But Intel Corp. already operates in seven states, including Colorado and Arizona, that require the company to pay more in corporate income tax through a combined reporting law, according to a newly released report.

The left-leaning Washington-based Center for Budget and Policy Priorities released the report this week.

The debate over whether New Mexico should pass a combined reporting law comes at a time when New Mexico is struggling financially, and policy makers are looking for ways to close a sizable budgetary shortfall.

As it is now, large, multi-state corporations often designate individual stores as subsidiaries that then make large payments to a home office in another state for use of, say, a logo. Those large payments funnel earned corporate income out of New Mexico that should be taxed here, according to the sponsor of the combined reporting bill, Sen. Peter Wirth, D-Santa Fe. He has carried the bill for several years because he says it’s a loophole that gives big corporations a leg up on local businesses.

Opponents, including the Greater Albuquerque Chamber of Commerce, say requiring combined reporting would send an anti-business message to corporations and industries at a time when New Mexico should be doing everything to entice businesses to relocate here or expand their operations.

The Center’s report shows that dozens of other big multi-state corporations with stores here in New Mexico operate in at least one state, if not more, that tax them more heavily than local businesses. Bank of America and H&R Block, for example, operate in all 23 states that have some version of combined reporting, the report shows.

At least 71 of the 78 multi-state corporations that have 250 or more employees in New Mexico have a facility in at least one state that mandates combined reporting, the report said.

Under combined reporting, a corporation’s nationwide profits are combined — that is, added together — and the state then taxes a share of that combined income, according to the Center.

New Mexico’s share would be calculated by an apportionment formula that weighs the corporate group’s level of activity in the state as compared to its activity in other states.

“We hear ‘Everyone has to sacrifice,’ but that’s baloney!” shouted Allen Sanchez, of the New Mexico Conference of Catholic Bishops. ”Some are already sacrificing more than others!”

]]> http://newmexicoindependent.com/45243/video-rally-to-stop-the-service-cuts-and-raise-revenue/feed 0 http://newmexicoindependent.com/39624/senate-panel-rules-combined-reporting-bill-not-relevant-to-special-session http://newmexicoindependent.com/39624/senate-panel-rules-combined-reporting-bill-not-relevant-to-special-session#comments Sun, 18 Oct 2009 22:14:19 +0000 Trip Jennings http://newmexicoindependent.com/?p=39624 By a 7 to 4 vote, a Senate panel killed legislation that would have altered the way the state collects its corporate income tax.

Called combined reporting, the bill (Senate Bill 8)sponsored by Santa Fe Democrat Peter Wirth would…

Photo by Brandi Sims

With a $660 million state budget shortfall, Sen. Peter Wirth, D-Santa Fe, says he knows where to find $40 million to $50 million in new money.

During the special legislative session that starts Saturday, Wirth plans to introduce a bill dramatically altering the way the state collects corporate income tax. It’s called combined reporting, and if passed, it would require multi-state companies with stores in New Mexico to pay taxes on income earned here.

As it is now, large, multi-state corporations often designate individual stores as subsidiaries that then make large payments to a home office in another state for use of, say, a logo. Those large payments funnel earned corporate income out of New Mexico that should be taxed here, Wirth says. He says it’s a loophole that gives big corporations a leg up on local businesses.

According to the Washington-based Center on Budget and Policy Priorities, combined reporting is a trend on the march. An April 2009 report by the organization says 23 of the 45 states with corporate income and similar business taxes have implemented “combined reporting.”

Seven of them, including Texas, have adopted the legislation since 2004. Massachusetts recently implemented combined reporting and is now looking to further tighten tax rules for large corporations. The District of Columbia did it for the 2010 budget year and similar proposals are being called for in Maryland.

“We have made the decision to give multi-state businesses, many of whom are already doing business in New Mexico, preferential tax treatment all to the detriment of our local companies,” Wirth has said. “It’s time for this to stop.”

But if the past is any indication, Wirth’s bill will run into a buzz saw of opposition. The bill has been defeated each time it’s been introduced in recent years, although with the state’s financial difficulties it’s unclear if the bill’s chances are increased.

