionB).
The2013amendmentdefinedtheterm“consumable.”
SCHOOLBUSDEDUCTIONFROMSPECIALFUELEXCISETAX
BriefDescription: Specialfuel(number2diesel)usedinschoolbusesthatarecontractedwiththePublicEducationDepartmentisdeductiblefromcomputingthespecialfuelexcisetaxdue.
StatutoryBasis: 7‐16A‐10(F)NMSA1978
IntendedPurpose: PresumablytoreducethecoststogovernmentsincetheStateofNewMexicopurchasesthisfuel.
History: Originallyenactedin1992,1993,1997,1998,2001,2005,2006,2007,2009,and2013.
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SCHOOLBUSEXEMPTIONFROMWDT
BriefDescription: UseofthehighwaysofNewMexicobyschoolbusesisexemptfromtheWDT.
StatutoryBasis: 7‐15A‐5(A)NMSA1978
IntendedPurpose: Presumablytoreducethecoststogovernment.
History: Originallyenactedin1988andamendedin2006.
SERVICESONMANUFACTUREDPRODUCTSGRTDEDUCTION
BriefDescription: Receiptsfromsellingtheserviceofcombiningorprocessingcomponentsormaterialstoamanufactureraredeductiblefromgrossreceipts.Theservicemustbeperformeddirectlyuponthetangiblepersonalpropertythebuyerisinthebusinessofmanufacturingorupontheingredientorcomponentpartsthereof.
Thebuyermustpresentanontaxabletransactioncertificatetotheseller.
StatutoryBasis: 7‐9‐75NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramidingastheservicemustbeperformeddirectlyupontangiblepersonalpropertyforamanufactureraspartofthereadyingofrawmaterialsorinthemanufacturingprocess.
History: Originallyenactedin1972.
SERVICESPERFORMEDOUTSIDETHESTATECREDITAGAINSTITGRT
BriefDescription: Ataxpayerwhohaspaidasales,use,grossreceipts,orsimilartaxtoanotherstateonthesameinterstatetelecommunicationsgrossreceiptsthataresubjecttoNewMexico’sITGRTisentitledtoacreditagainsttheITGRT.
StatutoryBasis: 7‐9C‐10NMSA1978
IntendedPurpose: TocomplywithU.S.CommerceClauseconcernsandpreventactualmulti‐jurisdictionaltaxationoftheprivilegeofengaginginbusinessofprovidinginterstatetelecommunicationsservices.
History: Originallyenactedin1992.
2016NewMexicoTaxExpenditureReport Page224
STOCKBONUS,PENSION,ANDPROFIT‐SHARINGTRUSTSEXEMPTIONFROMPITANDCIT
BriefDescription: AtrustorganizedorcreatedintheU.S.andformingpartofastockbonus,pension,orprofit‐sharingplanofanemployerfortheexclusivebenefitofhisemployeesortheirbeneficiarieswhichisexemptfromtaxationundertheprovisionsoftheInternalRevenueCodeisexemptfromPITandCIT.
StatutoryBasis: 7‐2‐4(A)and7‐2A‐4(B)NMSA1978
IntendedPurpose: Presumablytodefinethetaxbase.
History: ThePITexemptionwasoriginallyenactedin1965andamendedin1969,1971,and1981.
TheCITexemptionwasoriginallyenactedin1981andamendedin1986and1989.
TAXPAIDBYOUT‐OF‐STATETERMINALDEDUCTIONFROMGASOLINETAXANDSPECIALFUELEXCISETAX
BriefDescription: GasolineandspecialfuelreceivedinNewMexicoonwhichtheNewMexicogasolinetaxorspecialfuelexcisetaxwaspaidbytheout‐of‐stateterminalatwhichthegasolineorspecialfuelwasloadedaredeductiblefromcomputingthegasolinetaxorspecialfuelexcisetaxdue.
StatutoryBasis: 7‐13‐4(G)and7‐16A‐10(G)NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipletaxregimesasitisonlydeductibleifthegasolinetaxorspecialfuelexcisetaxwaspaidbytheout‐of‐stateterminalatwhichthegasolinewasloaded.
History: Thegasolinetaxsectionwasoriginallyenactedin1991andamendedin1997,1998,1999,and2007.
Thespecialfuelexcisetaxsectionwasoriginallyenactedin1992andamendedin1993,1997,1998,2001,2005,2006,2007,2009,and2013.
Thesubsectionscontainingthegasolinetaxandthespecialfuelexcisetaxdeductionsdiscussedherewerecreatedbyanamendmentin2007.
2016NewMexicoTaxExpenditureReport Page225
STADIUMSURCHARGEEXEMPTIONFROMGRTANDGGRT
BriefDescription: ReceiptsfromsalesataminorleaguebaseballstadiumonwhichastadiumsurchargeisimposedundertheMinorLeagueBaseballStadiumFundingActareexemptfromgrossreceiptstaxandgovernmentalgrossreceiptstax.
StatutoryBasis: 7‐9‐13.3NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms.
History: Originallyenactedin2001aspartofthelegislationthatenactedtheMinorLeagueBaseballStadiumFundingAct.
Evaluation: TheMinorLeagueBaseballStadiumFundingActprovidesanadditionalmethodofaccessingthecapitalmarketswiththeassistanceoftheNewMexicoFinanceAuthoritytomeettheneedforacompletefundingpackageforfunctionalandmodernminorleaguebaseballstadiums.BecausetheMinorLeagueBaseballStadiumFundingActallowsamunicipalitytoimposeastadiumsurchargeonproductsandservicessoldatorrelatedtothestadium,thisexemptionfromtheGRTpreventsthesefrombeingtaxedtwice.
IsotopesPark,homeoftheAlbuquerqueIsotopes,wasconstructedfrom2001to2003atareportedcostof$25million.TheLab,asithasbeennicknamed,openedinAprilof2003.
TAXPAIDINANOTHERSTATEFORPROPERTYANDSERVICESCREDITAGAINSTGRTANDCOMPENSATINGTAX
BriefDescription: Theamountofgrossreceipts,sales,compensating,orsimilartaxpaidtoanotherstateonpropertyacquiredinthatstateoranotherstateforuseinNewMexicooronservicesperformedoutsidethisstatemaybecreditedagainsttheamountofcompensatingtaxduetoNewMexicoontheuseofthepropertyortheGRTdueontheservicesperformedoutsideNewMexico.
StatutoryBasis: 7‐9‐79and7‐9‐79.1NMSA1978
IntendedPurpose: PresumablytoaddressU.S.CommerceClauseconcernsandpreventmulti‐jurisdictionaltaxationasagrossreceipts,sales,compensating,orsimilartaxmusthavebeenleviedonthepropertyorservicesinordertoqualifyforthecredit.
History: Thecompensatingtaxcreditforpropertywasoriginallyenactedin1966andamendedin1973and1991.
TheGRTcreditforserviceswasoriginallyenactedin1989andamendedin1994.
2016NewMexicoTaxExpenditureReport Page226
TAXPAIDONALCOHOLICBEVERAGESDESTROYEDINSHIPMENT,SPOILED,OROTHERWISEDAMAGED
REFUNDOFORCREDITAGAINSTLIQUOREXCISETAXANDLOCALLIQUOREXCISETAX
BriefDescription: Taxpayersareentitledtoarefundfortaxespaidpursuanttotheliquorexcisetaxandthelocalliquorexcisetaxonalcoholicbeveragesthatareunsaleableandnotconsumablebecausetheyaredestroyedinshipment,spoiled,ordamaged.
StatutoryBasis: 7‐17‐11and7‐24‐14NMSA1978
IntendedPurpose: Presumablytodefinethetaxbase,byavoidingtaxationofaproductthatisnotavailabletobesold.
History: Theliquorexcisetaxprovisionwasoriginallyenactedin1968andamendedin1969,1971,1973,1977,1984,and1995.
Thelocalliquorexcisetaxprovisionwasoriginallyenactedin1989.
TAXPAIDONGASOLINEORSPECIALFUELDESTROYEDBYFIRE,ACCIDENTORACTSOFGODBEFORERETAILSALE
REFUNDOFORCREDITAGAINSTGASOLINETAXANDSPECIALFUELEXCISETAX
BriefDescription: Ataxpayerisentitledtoarefundof,orcreditagainst,thegasolinetaxandspecialfuelexcisetaxpaidongasolineandspecialfuelthatisdestroyedbyfire,accident,oractsofGodwhileinthepossessionofthedistributor,wholesaler,orretailer.
StatutoryBasis: 7‐13‐11and7‐16A‐13NMSA1978
IntendedPurpose: Presumablytoensurethattaxesaren’tpaidongasolineandspecialfuelwhichthetaxpayerisunabletomarket.
History: Thegasolinetaxcreditandrefundsectionwasoriginallyenactedin1971andamendedin1983and1993.
Thespecialfuelexcisetaxcreditandrefundsectionwasoriginallyenactedin1992.
