Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports if they are used for other purposes.

 

Current FIRs (in HTML & Adobe PDF formats) are available on the NM Legislative Website (legis.state.nm.us).  Adobe PDF versions include all attachments, whereas HTML versions may not.  Previously issued FIRs and attachments may also be obtained from the LFC in Suite 101 of the State Capitol Building North.

 

 

F I S C A L    I M P A C T    R E P O R T

 

 

 

SPONSOR

Aragon

DATE TYPED

02-06-04

HB

 

 

SHORT TITLE

Amounts Included In NM Taxable Income

SB

440

 

 

ANALYST

Taylor

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY04

FY05

 

43,800.0

33,400.0

Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

SOURCES OF INFORMATION

 

LFC Files

 

Response Received From

Taxation and Revenue Department

 

SUMMARY

 

Senate Bill 440 amends the income tax act definition of net income.  In particular, the provision that excludes itemized deductions from base income is amended so that state and local taxes currently included in the taxpayer’s itemized deductions may no longer be excluded.

 

This provision would apply to taxable years beginning on or after January 1, 2004.

 

FISCAL IMPLICATIONS

 

TRD estimates that this bill would increase general fund revenues by $43.8 million in FY05.  Their analysis reports that the estimate is based on tabulations of federal income tax returns filed by New Mexicans in tax year 2000.  Figures are adjusted for income and population growth.

 

The impact diminishes in future years, as the top state income tax rates are reduced.

 

ADMINISTRATIVE IMPLICATIONS

 

TRD reports modest administrative impacts that they can absorb with existing resources.

 

 

TECHNICAL ISSUES

 

The TRD analysis reported the following technical issue: “The current proposal would eliminate the deduction for all “state and local taxes.”  It is unclear if this is intended to read “state and local income taxes” or if it is intended to include other taxes, like real estate taxes, that can be deducted as well.”  They also note that if the bill intends to eliminate the deduction for all state and local taxes (mostly property taxes), the revenue impact is 50 percent higher.

 

BT/lg:dm