Opponents say requiring combined reporting would send an anti-business message to corporations and industries at a time when New Mexico should be doing everything to entice businesses to relocate here or expand their operations.

“This is a global economy,” said Terri Cole, president and CEO of the Greater Albuquerque Chamber of Commerce, which has publicly opposed combined reporting. “We want to be a state that is open to business that exists around the globe, It works just the opposite to the way the world is moving.”

Under current New Mexico state law, large multi-state corporations may be composed of a “parent” corporation and a number of “subsidiary” corporations owned by the parent. The subsidiaries — in some cases, that means individual stores for big box retailers like Toys R Us — are allowed to pay a royalty to a home office headquartered in another state for use of a logo, a payment that is deducted from that subsidiary’s taxable income in New Mexico.

Under unitary combined reporting, a corporation’s nationwide profits are combined — that is, added together — and the state then taxes a share of that combined income, according to the Center.

New Mexico’s share would be calculated by an apportionment formula that weighs the corporate group’s level of activity in the state as compared to its activity in other states.

That thought must have crossed Gov. Bill Richardson‘s mind Thursday. His staff called a news conference at the Capitol to showcase the governor signing two ethics reform bills. One will put New Mexico in the mainstream of states by, for the first time, limiting campaign contributions to political candidates. Another bill will increase the number of campaign finance reports candidates must file.

It’s big news, no doubt. But the news conference turned into a lobbying session for a totally separate bill. Yep. You guessed it. Open conference committees.

A reporter began by asking if he was going to sign it. Richardson repeated his concern that the open conference committees legislation would let either chamber — the House or Senate — to ignore the law if it chose to. The bill passed the House on a 66-0 vote and the Senate by a 33-8 vote, by the way.

And then he repeated in general terms what he told me Wednesday.

“There wasn’t much public support in terms of e-mails. I meet with numerous constituents,” Richardson said. “Once, somebody came to me in Las Cruces and was for open conference committees.”

Then he turned to Sen. Dede Feldman, D-Albuquerque, who was sitting next to Richardson because of her role as a perennial advocate for campaign contribution limits. And he uttered the magic words.

“I would invite Dede or any of you to express your views” on open conference committees, the governor said.

What happened next is rare at gubernatorial press conferences. A spontaneous lobbying campaign by lawmakers and others.

Terri Cole, of the Greater Albuquerque Chamber of Commerce, jumped in to lobby first.

“We have urged you to sign it and we’re going to continue putting as much pressure on you as we can for you to sign it,” Cole said.

“Get me some e-mails,” Richardson quipped, meaning e-mails from supporters.

“If I knew that’s what I needed to do,” Cole shot back. “Well,” she said, looking at the clock hanging in the governor’s cabinet room. “Let’s see by 2 p.m.” It was about 11:30 a.m.

“I think the bill that’s in front of you, while it’s not perfect, I believe it’s the only bill we could get in front of you,” Cole said. “It’s either that or nothing. And we just don’t want nothing as we move forward. We’ll continue to urge you and be a pain in your neck.”

“You think this is the best we can do?” the governor retorted.

“Well, governor, I think so,” Feldman said. “We have tried it now for six years.”

Next came the sponsor of the campaign contributions bill, Sen. Peter Wirth, D-Santa Fe.

“It seems to me that with a bill like this, we get something in place and then if we need to go back, if it is being abused, we go back and fix the problem with what’s there,” Wirth said. “Because if we don’t do it, we start from scratch. There’s a momentum and we had a momentum during this session that led to the two bills we are signing today.”

Steven Robert Allen of Common Cause came last. He spoke to the governor’s concern about the Legislature’s ability to overturn the opening of conference committees.

“This is the bill that is passable,” Allen said. “And I think it is a major step forward. It’s certainly better than nothing, so Common Cause would urge the governor to sign it as well.”

The governor thanked everyone for speaking. He said he hadn’t received the open conference committees bill yet.

“Well, Step 1, I need to get it up here,” the governor said. “I physically couldn’t sign a bill that we don’t have.”