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TAXPAIDONSPECIALFUELINCERTAINCIRCUMSTANCESREFUNDOFSPECIALFUELEXCISETAX
BriefDescription: Ataxpayerisentitledtoarefundofthespecialfuelexcisetaxpaidonspecialfuelused:
(1) inaschoolbus(authorizedbycontractwiththePublicEducationDepartment),
(2) topropelavehicleoff‐road,
(3) tooperateauxiliaryequipmentbyapowertake‐offfromthemainengineortransmissionofavehicle,or
(4) tooperateanon‐automotiveapparatusvehicle.
StatutoryBasis: 7‐16A‐13.1NMSA1978
IntendedPurpose: Presumably,inthecaseoftheschoolbusrefund,toreducethecoststogovernmentandtorecognizethattheotheractivitiesdonotcontributetothedeteriorationoftheroads,themaintenanceofwhichisfundedthroughthespecialfuelexcisetaxdistributionstotheStateRoadFund.
History: Originallyenactedin2001andamendedin2005and2006.
TAXPAIDTOANOTHERSTATECREDITAGAINSTMVX
BriefDescription: Avehiclethathasbeenacquiredthroughanout‐of‐statetransactionuponwhichagrossreceipts,sales,compensatingorsimilartaxwaspaidmaybecreditedagainsttheMVXduetoNewMexicoonthesamevehicle.
StatutoryBasis: 7‐14‐7NMSA1978
IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxation.
History: Originallyenactedin1988.
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TAXPAIDTOANOTHERSTATEDEDUCTIONFROMGASOLINETAXANDSPECIALFUELEXCISETAX
BriefDescription: AtaxpayermaydeductgasolineandspecialfuelwhencomputingthegasolinetaxandspecialfuelexcisetaxifitisexportedfromNewMexicobyarackoperator,distributor,orwholesaleraslongas:
(1) thepersonexportingthegasolineandspecialfuelisregisteredinorlicensedbythedestinationstatetopaythatstate’sgasolineorequivalentfueltax,
(2) proofissubmittedthatthedestinationstate’sgasoline,specialfuel,orequivalentfueltaxhasbeenpaidorisnotdue,or
(3) thedestinationstate’sgasoline,specialfuel,orequivalentfueltaxinpaidtoNewMexicoinaccordancewiththetermsofanagreemententeredintowiththedestinationstate.
StatutoryBasis: 7‐13‐4(A)and7‐16A‐10(A)NMSA1978
IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxationasthedeductionisonlyavailableifproofissubmittedthatthedestinationstate’sgasolinetaxwaspaidorisnotdue.
History: Thegasolinetaxdeductionwasoriginallyenactedin1991andamendedin1997,1998,1999,and2007.
Thespecialfuelexcisetaxdeductionwasoriginallyenactedin1992andamendedin1993,1997,1998,2001,2005,2006,2007,2009,and2013.
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TAXPAIDTOANOTHERSTATECREDITAGAINSTESTATETAX
BriefDescription: Acreditagainsttheestatetaxisavailablewhenanypropertyofaresidentissubjecttoanestatetaximposedbyanotherstatewhentheotherstate’staxdoesnothaveareciprocalprovision.Thecreditamountwouldbeforthelesserof:
(1) theamountoftheestatetaxpaidtheotherstateandcreditedagainstthefederalestatetax,or
(2) anamountcomputedbymultiplyingthefederalcreditthepercentageoftheestatethatthepropertyrepresents.
StatutoryBasis: 7‐7‐3(B)NMSA1978
IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxationasitisonlyavailabletotheextentthattaxeswerepaidtoanotherstate.
History: Originallyenactedin1973.
TAXPAIDTONAVAJONATIONFORSELLINGCOALSEVENTY‐FIVEPERCENTCREDITAGAINSTGRT
BriefDescription: AtaxpayerisentitledtoacreditagainsttheGRTfor75%oftheamountoftaxpaidtotheNavajoNationonthereceiptsfromthesellingofcoalseveredfromNavajoNationland.
StatutoryBasis: 7‐9‐88.2NMSA1978
IntendedPurpose: Presumablytoaddresstheincreasedtaxburdensassociatedwithmulti‐jurisdictionaltax.
History: Originallyenactedin2001.
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TAXPAIDTONEWMEXICOTRIBESEXEMPTIONFROMITGRT
BriefDescription: Excludedfromthedefinitionof“interstatetelecommunicationsgrossreceipts”aregrossreceiptsorsalestaxesimposedbyIndiannations,tribes,orpueblosaslongastheIndiannation,tribe,orpueblotaxprovidesareciprocalexclusionforGRTimposedbyNewMexico.
StatutoryBasis: 7‐9C‐2(E)(2)NMSA1978
IntendedPurpose: Presumablytoavoidmulti‐jurisdictionaltaxation.
History: Originallyenactedin1992andamendedin1993and2002.
TAXPAIDTONEWMEXICOTRIBESSEVENTY‐FIVEPERCENTCREDITAGAINSTGRT
BriefDescription: AtaxpayerisentitledtoacreditagainsttheGRTfor75%oftheamountoftaxpaidtoanyofthe19NewMexicoPueblos,theJicarillaApacheNationortheMescaleroApacheTribeontaxabletransactionstakingplaceontriballands.
StatutoryBasis: 7‐9‐88.1NMSA1978
IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxation.
History: Originallyenactedin1999andamendedin2000,2001and2003.
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TAXESPAIDTOOTHERSTATESCREDITAGAINSTPIT
BriefDescription: WhenaresidentindividualisliabletoanotherstatefortaxuponincomederivedfromsourcesoutsideNewMexicobutalsoincludedinnetincomeallocatedorapportionedtoNewMexico,theindividualisentitledtoacreditagainstthetaxduetoNewMexicointheamountofthetaxpaidtotheotherstate.
StatutoryBasis: 7‐2‐13NMSA1978
IntendedPurpose: Presumablytopreventmulti‐jurisdictionaltaxationandbecausetaxationofinterstatecommerceisprohibitedbytheU.S.Constitution’sCommerceClause
History: Originallyenactedin1965andamendedin1973,1974,1981,1990,1992,and2013.
The2013amendmentlimitedthetaxcreditpaidtotheamountoftaxliabilityinNewMexico.
TELECOMMUNICATIONPROVIDERSDEDUCTIONFROMITGRT
BriefDescription: Receiptsfrominterstatetelecommunicationsservicesthatareprovidedbyacorporationtoitselfortoanaffiliatedcorporationmaybedeductedfrominterstatetelecommunicationsgrossreceipts.
StatutoryBasis: 7‐9C‐8NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1992andamendedin1993.
2016NewMexicoTaxExpenditureReport Page232
TRADE‐INALLOWANCEGRT,MVX,ANDDEDUCTIONS
BriefDescription: Receiptsfromatrade‐inoftangiblepersonalpropertyofthesametypebeingsoldaredeductiblefromgrossreceipts;allowancesgrantedforvehicletrade‐insaredeductiblefromthepricepaidorthereasonablevalueofthevehiclepurchasedincalculatingtheMVXandtheLVGRT.
StatutoryBasis: 7‐9‐71,7‐14‐4and7‐14A‐8NMSA1978
IntendedPurpose: Presumablytoproperlydefinethetaxbase.
History: TheGRTdeductionwasoriginallyenactedin1969andamendedin1979,and1991.
TheMVXdeductionwasoriginallyenactedin1988.
TheLVGRTdeductionwasoriginallyenactedin1991.
TRANSACTIONSININTERSTATECOMMERCEGRTANDGGRTDEDUCTION
BriefDescription: Receiptsfromtransactionsininterstatecommerceandfromsalesofradioortelevisionbroadcasttimeiftheultimatebuyerisanationalorregionaladvertiseraredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.
StatutoryBasis: 7‐9‐55NMSA1978
IntendedPurpose: PresumablybecausetaxationofinterstatecommerceisprohibitedbytheU.S.Constitution’sCommerceClause.
History: Originallyenactedin1969andamendedin1986and1993.
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TRANSACTIONSININTRASTATETRANSPORTATIONANDSERVICESININTERSTATECOMMERCE
GRTDEDUCTION
BriefDescription: Receiptsincurredwhentransportingpersonsorpropertyonanintrastatebasisandunderasinglecontractfortransportationininterstateorforeigncommerce(includinghandling,storage,drayage,orpackingofpropertyorotheraccessorialservicesonproperty)aredeductiblefromgrossreceipts.
Receiptsfromtelephoneaccesschargespaidbyothertelephonecarriersaredeductible.
StatutoryBasis: 7‐9‐56NMSA1978
IntendedPurpose: PresumablytoaddressU.S.CommerceClauseconcernsandcomportwiththepreemptiondoctrinewithrespecttothetransportationdeductionasthetransportationmustbepartofaninterstatecommercetransactiontobeeligibleforthededuction.
Withregardtothetelephoneserviceportionofthededuction,theintendedpurposeispresumablytopreventdoubletaxation.
History: Originallyenactedin1994.
