Unfortunately, liberals in the Legislature are hoping to eliminate the cap on TV shows, thus giving unlimited subsidies to the filming of television shows in New Mexico. SB 168 is terrible legislation. Rep. Kintigh’s HB 117 would move our state in the right direction by phasing out the subsidy at a rate of one percentage point annually.

According to the Fraser Institute’s (the are the Canadian national equivalent of the Rio Grande Foundation) 2011 report “Economic Freedom of North America,” New Mexico is the 49th-freest state in the nation (check page 2 of the report). Or, put another way, we’re less economically free than any state besides West Virginia.

What makes a state free? Small government, limited or no arbitrary takings and discriminatory taxation, and labor freedom, are the main factors.

States performing well on the economic freedom report include Delaware, Texas, Colorado, and Nevada. A quick video explaining the importance of economic freedom can be found below:

So, it is silly to me — regardless of whether Sen. Michel Sanchez decides to allow Sec. (designate) Hanna Skandera’s confirmation to move forward — that New Mexico’s Constitution requires the head of the Education Department to be a “qualified, experienced, educator.” Certainly, Skandera seems qualified, but why does the head of this department need to be a teacher? The skill sets involved in running a multi-billion dollar department are simply not the same as are those of a classroom teacher.

It would be like requiring a doctor to manage New Mexico’s Medicaid program or mandating that the head of Corrections be a prison guard. It would be silly and it would unnecessarily reduce the pool of qualified applicants. It would also make it more difficult to find fresh, new perspectives outside of the status quo.

And that gets us back to Hanna Skandera and her problems in NM. Her opponents don’t like her because she threatens the status quo. She is trying to shake the system up and make reforms that will get our state out of the bottom of the educational basement. Unfortunately, Sanchez, a powerful Senator, is carrying water for those who are happy with remaining 49th.

Simply put, Right to Work is one of the easiest ways for states to become more competitive economically. New Mexico is, of course, not a Right to Work state. Following are a few specific ways in which this legislation improves a state’s economic outlook.

Right to Work States Benefit From Faster Growth, Higher Real Purchasing Power – 2011 Update

Percentage Growth in Non-Farm Private-Sector Employees (2000-2010)

Right to Work States . . . . . . . . . . . . . . . +0.3%
Forced-Unionism States. . . . . . . . . . . . . . -5.5%
National Average . . . . . . . . . . . . . . . . . .  -3.3%
Source: Department of Labor, Bureau of Labor Statistics (BLS)

Percentage Real Growth in Private-Sector Employee Compensation (2000-2010)

Right to Work States . . . . . . . . . . . . . . . 11.3%
Forced-Unionism States. . . . . . . . . . . . .  . 0.7%
(2000-2010) National Average . . . . .  . . . . 4.3%
BEA; BLS

Cost of Living-Adjusted Compensation Per Private-Sector Employee (2010)

Right to Work States . . . . . . . . . . . . . $56,575
Forced-Unionism States . . . . . . . . . . . $55,420
National Average . . . . . . . . . . . . . . . . $55,896
Missouri Economic Research and Information Center (MERIC);
BEA; Department of Commerce, Bureau of the Census (BOC)

Current New Mexico Corporate income tax rates are:

4.8% > 0

6.4% > $500K

7.6% > $1Million

This legislation would lower that rate to 4.8% across the board by 2015. In FY 2010, the corporate income tax generated $125 million in revenue. By its nature, this tax is highly volatile on a year to year basis, thus making it an inconsistent revenue supporter, particularly at higher rates. Reducing rates would improve the consistency of those collections and could, if it helped attracted one or more major businesses, result in greater overall tax revenue.

According to the non-partisan Tax Foundation, New Mexico’s corporate income tax was the 34^th- worst corporate income tax in the nation in FY 2011. In FY 2012, that ranking had dropped to 38^th.

For states with corporate income taxes, the three most relevant measurements are top tax rate, the level of taxable income at which the top rate kicks in, and the number of brackets.

This legislation would make New Mexico’s corporate income structure more competitive by addressing all three of the major factors impacting corporate income taxation:

• by reducing the top rate by 37%;
• reducing the number of brackets from three to one.

Why is reducing the corporate income tax a good idea?