The House passed the Electronic Medical Record Act on Monday. The Senate passed it earlier in the session.

The bill, sponsored by state Sen. Peter Wirth, is part of the governor’s legislative health-reform agenda. About 15 percent of providers, or 600 physicians in New Mexico, use electronic medical records. The legislation does not require use of medical records, but puts in more privacy protection.

“I applaud the Legislature for passing this bill, which will encourage more providers to use electronic medical records because their patients’ information will be confidential,” Richardson said in an e-mail news release. “New Mexico can reduce errors and control costs by moving from paper to electronic records.”

According to the news release, the Electronic Medical Records Act:

Clarifies individual rights with disclosure of information contained in electronic medical records

Provides for the accurate retention and accessibility of electronic medical records

Allows individuals to request that their records be excluded from a record locator service

Requires the service provide a log indicating who has accessed a client’s medical record and for what purpose

Establishes electronic medical records systems as the legal equivalent of existing non-electronic medical records

The New Mexico Department of Health is now using electronic medical records in all public health offices around the state, the agency said in a news release.

Here is an update: Sen. Peter Wirth says the bill must go back to the Senate to get a concurrence, usually a formality. So it doesn’t go directly to the governor’s desk from the House.

The House, by the way, passed the bill on a vote of 61-2, Sen. Wirth says.

State Sens. Tim Jennings, Stuart Ingle and Dianna Duran voted to table the proposal while Sens. Dede Feldman and Peter Wirth opposed the motion.

The bill, sponsored by Sen. Tim Keller, was one of the ethics-reform proposals sought by Gov. Bill Richardson. There is some legislative pushback against Richardson for trumpeting his support for the bill because the governor is viewed as having taken millions of dollars from state contractors in his 2002 election bid and his bid for re-election in 2006. He is barred from running again for governor in 2010.

A legislative analysis explains that the bill would have prohibited:

“a principal of a state contractor or prospective state contractor from making a contribution to or soliciting a contribution on behalf of a candidate for state public office or a candidate’s political committee. The prohibition begins when a bid is submitted to the state and lasts for two years following the expiration of any state agency contract. For bid submissions after July 1, 2011, if a prohibited contribution has been made in the two year period before the bidding process the prospective state contractor will be prevented from contracting with the state and any contract entered into is can be cancelled by the contracting agency.”

The analysis goes on to say:

GSD (the state’s General Services Department) states that in cases of a violation, the tracking of suspended companies will require a system that is available to all state agencies and instrumentalities such as the SHARE system. A flag or notation capability will be required but it is unclear who will provide the resources for implementation.

The vote moves New Mexico a step closer to joining the vast majority of states across the country that limit what individuals, political action committees, political parties and businesses can give to candidates or elected officials.

New Mexico is currently among five states, including Illinois, that have no limits at all.

Longtime advocates of ethics reform praised the Senate’s action.

“This does address the perception that campaign contributions have the potential of buying votes,” said state Sen. Dede Feldman, D-Albuquerque, a longtime ethics reform supporter. “We have limited the really big contributions.”

Under the legislation that passed, individuals could not give more than $2,300 during a calendar year. A limit of $5,000 over the same period would apply to a political committee and $10,000 for a political party.

The legislation would also cap what political committees and political parties can give to candidates or to other committees or parties — $5,000 for each during a calendar year. It would further limit to $10,000 what a political party could give to a candidate or another political committee.

The legislation does not include a ban on money from lobbyists and state contractors to candidates, an idea being pushed by Gov. Bill Richardson this year.

The state Senate vote came after about an hour of debate in which lawmakers amended the legislation twice.

One amendment removed a provision that would have repealed the campaign contributions law in 2013, two years after it took effect in 2011.

The other amendment – which added a severability clause — basically means that if someone challenges a provision of the act, the other provisions are not thrown into question and will remain in effect.

A third amendment, offered by state Sen. Rod Adair, R-Roswell, failed largely along partisan lines. That would have banned contributions from lawyers to candidates running for judicial posts.