2016NewMexicoTaxExpenditureReport Page234
TRANSPORTATIONFROMWITHINTHEMUNICIPALITYTOOUTSIDETHEMUNICIPALITY
EXEMPTIONFROMLOCALOPTIONGRT
BriefDescription: Thetransportingofpersonsorpropertyforhirebyanymeansfromonepointwithinthemunicipality(orcounty)toanotherpointoutsidethemunicipality(orcounty)areexemptfromthesupplementalmunicipalGRT,themunicipallocaloptionGRT,thelocalhospitalGRT,thecountylocaloptionGRT,andthecountycorrectionalfacilityGRT.
StatutoryBasis: 7‐19‐14(A),7‐19D‐5(A),7‐20C‐5,7‐20E‐5,and7‐20F‐6NMSA1978
IntendedPurpose: Presumablytoresolveajurisdictionalquestionandprovidecertaintyaboutthetaxratethatappliesinthissituation.
History: ThesupplementalmunicipalGRTexemptionwasoriginallyenactedin1979andamendedin1983and1994.
ThemunicipalandcountylocaloptionGRTsexemptionswereoriginallyenactedin1993andamendedin1994.
ThecountycorrectionalfacilityGRTwasoriginallyenactedin1993.
ThelocalhospitalGRTexemptionwasoriginallyenactedin1991andamendedin1994.
UNCOLLECTIBLEDEBTSGRTANDGGRTDEDUCTION
BriefDescription: Refundsandallowancesmadetobuyersoramountswrittenoffthebooksasanuncollectibledebtbyapersonreportinggrossreceiptstaxandgovernmentalgrossreceiptsonanaccrualbasismaybedeductedfromgrossreceiptsandgovernmentalgrossreceipts.
StatutoryBasis: 7‐9‐67NMSA1978
IntendedPurpose: Presumablytoavoidrequiringataxpayertopaytaxesonrefundedoruncollectiblereceipts.
History: Originallyenactedin1969andamendedin1994.
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UNPAIDCHARGESFORHOSPITALSERVICESCREDITAGAINSTGRT
BriefDescription: Alicensedmedicaldoctororlicensedosteopathicphysicianmayclaimacreditagainstgrossreceiptstaxesdueforthevalueofunpaidqualifiedhealthcareservices.Qualifiedhealthcareservicesmustbeprovidedbythedoctororphysicianwhileoncalltoahospital.
StatutoryBasis: 7‐9‐96.2NMSA1978
IntendedPurpose: Presumablytoavoidrequiringataxpayertopaytaxesonnon‐existentreceipts.
History: Originallyenactedin2007.
USEOFTANGIBLEPERSONALPROPERTYFORLEASINGDEDUCTIONFROMCOMPENSATINGTAX
BriefDescription: Thevalueoftangiblepersonalpropertyheldforleasebyapersonengagedinthebusinessofsellingorleasingthesametypepropertymaybedeductedbeforecomputingcompensatingtaxdue;however,itdoesnotapplytothevalueoffurnitureorappliancesfurnishedaspartofarenthouseorapartment,coin‐operatedmachines,ormanufacturedhomes.
StatutoryBasis: 7‐9‐78NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin1973,1975,1979,1981,1984,and1991.
VEGETABLEOILORANIMALFATBIODIESELDEDUCTIONFROMSPECIALFUELEXCISETAX
Category: Environment,Conservation&RenewableEnergy
BriefDescription: BiodieselthatisblendedorresoldatarackinNewMexicoisdeductiblefromthespecialfuelexcisetax
StatutoryBasis: 7‐16A‐10(H)(1)and(2)NMSA1978
IntendedPurpose: Presumablytopreventdoubletaxation.
History: Originallyenactedin2009andamendedin2013.The2013amendmentchangedadefinitionofthefuelasconsistingofatleast99%vegetableoiloranimalfatinfavorofjustusingtheterm‘biodiesel’.
2016NewMexicoTaxExpenditureReport Page236
VEHICLETHATISOWNEDBYTHESTATEOFNEWMEXICOEXEMPTIONFROMMVX
BriefDescription: AvehiclewithacertificateoftitleownedbyNewMexicooranypoliticalsubdivisionisexemptfromMVX.
StatutoryBasis: 7‐14‐6(C)NMSA1978
IntendedPurpose: Presumablytoreducethecoststogovernment.
History: Originallyenactedin1988,andamendedin1990,1994,2004,and2007.
VEHICLETHATWASPREVIOUSLYREGISTEREDINNEWMEXICOEXEMPTIONFROMMVX
BriefDescription: ApersonapplyingforacertificateoftitleforavehicleregisteredinanotherstateisexemptfromthetaxifthepersonhaspreviouslyregisteredandtitledthevehicleinNewMexicoandhasownedthevehiclecontinuouslysincethattime.
StatutoryBasis: 7‐14‐6(B)NMSA1978
IntendedPurpose: Presumablytopreventdoubletaxation(twiceinNewMexico).
History: Originallyenactedin1988,andamendedin1990,1994,2004,and2007.
2016NewMexicoTaxExpenditureReport Page237
VEHICLESEXEMPTIONSFROMGRTANDCOMPENSATINGTAX
BriefDescription: ThereceiptsfromsellingvehiclesonwhichataxisimposedbytheMotorVehicleExciseTaxAct,vehiclesregisteredbypersonswithsignificantmobilitylimitations,andvehiclesexemptfromtheMVXpursuanttoSection7‐14‐6(F)NMSA1978areexemptfromGRT.
TheuseofvehiclesusedinNewMexicoonwhichthetaximposedbytheMotorVehicleExciseTaxActhasbeenpaid,theuseofvehiclessubjecttoregistrationundertheMotorVehicleCodeandtheuseofvehiclesexemptfromMVXpursuanttoSection7‐14‐6(F)NMSA1978areexemptfromcompensatingtax.
StatutoryBasis: 7‐9‐22and7‐9‐23NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms,astheexemptiononlyappliestovehiclesonwhichataxisimposedpursuanttotheMotorVehicleExciseTaxAct.
History: TheGRTexemptionwasoriginallyenactedin1969andamendedin1976,1981,1988,and2004.
Thecompensatingtaxexemptionwasoriginallyenactedin1969andamendedin1976,1983,1988,and2004.
VEHICLESUSEDFORSHORT‐TERMLEASINGCREDITAGAINSTMVX
BriefDescription: TheMVXissuspendedforvehiclesusedprimarilyasshort‐termrentalvehiclesthatarepartofavehiclefleetofatleastfivevehiclesthataresubjecttotheleasedvehiclegrossreceiptstax.
StatutoryBasis: 7‐14‐7.1NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipletaxprograms.
History: Originallyenactedin1991andamendedin1993and1994.
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VEHICLESUSEDININTERSTATECOMMERCEGRTDEDUCTION
BriefDescription: ReceiptsfromtherentalorleasingofvehiclesusedinthetransportationofpassengersorpropertyforhireininterstatecommerceundertheregulationsorauthorizationofanyagencyoftheU.S.aredeductiblefromGRT.
StatutoryBasis: 7‐9‐70NMSA1978
IntendedPurpose: PresumablybecausetaxationofinterstatecommerceisprohibitedbytheU.S.Constitution’sCommerceClause.
History: Originallyenactedin1969.
WAGESEXEMPTIONFROMGRT
BriefDescription: Receiptsofemployeesfromwages,salaries,commissionsorfromanyotherformofremunerationforpersonalservicesareexemptfromGRT.
StatutoryBasis: 7‐9‐17NMSA1978
IntendedPurpose: Presumablytodefinethetaxbase.
History: Originallyenactedin1969.
WARRANTYOBLIGATIONSGRTDEDUCTION
BriefDescription: Receiptsofadealerfromfurnishinggoodsorservicestothepurchaseroftangiblepersonalpropertytofulfillawarrantyobligationofthemanufacturerofthepropertymaybedeductedfromgrossreceipts.
StatutoryBasis: 7‐9‐68NMSA1978
IntendedPurpose: Presumablytoproperlydefinethetaxbase,asthecostofthewarrantyispartofcostofthegoodorserviceandtaxeswerepaidonitatthetimeoftheoriginalpurchase.
History: Originallyenactedin1969.
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ARGUABLE
WhilemanyofthedeviationsfromNewMexico’smanytaxprogramsareeasilycategorizedaseither“TaxExpenditures”or“NotTaxExpenditures”,thereareanumberaboutwhichgoodargumentscouldbemadeforboth.Withafewothers,thepurposeofthedeviationisnotentirelyclear;withoutknowingwhythedeviationwasputinthecode,itisnotpossibletodetermineinwhichcategoryitbelongs.
Aswiththe“NotTaxExpenditures”section,webelievethatincludinginformationaboutthesedeviations,evenwithoutanalysisofthefiscalimpact,makesthereaderbetterinformedabouttheNewMexicotaxstructure.
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ADMINISTRATIVEANDACCOUNTINGSERVICESGRTDEDUCTION
BriefDescription: Receiptsofabusinessentityforadministrative,managerial,accounting,andcustomerservicesperformedbyitforanaffiliateuponanonprofitorcostbasisaredeductiblefromgrossreceipts.