Newman (1982) found that differentials in state corporate income taxes were a major factor influencing the movement of industry to southern states. Two decades later, with global investment greatly expanded, Agostini and Tulayasathien (2001) determined that a state’s corporate tax rate is “the most relevant tax in the investment decisions of foreign investors.”

The need to reduce corporate tax burdens is not a partisan issue. President Obama, during his recent State of the Union speech, has made reforming corporate income taxes a top priority. He said in his speech that reforming the tax code will help bring “jobs back” to the U.S and that “companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it. So let’s change it.”

It is noteworthy that a state’s corporate tax is levied in addition to the federal corporate income tax rate, which varies from 15 percent on the first dollar of income to a top rate of 35 percent. This top rate is the second-highest corporate income tax rate among industrial nations. In many states, federal and state corporate tax rates combine to levy the highest corporate tax rates in the world.

This is a global economy and businesses look to locate and create jobs where they have the most favorable rules, regulations, and tax burdens. Even before Japan reduced its corporate income tax rate, New Mexico was one of 24 U.S. states have a combined corporate tax rate higher than top-ranked Japan.

On the other hand, according to the Federation of Tax Administrators, there are three states that levy neither a corporate income tax nor a gross receipts tax: Nevada, South Dakota and Wyoming. New Mexico’s corporate tax rate is the highest among states in the region — for example, Colorado’s rate is 4.63 percent, Arizona’s is 6.97 percent and Utah’s is 5 percent.

New Mexico’s corporate income tax as a share of total state/local business taxes is 6.6% According to the liberal Center for Budget & Policy Priorities, this is about the median.

According to the Tax Foundation’s 2007 report, “Personalizing the Income Tax”: One of the lowest-income households in America bear a large share of the corporate tax burden.

In total, the poorest 20 percent of households pay more in corporate income taxes each year than they pay in individual income taxes to the IRS each April. Households earning under $23,700 in 2004 paid $271 in corporate income taxes, compared to just $171 in individual income taxes.

As a share of their total tax burden, corporate taxes were 6.3 percent of low-income households’ tax bills compared to just 4 percent for individual income taxes. The only tax that hits low-income families harder than corporate taxes is the federal payroll tax, which is designed to pay for Social Security and Medicare.

“What this means is that cutting corporate tax rates is not about handing money to U.S. companies,” said Hodge. “It is about providing tax relief to American families, much of which will provide enormous benefits to the nation’s lowest-income wage earners.”

Cutting New Mexico’s income tax would be a move towards economic competitiveness. If the Legislature is serious about attracting job-creating businesses to New Mexico, reducing the corporate income tax would be a simple way to put our state especially relative to the myriad tax credits and incentives that are either on the books or under consideration.

But what if a group of right-wing goons (or heaven-forbid Tea Partiers) had forcibly disrupted a peaceful meeting of the ACLU or Friends of the Earth? Straight out of Germany in the 1930’s, right?

Of course, we already know that the “Occupy” movement is not keen on the first amendment. See here and here. So, what would a more descriptive headline have been? How about “Anti-free speech protesters forcibly disrupt peaceful, private meeting.”

Personally, I hope the “Occupy” folks continue their “brown-shirt”‘ tactics as it only further discredits their so-called movement.

That said, it is worth comparing Daniels’ real track record to his rhetoric. Daniels headed up the Office of Management and Budget under George W. Bush. While not in Obama’s league, Bush was a very big spender as President. Yes, I realize that Congress is in charge of budgets, but Bush didn’t exactly wield an effective veto pen…Also, while Daniels was in office, Bush was promoting his massive Prescription Drug Entitlement and got No Child Left Behind (a massive expansion of the federal role in education) passed. While I can’t blame Daniels entirely for Bush’s policies (and he did resign after just a few years of service), I have no record of Daniels protesting Bush’s big-spending expansions of government, but if a reader has one (or more), please post them in the comments section.

I’m not trying to dismiss Daniels’ track record of public service. He is doing a good job as Gov. of Indiana and I wish he was running for President. I do wish that more Republicans adhered to their rhetoric when it comes to government spending and actually downsizing Washington.

There is no reason, despite competition from the Internet, that delivering packages and the mail could not make money in the United States as well. It is time to abandon socialism in the mail and just privatize it.