Adair chastised the chamber for not supporting his amendment, saying the Senate didn’t want to confront the trial lawyers’ lobby.

Even supporters of the legislation said it wasn’t a perfect bill and explained that allowing people to raise $2,300 per calendar year, as opposed to per election cycle, would help incumbents but hurt challengers.

Federal law sets separate limits for contributions over a primary election cycle and the general election cycle so a person can give $4,800 to a candidate during both cycles.

Other states go with that formula as well.

But supporters said the bill was a step in the right direction.

“This is an incredibly important first step,” said state Sen. Peter Wirth, D-Santa Fe, and the legislation’s sponsor.

This year’s push for ethics reform comes amid three separate investigations that are reviewing practices in state offices, including a federal inquiry into the business practices of the Richardson administration. Two state probes, meanwhile, are looking into the operations of a defunct housing authority run by a friend of state House Speaker Ben Lujan and trying to find federal election money that went missing during the tenure of former Secretary of State Rebecca Vigil-Giron. In addition, former Senate President Pro Tem Manny Aragon pleaded guilty to federal corruption charges in October.

The limits have faced serious opposition in previous years, partly because legislators wondered why the legislative branch was included in the system when it was Richardson who collected eye-popping contributions. On occasion the governor saw $75,000 and $100,000 contributions go toward his election and re-election campaigns.

The Senate bill now goes to the House.

The chamber’s vote came after a short debate on the Senate floor in which some lawmakers wondered if placing medical records in a system would invade a patient’s privacy.

The legislation’s sponsor, Sen. Peter Wirth, D-Santa Fe, said that a patient would sign a release each year allowing the records to be kept in the system.

The New Mexico Legislature has debated this issue before and came close to passing a similar bill during last year’s special legislative session.

Like much of the nation, New Mexico is shifting in how medical records are stored, with the state estimating that 10 percent to 15 percent of the state’s 4,000 physicians already use electronic records. And in all likelihood the number will increase, particularly with President Barack Obama’s talk of codifying the trend, proponents say. Obama has tied the idea of electronic medical records to his economic recovery plan.

Opponents — including some physicians — have argued that the transition to electronic records would be costly, requiring physicians to spring for programs that run into the tens of thousands of dollars.

The bill that cleared the Senate on Tuesday would fill some gaps in coverage, supporters say.

Most medical records fall under the federal Health Insurance Portability and Accountability Act, a Clinton-era law outlining a consumer’s privacy rights in regard to medical information. It establishes who does and does not have access to your medical records.

But as more records are digitized in New Mexico and across the country, professionals and policy makers are debating whether HIPAA covers all the newly digitized information. For example, Mayer says, Microsoft stores protected medical information, and Microsoft is not a covered entity under HIPPA.

In addition to making electronic records as legally acceptable as paper records, the bill would accomplish other goals, according to a legislative report analyzing the legislation. The report says the bill would:

• recognize the legal equivalency of electronic records and signatures;
• provide for the accurate retention and accessibility of electronic medical records;
• limit disclosure of information in an electronic medical record unless the patient consents, it is required for emergency treatment, or it is otherwise permitted by state or federal law;
• require an audit log of persons obtaining access to an electronic medical record;
• require an audit log made available to an individual health care consumer to only contain information relating to that individual;
• provide a mechanism for an individual health care consumer to request a removal of private information from a health information exchange; however, the request to exclude information will not apply to a provider or health care institution that has provided health care to that individual;
• give providers, health care institutions or health information exchanges exclusion from liability for any harm caused by an individual’s exclusion of medical information;
• requires that providers or institutions warrant that a request for an individual’s electronic medical record has consent of the individual or is otherwise permitted by state or federal law;
• provide a mechanism for an individual health care consumer to secure a copy of the information contained in the individual’s medical record audit log;
• allows information in an individual’s electronic medical record to be used in aggregate form for research or public health purposes;
• provide for both in-state and out-of-state disclosure of information; and
• exclude property and casualty, workers’ compensation, life, long-term care and disability income insurers from the provisions in the Act.

The legislation now goes to the House.