Receiptsofabusinessentityfromanaffiliateforthejointuseorsharingofofficemachinesandfacilitiesuponanonprofitorcostbasisaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐69NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin1990,1993,1998,2002,and2015.
AGRICULTURALPRODUCTSEXEMPTIONFROMGRTANDGGRT
BriefDescription: Receiptsfromsellinglivestock,includinghorses,andthereceiptsofgrowers,producersandtrappersfromsellinglivepoultry,unprocessedagriculturalproducts(forexample,abaleofhay,aheadoflettuceoranunroastedsackofgreenchili),hidesorpeltsareexemptfromtheGRTandGGRT.
ReceiptsfromsellingdairyproductsatretailarenotexemptfromtheGRT.
StatutoryBasis: 7‐9‐18NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin1991,1992,1993,and2011.
The2011amendmentexpandedthedeductionbydefining“livestock”asalldomesticordomesticatedanimalsthatareusedorraisedonafarmorranch,includingthecarcassesthereof,andincludeshorses,asses,mules,cattle,sheep,goats,swine,bison,poultry,ostriches,emus,rheas,camelidsandfarmedcervidaeuponanylandinNewMexico.
Evaluation: Thisdeductioncannotbecompletelyconsideredananti‐pyramidingdevice,asthereisnolimitationthatthereceiptscomefromthesaleofgoodsthatareintermediategoods,orthatareforresale.However,itisnotpossibletodeterminewhichportionisattributabletoresaleactivitiesandwhichisnot.
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CERTAINCOMMISSIONSGRTDEDUCTION
BriefDescription: Receiptsderivedfromcommissionsfromsalesoftangiblepersonalpropertywhenthepropertysoldisnotsubjecttogrossreceiptstaxaredeductiblefromgrossreceipts.
Receiptsoftheownerofadealerstoreforsellingaprincipal’sgoodsaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐66NMSA1978
IntendedPurpose: Presumablytoavoiddoubletaxationsincecommissionsaretaxableaspersonalincome.
History: Originallyenactedin1969andamendedin1999.
CERTAINSALESFORRESALETENPERCENTCREDITAGAINSTGRTANDGGRT
BriefDescription: AtaxpayermayclaimacreditagainstGRTandGGRTforreceiptsfromsellingservicesforresaleaslongastheresaleisintheordinarycourseofbusiness,theresaleisnotsubjecttoeitherGRTorGGRT,andthebuyerdeliverstothesellerappropriatedocumentationfromTRDthattheresalemeetsthecriteriaforresaleintheordinarycourseofbusiness.
StatutoryBasis: 7‐9‐96NMSA1978
IntendedPurpose: Presumablytoremovethetaxburdenfromthe“sellersofservicesforresale”thatwillnotbetaxedatthefinalsale.
History: Originallyenactedin2005.
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FEEDANDFERTILIZER&AUCTIONEERSSELLINGLIVESTOCKANDAGRICULTURALPRODUCTSATAUCTION
GRTDEDUCTION
BriefDescription: Receiptsfromsellingfeedforlivestock,fish,poultry,oranimalsraisedfortheirhides/peltsandfromsellingseeds,roots,bulbs,plants,soilconditioners,fertilizers,insecticides,germicides,insectsusedtocontrolpopulationsofotherinsects,fungicidesorweedicidesorwaterforirrigationpurposesaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐58NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin1977,1983,1991,1992and2002.
GROSSAMOUNTSWAGEREDEXEMPTIONFROMGRT
BriefDescription: ExemptedfromGRTarereceiptsofahorseracetrackwhichareauthorizedbytheHorseRacingActtoberetainedbyahorseracetrackthatislicensedtoconducthorseraces.
StatutoryBasis: 7‐9‐40(B)NMSA1978
IntendedPurpose: Presumablytoavoidtaxingreceiptsovergrossamountswageredwhichareundernoauthoritytobespentbyahorseracetrack.
History: Originallyenactedin1970andamendedin1971,1985,and1989.
Recommendation: Updatethestatutetoreflectthecorrectcitation.ItcurrentlyreferencesSection60‐1‐10NMSA1978whichwasrepealedin2007.PresumablytheintentionisforittoreferencethesuccessorstatutewhichappearstobeSection60‐1A‐19NMSA1978.
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INSURANCECOMPANIESEXEMPTIONFROMGRT
BriefDescription: ThereceiptsofinsurancecompaniesoranyagentthereoffrompremiumsandanyconsiderationreceivedbyapropertybondsmanassecurityorsuretyforabailbondinconnectionwithajudicialproceedingareexemptfromGRT.
StatutoryBasis: 7‐9‐24NMSA1978
IntendedPurpose: Presumablytopreventtaxationundermultipletaxprograms,asthereceiptsofinsurancecompaniesaresubjecttotheinsurancepremiumtaxandpresumablytoensurethatconsiderationsreceivedassecurityofsuretyforabailbondarenottaxedastheyarenotrightlyconsideredreceipts.
History: Originallyenactedin1969andamendedin1988.
LIVESTOCKFEEDINGEXEMPTIONFROMGRT
BriefDescription: Receiptsfromfeeding(includingpenningorhandlinglivestockpriortosaleandtraininglivestock)orpasturinglivestock,areexemptfromGRT.
StatutoryBasis: 7‐9‐19NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969andamendedin1974,1991,and1992.
PETROLEUMPRODUCTSSOLDTOTHEFEDERALGOVERNMENTEXEMPTIONFROMPETROLEUMPRODUCTSLOADINGFEE
BriefDescription: PetroleumproductssoldtotheU.S.oranyagencyorinstrumentalitythereoffortheexclusiveuseoftheU.S.oranyagencyorinstrumentalitythereofareexemptfromthePPLF.
StatutoryBasis: 7‐13A‐4(B)NMSA1978
IntendedPurpose: PresumablytoreducethecosttotheU.S.government.
History: Originallyenactedin1991.
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PIPELINETRANSPORTATIONOFOILANDGASPRODUCTSEXEMPTIONFROMGRTANDCOMPENSATINGTAX
BriefDescription: Receiptsfromthesaleofoil,naturalgas,liquidhydrocarbon,oranycombinationthereofconsumedasfuelinthepipelinetransportationofsuchproductsareexemptfromGRT.
Theuseofoil,naturalgas,liquidhydrocarbonoranycombinationthereofasfuelinthepipelinetransportationofsuchproductsisexemptfromcompensatingtax.
StatutoryBasis: 7‐9‐36and7‐9‐37NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: TheGRTandcompensatingexemptionswereoriginallyenactedin1969.
PROCESSINGAGRICULTURALPRODUCTSGRTDEDUCTION
BriefDescription: Receiptsfromwarehousinggrainorotheragriculturalproductsandfromthreshing,harvesting,growing,cultivating,andprocessingagriculturalproductsaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐59NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1969,andamendedin1970,and2000.
RECEIPTSOFHOMEOWNERSASSOCIATIONSEXEMPTIONFROMGRT
BriefDescription: Receiptsofhomeowners’associations(HOA)frommembershipfees,dues,andassessmentsfromowner‐memberstobeusedfortax,insurance,utilityexpenses,managementandimprovement,maintenanceorrehabilitationofthosecommonareas,elements,orfacilitiesappurtenanttheretoforcommonly‐ownedareasandfacilitiesareexemptfromGRT.
StatutoryBasis: 7‐9‐20NMSA1978
IntendedPurpose: PresumablytoprovideclarificationthataHOAcanberecognizedasa501(c)(4)organizationtoqualifyforthisexemptionifitsactivitiesbenefitacommunity.
History: Originallyenactedin1988.
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RESALEOFCERTAINMANUFACTUREDHOMESGRTDEDUCTION
BriefDescription: ReceiptsfromtheresaleofamanufacturedhomewhichwassubjecttoGRT,compensatingtax,orMVXuponitsoriginalsaleoruseinNewMexicoaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐76.1NMSA1978
IntendedPurpose: Presumablytoavoidtaxationundermultipleprograms,asthedeductiononlyappliesiftheinitialsalewassubjecttotheGRT,thecompensatingtax,ortheMVX.
History: Originallyenactedin1979andamendedin1980,1990,and1991.
SALEBYORTOU.S.ARMEDFORCESEXEMPTIONFROMLIQUOREXCISETAXANDLOCALLIQUOR
EXCISETAX
BriefDescription: AlcoholicbeveragessoldtoorbyanyinstrumentalityoftheU.S.armedforcesthatareengagedinresaleactivitiesareexemptfromtheliquorexcisetaxandthelocalliquorexcisetax.
StatutoryBasis: 7‐17‐9and7‐24‐12NMSA1978
IntendedPurpose: PresumablytocomplywiththepreemptiondoctrinewithrespecttosalesbyU.S.instrumentalities.
History: Theliquorexcisetaxexemptionwasoriginallyenactedin1966andamendedin1973,1984,and1985.
Thelocalliquorexcisetaxexemptionwasoriginallyenactedin1989.
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SALEOFPROSTHETICDEVICESGRTANDGGRTDEDUCTION
BriefDescription: Receiptsfromsellingprostheticdevicestopersonslicensedtopracticeinanumberofmedicaldisciplinesaredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.
