LFC Tax Expenditure Report a confusing mess (kind of like NM’s economic development policies)

Recently, based on limited information, RGF commented on the outline of a new report that the Legislative Finance Committee has put together in which they claim that the “$520 million New Mexico spent on economic development tax incentives in fiscal year 2025 found taxpayers didn’t get much in return” according to the Santa Fe New Mexican. The full report can be found here. 

To be clear, RGF has LONG opposed actual spending on Hollywood. That should be obvious. To her credit, Rep. Susan Herrera, D-Embudo told the New Mexican that she “advocated for a ‘revamp’ of the state’s tax incentives, particularly on the film production tax credit.”

Genuine tax incentives ARE a mixed bag and should be evaluated, but what the politicians quoted in the New Mexican refuse to understand is that most of our problems could be addressed by simply reforming the gross receipts tax and eliminating the incentives necessary to paper over the fact that we have this absurd policy in the first place.

Here’s how the Legislature should consider reforms:

Reform the GRT to make it more like a sales tax (eliminating tax on business inputs);

Eliminate the personal and corporate income tax;

Eliminate ALL incentives that involve spending tax money (LEDA and Film);

Once those have been accomplished further analysis can be undertaken of the need (or lack thereof) of various tax breaks and incentives.

Sadly, the LFC which ultimately answers to the Legislature, won’t come out and make these bold policy prescriptions because the Democrats who control the Legislature don’t want to give up their power over businesses that they gain by limiting and narrowly targeting one-off incentives.