Thebuyermustdeliveranontaxabletransactioncertificateandmustdelivertheprostheticdeviceincidentaltotheperformanceofaserviceandmustincludethevalueoftheprostheticdeviceinhischargefortheservice.
StatutoryBasis: 7‐9‐73NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramidingasthevalueoftheprostheticmustbefullyincludedinthefinalpriceoftheservice,andthenatureofthefinalsalewilldeterminewhetheritistaxableornot.
History: Originallyenactedin1970andamendedin1992.
SALEORLEASEOFREALPROPERTY&LEASEOFMANUFACTUREDHOMESGRTDEDUCTION
BriefDescription: Receiptsfromthesaleorleaseofrealproperty,whichincludesthelandandanypermanentfixtures,fromtheleaseofamanufacturedhomeforatleastonemonth,andfromtherentalofspaceforamanufacturedhomeorrecreationalvehicleforatleastonemonth,aredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐53NMSA1978
IntendedPurpose: Presumablytoreducetaxburdensassociatedwithoccupancyofresidentialandcommercialspacesonanon‐transientbasis.
History: Originallyenactedin1969andamendedin1972,1973,1975,1979,1983,1991,and1998.
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SALESTOFEDERALGOVERNMENT,STATEOFNEWMEXICO,ORNEWMEXICOTRIBESEXEMPTIONFROMCIGARETTETAXAND
TOBACCOPRODUCTSTAX
BriefDescription: SalesofcigarettesandtobaccoproductstotheU.S.,theStateofNewMexico,oranIndiannation,tribe,orpuebloareexemptfromthecigarettetaxandthetobaccoproductstax.
StatutoryBasis: 7‐12‐4and7‐12A‐4NMSA1978
IntendedPurpose: Presumablytoreducethecoststogovernment.
History: Thecigarettetaxexemptionwasoriginallyenactedin1943.Section7‐12‐4NMSA1978wasamendedin1971,1992,and2010.The2010legislationalsoincludedanincreaseofthecigarettetaxby$0.75perpack.
Thetobaccoproductstaxwasoriginallyenactedin1986.Section7‐12A‐4NMSA1978amendedin2009toexpandtheexemptiontoincludethesaleoftobaccototribesortribalmembers.
SALESTOGOVERNMENTALAGENCIESGRTANDGGRTDEDUCTION
BriefDescription: ReceiptsfromsellingtangiblepersonalpropertytotheU.S.,theStateofNewMexico,oranIndiannation,tribe,orpuebloforuseonanIndianreservationorpueblograntaredeductiblefromgrossreceiptsandgovernmentalgrossreceipts.
StatutoryBasis: 7‐9‐54NMSA1978
IntendedPurpose: Presumablytoreducethecoststogovernment.
History: Originallyenactedin1969andamendedin1976,1985,1989,1992,1993,1995,2000,2001,and2003.
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TAXPAIDONSPECIALFUELUSEDCREDITAGAINSTSPECIALFUELEXCISETAX
BriefDescription: Ataxpayerisentitledtoacreditagainstthecalculatedspecialfuelexcisetaxdueforareportingperiodforspecialfuelexcisetaxpaidonspecialfuelusedduringthereportingperiod.
StatutoryBasis: 7‐16A‐12NMSA1978
IntendedPurpose: Presumablytoavoidrequiringataxpayertopaytaxesonfuelthatisnotavailabletobesold.
History: Originallyenactedin1992andamendedin1997.
TRAVELAGENTS’COMMISSIONSGRTDEDUCTION
BriefDescription: Receiptsoftravelagentsfromcommissionspaidbymaritimetransportationcompanies,andinterstateairlines,railroadsandpassengerbusesforbooking,referral,reservation,orticketservicesaredeductiblefromgrossreceipts.
StatutoryBasis: 7‐9‐76NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin1977.
USEOFELECTRICITYEXEMPTIONFROMCOMPENSATINGTAX
BriefDescription: Electricityusedintheproductionandtransmissionofelectricity,includingtransmissionusingvoltagesourceconversiontechnologyisexemptfromthecompensatingtax.
StatutoryBasis: 7‐9‐38NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding
History: Originallyenactedin1969andamendedin2012.
The2012amendmentexpandedtheexemptiontoincludeelectricityusedinthetransmissionofelectricityusingvoltagesourceconversiontechnology.
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VETERINARYMEDICALFORTREATMENTOFCATTLEGRTDEDUCTION
BriefDescription: Receiptsfromsalesofveterinarymedicalservices,medicineormedicalsuppliesusedinthemedicaltreatmentofcattlemaybedeductedfromgrossreceiptsifthesaleismadeto:
(1) apersonwhostatesinwritingthatthepersonisregularlyengagedinthebusinessofranchingorfarming,includingdairyfarming,inNewMexico,or
(2) aveterinarianwhoisprovidingveterinarymedicalservices,medicine,ormedicalsuppliesinthetreatmentofcattleownedbythatperson.
StatutoryBasis: 7‐9‐109NMSA1978
IntendedPurpose: Presumablytoreducetaxpyramiding.
History: Originallyenactedin2007.
WIDE‐AREATELEPHONEANDPRIVATECOMMUNICATIONSSERVICE
DEDUCTIONFROMITGRT
BriefDescription: Receiptsfromtheprovisionofwide‐areatelephoneserviceandprivatecommunicationsserviceinthisstatemaybedeductedfrominterstatetelecommunicationsgrossreceipts.
StatutoryBasis: 7‐9C‐6NMSA1978
IntendedPurpose: Unclear.
History: Originallyenactedin1992andamendedin1993.
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APPENDIXB:TABLEOFEXPENDITURESBYCATEGORY
CitizenBenefitExpendituresNameofExpenditure StatuteAffordableHousingCreditagainstModifiedCombinedTax,PIT,orCIT 7‐9I‐5ArmedForcesSalariesExemptionfromPIT 7‐2‐5.11Back‐to‐SchoolTax‐FreeWeekendDeductionfromGRT 7‐9‐95BusesOperatedbyReligiousandNonprofitCharitableOrganizations ExemptionfromWDT 7‐15A‐5(C)CapitalGainDeductionfromPIT 7‐2‐34CertainDisabledMilitaryVeteranExemptionfromMVX 7‐14‐6(E)ChildCaretoPreventIndigencyCreditagainstPIT 7‐2‐18.1ContributionsofInventorytoNonprofitOrganizationsorGovernmentalAgenciesDeductionfromCompensatingTax 7‐9‐91Corporate‐SupportedChildCareCreditagainstCIT 7‐2A‐14DisabledPersonExemptionfromMVX 7‐14‐6(D)DisabledStreetVendorsExemptionfromGRT 7‐9‐41.3EducationTrustFundPaymentDeductionfromPIT 7‐2‐32
ElectronicIDReaderCreditagainstPITandCIT7‐2‐18.8and7‐2A‐18
ExcessofElderlyTaxpayersMaximumPropertyTaxLiabilityRebatefromPIT 7‐2‐18FeesfromSocialOrganizationsExemptionfromGRT 7‐9‐39HybridVehicleExemptionfromMVX 7‐14‐6(G)
JobMentorshipCreditagainstPITandCIT7‐2‐18.11and7‐2A‐17.1
Loan‐RelatedCostsGRTDeduction 7‐9‐61.1Low‐andMiddle‐IncomeTaxpayersExemptionfromPIT 7‐2‐5.8
Low‐IncomeComprehensiveTaxRebateandPropertyTaxRebateagainstPIT7‐2‐14(A)and7‐2‐14.3
MedicalCareSavingsAccountExemptionfromPIT 7‐2‐5.6NewMexicoNationalGuardMemberPremiumsPaidforGroupLifeInsuranceExemptionfromPIT 7‐2‐5.10NonathleticSpecialEventatNewMexicoStateUniversityGRTDeduction 7‐9‐104NonprofitElderlyCareFacilityExemptionfromGRT 7‐9‐16NonprofitOrganizationsExemptionfromGRT 7‐9‐29NonprofitOrganizationsFundraisersGRTDeduction 7‐9‐85OfficiatingatNewMexicoActivitiesAssociationEventsExemptionfromGRT 7‐9‐41.4OrganDonationDeductionfromPIT 7‐2‐36PersonsOneHundredandOlderExemptionfromPIT 7‐2‐5.7PersonsSixty‐FiveandOlderorBlindExemptionfromPITand a ComprehensiveTaxRebate
7‐2‐5.2and7‐2‐14(C)
PreservationofCulturalPropertyCreditagainstPITandCIT 7‐2‐18.2and7‐2A‐8.6
SaleofFoodatRetailFoodStoresGRTDeductionandHoldHarmlessDistribution7‐9‐92and7‐1‐6.46,7‐1‐6.47
SaleofTextbooksinCertainBookstoresExemptionfromGRT 7‐9‐13.4SalestoNonprofitOrganizationsGRT,GGRT,andCompensatingTax Deduction 7‐9‐60,7‐9‐
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15SpecialNeedsAdoptedChildCreditagainstPIT 7‐2‐18.16UnreimbursedorUncompensatedMedicalCareExpensesCreditFromPIT 7‐2‐18.13UnreimbursedorUncompensatedMedicalCareExpensesDeductionFromPIT 7‐2‐37UnreimbursedorUncompensatedMedicalCareExpensesExemptionFromPIT 7‐2‐5.9VehiclesTitledbeforeJuly1,1991ExemptionfromLVGRT 7‐14A‐9
VeteranEmploymentCreditagainstPITandCIT 7‐2‐18.28and7‐2A‐27
Welfare‐to‐WorkCreditagainstPITandCIT7‐2‐18.5and7‐2A‐8.8
WorkingFamiliesCreditagainstPIT 7‐2‐18.15
EconomicDevelopmentExpendituresNameofExpenditure StatuteAircraftSalesorServicesGRTDeduction 7‐9‐62.1AlternativeEnergyProductManufacturersCreditagainstModifiedCombinedTax 7‐9J‐1etseq.AngelInvestmentCreditagainstPIT 7‐2‐18.17ApportionmentElectionofCITForManufacturers 7‐4‐10(B)ApportionmentElectionofCITForHeadquarters 7‐4‐10(C)
BusinessFacilityRehabilitationCreditagainstPITandCIT7‐2‐18.4and7‐2A‐15
CommercialMotorCarrierVehiclesOperatingExclusivelywithin10MilesofMexicoBorderExemptionfromTripTaxandWDT
7‐15‐3.2and7‐15A‐5(D)
FilmandTelevisionCreditagainstPITandCIT 7‐2F‐1etseq.High‐WageJobsCreditagainstModifiedCombinedTax 7‐9G‐1HostingWorldWideWebSitesGRTDeduction 7‐9‐56.2InvestmentCreditagainstGRT,CompensatingTax,orWithholdingTax 7‐9A‐1etseq.InvestmentManagementorAdvisoryServicesGRTDeduction 7‐9‐108
JetFuelFifty‐FivePercentGRTandCompensatingTaxDeduction7‐9‐83and7‐9‐84
LaboratoryPartnershipwithSmallBusinessCreditagainstGRT 7‐9E‐1etseq.ResearchandDevelopmentSmallBusinessCreditagainstGRTorFiftyPercentCreditagainstWithholdingTax 7‐9H‐1etseq.RuralJobCreditagainstModifiedCombinedTax,PIT,andCIT 7‐2E‐1.1SaleofCertainServicestoanOut‐of‐StateBuyerGRTDeduction 7‐9‐57SalestoQualifiedFilmProductionCompanyGRTandGGRTDeduction 7‐9‐86SalestoState‐CharteredCreditUnionsGRTandGGRTDeduction 7‐9‐61.2TechnologyJobsandResearchandDevelopmentCreditagainstGRT,CompensatingTax,WithholdingTax,PIT,orCIT 7‐9F‐1etseq.TIDD–TaxIncrementforDevelopmentDistrictDedicatedIncrements 5‐15‐15VentureCapitalInvestmentCreditagainstPIT 7‐2D‐8.1
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Environment,Conservation&RenewableEnergyExpendituresNameinTER Statute
AdvancedEnergyCreditagainstGRT,CompensatingTax,WithholdingTax,PIT,orCIT
7‐2‐18.25,7‐2A‐25,and7‐9G‐2
AdvancedEnergyGRTandCompensatingTaxDeduction 7‐9‐114
AgriculturalBiomassCreditagainstPITandCIT7‐2‐18.26and7‐2A‐26
AgriculturalWaterConservationExpensesCreditagainstPITandCIT7‐2‐18.20and7‐2A‐22
BiodieselBlendingFacilityTaxThirtyPercentCreditagainstGRTandCompensatingTax 7‐9‐79.2Biomass‐RelatedEquipmentandBiomassMaterialsDeductionfromCompensatingTax 7‐9‐98
BlendedBiodieselFuelCreditagainstPITandCIT7‐2‐18.21,7‐2A‐23
ConveyanceofLandforConservationorPreservationFiftyPercentCreditagainstPITandCIT
7‐2‐18.10and7‐2A‐8.9
GeothermalGround‐CoupledHeatPumpCreditagainstPITandCIT7‐2‐18.24and7‐2A‐24
RenewableEnergyProductionCreditagainstPITandCIT 7‐2‐18.18and7‐2A‐19
SolarEnergySystemsGRTDeduction 7‐9‐112SolarMarketDevelopmentCreditagainstPIT 7‐2‐18.14
SustainableBuildingCreditagainstPITandCIT7‐2‐18.19and7‐2A‐21
WindandSolarGenerationEquipmentGRTDeduction 7‐9‐54.3
HealthCareIncentiveNameinTER StatuteConstructionEquipmentandMaterialsUsedintheConstructionofSoleCommunityProviderHospitalsGRTDeduction 7‐9‐100ConstructionofSoleCommunityProviderHospitals GRTDeduction 7‐9‐99DOH‐LicensedHospitalsCreditagainstGRT 7‐9‐96.1DOH‐LicensedHospitalsFiftyPercent GRTDeduction 7‐9‐73.1
HealthCarePractitionerServicesGRTDeductionandHoldHarmlessDistribution7‐9‐93,7‐1‐6.46,and7‐1‐6.47
HearingandVisionAidsGRTDeduction 7‐9‐111PenaltyPursuanttoSection7‐1‐71.2NMSA1978CreditAgainstGRT,CompensatingTaxandWithholdingTax 7‐9‐105PhysicianParticipatinginCancerTreatmentClinicalTrialsCreditagainstPIT 7‐2‐18.27PrescriptionDrugsandOxygenGRTandGGRTDeduction 7‐9‐73.2RuralHealthCarePractitionerCreditagainstPIT 7‐2‐18.22TaxStampsRateDifferentialinCigaretteTax 7‐12‐7(D)
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HighlySpecializedIndustryExpendituresNameinTER StatuteBorder‐ZoneTrade‐SupportCompanyGRTDeduction 7‐9‐56.3BusesUsedforTransportationofAgriculturalLaborersExemptionfromWDT 7‐15A‐5(B)CoalExemptionfromSeveranceSurtax 7‐26‐6.2ElectricTransmissionandStorageFacilitiesGRTandCompensatingTaxDeduction
7‐9‐101and7‐9‐102
ElectricTransmissionandStorageFacilitiesServicesGRTDeduction 7‐9‐103ElectricityConversionGRTDeduction 7‐9‐103.1ElectricityExchangeGRTDeduction 7‐9‐103.2FuelforSpaceVehiclesExemptionfrom GRTandCompensatingTax 7‐9‐26.1GoodsandServicesfortheDODRelatedtoDirectedEnergyandSatellitesGRTDeduction 7‐9‐115
LocomotiveEngineFuelGRTandCompensatingTaxDeduction7‐9‐110.1and7‐9‐110.2
LotteryRetailerReceiptsGRTDeduction 7‐9‐87MedicalandHealthCareServicesGRTDeduction 7‐9‐77.1
MicrobrewerBeerandSmallWineriesRateDifferentialfromLiquorExciseTax7‐17‐5(A)(5)and7‐17‐5(A)(6)
MilitaryConstructionServicesGRTDeduction 7‐9‐106MilitaryTransformationalAcquisitionProgramsGRTDeduction 7‐9‐94NaturalGasExemptionfromOilandGasSeveranceTax 7‐29‐4(B)(1)
NaturalGasRateDifferentialfromOilandGasEmergencySchoolTax7‐31‐4(A)(6)and7‐31‐4(A)(7)
NaturalGasRateDifferentialfromOilandGasSeveranceTax
7‐29‐4(A)(4),7‐29‐4(A)(6),and7‐29‐4(A)(7)
NewspaperSalesGRTDeduction 7‐9‐64OilandOtherLiquidHydrocarbonsExemptionfromOilandGasSeveranceTax 7‐29‐4(B)(2)
OilandOtherLiquidHydrocarbonsRateDifferentialfromOilandGasEmergencySchoolTax
7‐31‐4(A)(4)and7‐31‐4(A)(5)
OilandOtherLiquidHydrocarbonsRateDifferentialfromOilandGasSeveranceTaxRate
7‐29‐4(A)(3),7‐29‐4(A)(5),7‐29‐4(A)(8),and7‐29‐4(A)(9)
ProductionorStagingofProfessionalContestsGRTDeduction 7‐9‐107PublicationSalesGRTDeduction 7‐9‐63PursesandJockeyRemunerationatNewMexicoRacetracksExemptionfromGRT 7‐9‐40(A)RailroadEquipment,Aircraft,andSpaceVehiclesExemptionfromCompensatingTax 7‐9‐30RealEstateTransactionsGRTDeduction 7‐9‐66.1SaleandUseofAgriculturalImplements,FarmTractors,Aircraft,andMotorVehiclesthatDon’tHavetobeRegisteredGRTandCompensatingTaxDeduction
7‐9‐62 and7‐9‐77
SaleofSoftwareDevelopmentServicesGRTDeduction 7‐9‐57.2
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Spaceport‐RelatedActivitiesGRTDeduction 7‐9‐54.2Space‐RelatedTestArticlesDeductionfromCompensatingTax 7‐9‐54.4TestArticleDeductionfromCompensatingTax 7‐9‐54.5UraniumEnrichmentPlantEquipmentDeductionfromCompensatingTax 7‐9‐78.1UraniumHexafluorideandUraniumEnrichmentGRTDeduction 7‐9‐90
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APPENDIXC:FREQUENTLYUSEDACRONYMS
ACA–AffordableCareAct
CIT‐CorporateIncomeTax
CRS‐CombinedReportingSystem(CRSreturnsincludeGRT,compensatingtax,andwithholdingtax)
DOH–NewMexicoDepartmentofHealth
EDD–NewMexicoEconomicDevelopmentDepartment
EMNRD–NewMexicoEnergy,Minerals,andNaturalResourcesDepartment
GGRT‐GovernmentalGrossReceiptsTax
GRT‐GrossReceiptsTax
HSD–NewMexicoHumanServicesDepartment
ITGRT‐InterstateTelecommunicationsGRT
LVGRT‐LeasedVehicleGRT
MCF‐1,000CubicFeet
MFA‐NewMexicoMortgageFinanceAuthority
MVX‐MotorVehicleExciseTax
NAICS–NorthAmericanIndustryClassificationSystem
NMDOT–NewMexicoDepartmentofTransportation
NMENV–NewMexicoEnvironmentDepartment
ONGARD–OilandNaturalGasAdministrationandRevenueDatabase
PIT‐PersonalIncomeTax
PPLF–PetroleumProductsLoadingFee
REPTC–RenewableEnergyProductionTaxCredit
RSTP–RevenueStabilizationandTaxPolicy‐aninterimlegislativecommittee
TIDD‐TaxIncrementDevelopmentDistrict
TPP‐TangiblePersonalProperty
TRD‐NewMexicoTaxationandRevenueDepartment
WDT‐WeightDistanceTax
WTI‐WestTexasIntermediate
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APPENDIXD:PRINCIPLESOFGOODTAXPOLICY
Therehasbeenmuchdiscussioninrecentyearsaboutwhatmakesgoodtaxpolicy,andthereareanumberofprincipleswhichestablishconsensus.Weprovideabriefoverviewofeachbelow.Itmustbenoted,however,thattheseprinciplesareofteninconflict,anditistheresponsibilityoftheLegislatureandexecutivetoworktogethertomaintainbalancebetweentheseprinciples.
PerhapsthemostglaringexampleofhowsomeprinciplescanoverwhelmothersisNewMexico’sGrossReceiptsandCompensatingTaxAct.IthasbecomeincreasinglycomplexaseffortshavebeenmadetoachieveEquity,Efficiency,and—withrecentreportingrequirements—Accountability.Putanotherway,Simplicityhasbeensacrificedonthealtarofothertaxpolicyprinciples.
Weusethisillustrationnottodisparageanyparticularsectionofthetaxcodebuttoremindpolicymakersthatrelianceontheseprinciplesrequiresconsiderationsofhowapplicationofoneprincipleimpactsotherprinciples.
ADEQUACYTaxrevenuesshouldbeadequatetosupportneededgovernmentservices.Inherentinthisprincipleisthefactthattaxesarenecessaryinordertoprovidetheseservices.Unfortunately,thereisnoobjectivemeasureastowhatconstitutes“adequate”asthisconceptistiedtightlytothedeterminationaboutwhatservicesgovernmentshouldprovideandatwhatlevelofservicetheseshouldbeprovided.Adequacyisoftencitedasthereasonforincreasingtaxeswithoutacorrespondingconversationabouttheappropriatenessoftheservicesbeingprovidedortheappropriatenessofthelevelofthatservice.Thetwoconversationsshouldtakeplacetogether.
EQUITYTaxequityorfairnessisconcernedwithhowtaxburdensaredistributedamongtaxpayers.Therearetwodifferenttypesofequity:1)“vertical”equitywhichsaysthattaxburdensshouldbedistributedaccordingtotaxpayers’abilitytopay,sothattaxpayerswithgreaterabilitytopaybearalargerburdenthanthosewithalesserabilitytopay,and2)“horizontal”equitywhichisinterestedinensuringthatsimilarly‐situatedtaxpayersfacesimilartaxburdens.Withouthorizontalequity,thegovernmentisputtingitsthumbonthescalebygivingonetaxpayeracompetitiveadvantageoveranother.Theremaybelegitimatepolicyreasonsfordoingso,butitshouldneitherbedonelightlynorwithoutanunderstandingaboutwhatishappening.
EFFICIENCYInthiscontext,efficiencyisthetermeconomistsapplytopoliciesthatbenefiteconomicgrowth.Taxpoliciesaffecttheefficiencyoftheeconomyincomplicatedways.Asageneralrule,taxefficiencyrequiresthattaxesbeleviedinsuchawayastominimizemarketdistortionsthatoccurastaxpayerssubstituteuntaxedgoodsfortaxedgoodssoastoreducetaxburdens.Asanexample,incometaxesonlaborincomemayinducetaxpayerstoworklessandinsteadusetheirtimefornon‐taxedleisure.Theresultisalowerlaborsupplyandlesseconomicgrowth.
Evaluationofefficiencyintheapplicationofeconomictheoryiscomplicatedwhenanactivitygeneratesexternalcosts,suchasenvironmentaldegradation.Thesecostsare“external”inthesensethattheymaynotbefullyconsideredbyindividualactorsintheirmarketplacedecisions.Inthiscase,taxesmaybeimposedasproxiesforcoststhatwouldotherwisenotbetakenintoaccount
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andcanarguablyimprovethefunctioningoftheeconomy.Forexample,thisreasoningsupportstaxexpendituresforrenewableenergybecausetheymayhavetheeffectofreducingpollution,animportantexampleofanexternalcost.
SIMPLICITYTaxpayersincurcompliancecostsastheyprepare,submit,andkeeprecordsabouttaxreturns.Theyalsofacesignificantpenaltiesforfailuretocorrectlypreparethosereturns.NewMexico’sstateandlocalgovernmentsincuradministrativecostsastheycollecttaxes,checkontheaccuracyoftaxreturnsandtaxpayments,anddealwithtaxpayerswhounderpayorfailtopay.Thesecostsareinescapable,buttheirmagnitudeisaffectedbyhowtaxesaredefinedandcollected:themorecomplicatedthecode,thehigherthecostthattheStatemustbeartoensurecompliance.
Whiletheymayincreaseaccountability,taxexpendituresthatrequireadditionalreportingmoveawayfromthetaxprincipleofsimplicity‐forboththetaxpayerandtheadministrationofthetaxcode.Althoughgenerallyhiddenfromview,thecostsofcollectionandcomplianceimposesignificantburdensonsocietyandshouldbekepttoaminimumlevel,consistentwithothergoals.
ACCOUNTABILITYGoodtaxpolicysuggeststhattaxpreferencesshouldbeeasytomonitorandevaluate.Moreovertaxesshouldbetransparentsothattaxpayerscanbetterevaluategovernmentpolicy.Improvedaccountabilityisanimportantgoalofthistaxexpenditurereport.
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INDEXOFSTATUTES
Pleasenotethatstatutesarenotlistedinnumericalorderbytaxprogram.Thesoftwareordersthestatutesnumericallybutdoesnotrecognizethehyphenatedsections.Inshort,itlists,forexample,7‐12‐1etseq.before7‐9‐1.
5‐15‐15.....................................................................1797‐12‐4........................................................................2477‐12‐7(D).................................................................1757‐12A‐4.....................................................................2477‐12A‐5.....................................................................2087‐12A‐6.....................................................................2177‐13‐11.....................................................................2267‐13‐17.....................................................................2157‐13‐4(A).................................................................2287‐13‐4(D).................................................................1997‐13‐4(E)..................................................................2197‐13‐4(F)..................................................................2207‐13‐4(G).................................................................2247‐13‐4.4....................................................................1967‐13A‐4(A)..............................................................2137‐13A‐4(B)..............................................................2437‐13A‐5(A)..............................................................2027‐13A‐5(B)..............................................................1947‐14‐4........................................................................2327‐14‐6(A).................................................................1937‐14‐6(B).................................................................2367‐14‐6(C)..................................................................2367‐14‐6(D)...................................................................697‐14‐6(E)....................................................................567‐14‐6(F)..................................................................1927‐14‐6(G)...................................................................977‐14‐7........................................................................2277‐14‐7.1....................................................................2377‐14A‐7.....................................................................2087‐14A‐8.....................................................................2327‐14A‐9.....................................................................1857‐15‐3.2......................................................................607‐15A‐5(A)..............................................................2237‐15A‐5(B)................................................................527‐15A‐5(C).................................................................517‐15A‐5(D)................................................................607‐15A‐6(B)..............................................................2137‐1‐6.46............................................................90,1597‐1‐6.47....................................................................1597‐16A‐10(A)............................................................2287‐16A‐10(E)............................................................1997‐16A‐10(F)............................................................2227‐16A‐10(G)............................................................224
7‐16A‐10(H)(1)....................................................2357‐16A‐10(H)(2)....................................................2357‐16A‐12..................................................................2487‐16A‐13..................................................................2267‐16A‐13.1..............................................................2277‐17‐11.....................................................................2267‐17‐5A(5)..............................................................1147‐17‐5A(6)..............................................................1147‐17‐6........................................................................2077‐17‐9........................................................................2457‐19‐14(A)..............................................................2347‐19‐14(B)..............................................................1957‐19D‐5(A)..............................................................2347‐19D‐5(B)..............................................................1957‐20C‐5.....................................................................2347‐20E‐5.....................................................................2347‐20F‐6.....................................................................2347‐2‐13........................................................................2317‐2‐14(A).................................................................1097‐2‐14(C).................................................................1377‐2‐14.3....................................................................1097‐2‐18...........................................................................827‐2‐18.1...............................................................57,587‐2‐18.10....................................................................667‐2‐18.11.................................................................1027‐2‐18.13.................................................................1827‐2‐18.14.................................................................1687‐2‐18.15.................................................................1907‐2‐18.16.................................................................1727‐2‐18.17....................................................................387‐2‐18.18.................................................................1477‐2‐18.19.................................................................1737‐2‐18.2....................................................................1417‐2‐18.20....................................................................337‐2‐18.21....................................................................487‐2‐18.22.................................................................1517‐2‐18.24....................................................................887‐2‐18.25....................................................................257‐2‐18.26....................................................................317‐2‐18.27.................................................................1397‐2‐18.28.................................................................1877‐2‐18.4.......................................................................537‐2‐18.5....................................................................188
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7‐2‐18.8......................................................................817‐2‐2(N)....................................................................2117‐2‐32..........................................................................757‐2‐34..........................................................................547‐2‐36........................................................................1347‐2‐37........................................................................1837‐2‐4(A)....................................................................2247‐2‐4(B)....................................................................1967‐24‐12.....................................................................2457‐24‐13.....................................................................2157‐24‐14.....................................................................2267‐2‐5.10....................................................................1237‐2‐5.11......................................................................437‐2‐5.2.......................................................................1377‐2‐5.5.......................................................................2037‐2‐5.6.......................................................................1137‐2‐5.7.......................................................................1367‐2‐5.8.......................................................................1087‐2‐5.9.......................................................................1847‐25‐7........................................................................2147‐29‐4(A)(3)...........................................................1337‐29‐4(A)(4)...........................................................1207‐29‐4(A)(5)...........................................................1337‐29‐4(A)(6)...........................................................1207‐29‐4(A)(7)...........................................................1207‐29‐4(A)(8)...........................................................1337‐29‐4(A)(9)...........................................................1337‐29‐4(B)(1)...........................................................1187‐29‐4(B)(2)...........................................................1317‐29C‐1.....................................................................2067‐29C‐2.....................................................................2047‐2A‐14.......................................................................687‐2A‐15.......................................................................537‐2A‐16.....................................................................2057‐2A‐17.1.................................................................1027‐2A‐18.......................................................................817‐2A‐19.....................................................................1477‐2A‐21.....................................................................1737‐2A‐22.......................................................................337‐2A‐23.......................................................................487‐2A‐24.......................................................................887‐2A‐25.......................................................................257‐2A‐26.......................................................................317‐2A‐27.....................................................................1877‐2A‐4(A).................................................................2047‐2A‐4(B).................................................................2247‐2A‐4(C).................................................................1967‐2A‐8........................................................................2037‐2A‐8.6....................................................................1417‐2A‐8.8....................................................................188
7‐2A‐8.9.......................................................................667‐2D‐8.1...................................................................1867‐2E‐1.1....................................................................1537‐2F‐1...........................................................................847‐31‐27.....................................................................2097‐31‐4(A)(4)..........................................................1327‐31‐4(A)(5)..........................................................1327‐31‐4(A)(6)..........................................................1197‐31‐4(A)(7)..........................................................1197‐33‐7........................................................................2117‐4‐10...................................................................40,427‐7‐3(B)....................................................................2297‐7‐4(D)...................................................................2127‐9‐100........................................................................627‐9‐101........................................................................767‐9‐102........................................................................767‐9‐103........................................................................787‐9‐103.1....................................................................797‐9‐103.2....................................................................807‐9‐104.....................................................................1247‐9‐105.....................................................................1357‐9‐106.....................................................................1167‐9‐107.....................................................................1427‐9‐108.....................................................................1007‐9‐109.....................................................................2497‐9‐110.1.................................................................1057‐9‐110.2.................................................................1057‐9‐111........................................................................927‐9‐112.....................................................................1677‐9‐114........................................................................277‐9‐115........................................................................897‐9‐13.3....................................................................2257‐9‐13.4....................................................................1627‐9‐13.5....................................................................2007‐9‐15........................................................................1637‐9‐16........................................................................1257‐9‐17........................................................................2387‐9‐18........................................................................2407‐9‐18.1....................................................................2017‐9‐19........................................................................2437‐9‐20........................................................................2447‐9‐22........................................................................2377‐9‐22.1....................................................................1957‐9‐23........................................................................2377‐9‐23.1....................................................................1957‐9‐24........................................................................2437‐9‐25........................................................................1987‐9‐26........................................................................2027‐9‐26.1.......................................................................877‐9‐27........................................................................213
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7‐9‐28........................................................................2127‐9‐29........................................................................1267‐9‐30........................................................................1457‐9‐31........................................................................2177‐9‐32........................................................................2127‐9‐33........................................................................2147‐9‐34........................................................................2167‐9‐35........................................................................2117‐9‐36........................................................................2447‐9‐37........................................................................2447‐9‐38........................................................................2487‐9‐38.1....................................................................2087‐9‐39..........................................................................837‐9‐40(A).................................................................1447‐9‐40(B).................................................................2427‐9‐41........................................................................2167‐9‐41.1....................................................................1937‐9‐41.3......................................................................717‐9‐41.4....................................................................1307‐9‐46........................................................................2227‐9‐47........................................................................2217‐9‐48........................................................................2177‐9‐49........................................................................2207‐9‐50........................................................................2107‐9‐51........................................................................1977‐9‐52........................................................................1987‐9‐52.1....................................................................2107‐9‐53........................................................................2467‐9‐54........................................................................2477‐9‐54.1....................................................................2187‐9‐54.2....................................................................1707‐9‐54.3....................................................................1897‐9‐54.4....................................................................1717‐9‐54.5....................................................................1787‐9‐55........................................................................2327‐9‐56........................................................................2337‐9‐56.1....................................................................2077‐9‐56.2......................................................................967‐9‐56.3......................................................................497‐9‐57........................................................................1587‐9‐57.1....................................................................2217‐9‐57.2....................................................................1617‐9‐58........................................................................2427‐9‐59........................................................................2447‐9‐60........................................................................1637‐9‐61.1....................................................................1047‐9‐61.2....................................................................1667‐9‐62........................................................................1557‐9‐62.1......................................................................357‐9‐63........................................................................143
7‐9‐64........................................................................1227‐9‐65........................................................................1977‐9‐66........................................................................2417‐9‐66.1....................................................................1467‐9‐67........................................................................2347‐9‐68........................................................................2387‐9‐69........................................................................2407‐9‐70........................................................................2387‐9‐71........................................................................2327‐9‐73........................................................................2467‐9‐73.1.......................................................................747‐9‐73.2....................................................................1407‐9‐74........................................................................2097‐9‐75........................................................................2237‐9‐76........................................................................2487‐9‐76.1....................................................................2457‐9‐76.2....................................................................2007‐9‐77........................................................................1557‐9‐77.1....................................................................1117‐9‐78........................................................................2357‐9‐78.1....................................................................1807‐9‐79........................................................................2257‐9‐79.1....................................................................2257‐9‐79.2.......................................................................457‐9‐83........................................................................1017‐9‐84........................................................................1017‐9‐85........................................................................1287‐9‐86........................................................................1657‐9‐87........................................................................1077‐9‐88.1....................................................................2307‐9‐88.2....................................................................2297‐9‐89........................................................................1927‐9‐90........................................................................1817‐9‐91...........................................................................657‐9‐92........................................................................1597‐9‐93...........................................................................907‐9‐94........................................................................1177‐9‐95...........................................................................447‐9‐96........................................................................2417‐9‐96.1.......................................................................727‐9‐96.2....................................................................2357‐9‐97........................................................................2157‐9‐98...........................................................................467‐9‐99...........................................................................637‐9A‐1..........................................................................987‐9C‐10.....................................................................2237‐9C‐2(E)(2)...........................................................2307‐9C‐6.......................................................................2497‐9C‐7.......................................................................2187‐9C‐8.......................................................................231
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7‐9C‐9........................................................................1947‐9E‐1........................................................................1037‐9F‐1........................................................................1777‐9G‐1..........................................................................93
7‐9G‐2..........................................................................257‐9H‐1.......................................................................1497‐9I‐5............................................................................297‐9J................................................................................36