SENATE BILL 7

49th legislature - STATE OF NEW MEXICO - first special session, 2009

INTRODUCED BY

Eric G. Griego

AN ACT

RELATING TO REVENUE; AMENDING THE INCOME TAX ACT; CREATING A GRADUATED SURTAX FOR HIGHER LEVELS OF TAXABLE INCOME; DISTRIBUTING NET RECEIPTS GENERATED BY THE INCOME TAX SURTAX; AMENDING THE PUBLIC SCHOOL FUND TO PREVENT FISCAL YEAR-END REVERSIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of the Tax Administration Act is enacted to read:

     "[NEW MATERIAL] A distribution of the net receipts from the income tax surtax shall be made pursuant to Section 7-1-6.1 NMSA 1978 as follows:

          A. fifty percent to the public school fund; and

          B. fifty percent to the human services department for expenditures for the state’s medicaid program."

     Section 2. Section 7-2-7 NMSA 1978 (being Laws 2005, Chapter 104, Section 4) is amended to read:

     "7-2-7. INDIVIDUAL INCOME TAX RATES.--The tax imposed by Section 7-2-3 NMSA 1978 shall be at the following rates for any taxable year beginning on or after January 1, 2008:

          A. For married individuals filing separate returns:

     If the taxable income is:       The tax shall be:

Not over $4,000                       1.7% of taxable income

Over $ 4,000 but not over $ 8,000   $ 68.00 plus 3.2% of excess over $ 4,000

Over $ 8,000 but not over $ 12,000   $ 196 plus 4.7% of  excess over $ 8,000

Over $ 12,000                         $ 384 plus 4.9% of  excess over $ 12,000.

          B. For heads of household, surviving spouses and married individuals filing joint returns:

     If the taxable income is:       The tax shall be:

Not over $8,000                       1.7% of taxable income

Over $ 8,000 but not over $ 16,000   $ 136 plus 3.2% of                                        excess over $ 8,000

Over $ 16,000 but not over $ 24,000   $ 392 plus 4.7% of                                        excess over $ 16,000

Over $ 24,000                         $ 768 plus 4.9% of  excess over $ 24,000.

          C. For single individuals and for estates and trusts:

     If the taxable income is:       The tax shall be:

Not over $5,500                       1.7% of taxable income

Over $ 5,500 but not over $ 11,000   $ 93.50 plus 3.2% of excess over $ 5,500

Over $ 11,000 but not over $ 16,000   $ 269.50 plus 4.7% of excess over $ 11,000

Over $ 16,000                         $ 504.50 plus 4.9% of excess over $ 16,000.

          D. The tax on the sum of any lump-sum amounts included in net income is an amount equal to five multiplied by the difference between:

                (1) the amount of tax due on the taxpayer's taxable income; and

                (2) the amount of tax that would be due on an amount equal to the taxpayer's taxable income and twenty percent of the taxpayer's lump-sum amounts included in net income.

          E. The tax imposed by Section 7-2-3 NMSA 1978 is

increased for taxable years 2010 through 2012 by a surtax that may be cited as the "income tax surtax" and that is imposed at the rate of:

                (1) for married individuals filing separate returns:

                     (a) one percent on taxable income in excess of seventy-five thousand dollars ($75,000);

                     (b) two percent on taxable income in excess of one hundred thousand dollars ($100,000); and

                     (c) three percent on taxable income in excess of one hundred fifty thousand dollars ($150,000);

                (2) for heads of households, surviving spouses and married individuals filing joint returns:

                     (a) one percent on taxable income in excess of one hundred fifty thousand dollars ($150,000);

                     (b) two percent on taxable income in excess of two hundred thousand dollars ($200,000); and

                     (c) three percent on taxable income in excess of two hundred fifty thousand dollars ($250,000); and

                (3) for single individuals and for estates and trusts:

                     (a) one percent on taxable income in excess of one hundred thousand dollars ($100,000);

                     (b) two percent on taxable income in excess of one hundred thirty-three thousand dollars ($133,000); and

                     (c) three percent on taxable income in excess of one hundred sixty-six thousand dollars ($166,000)."

     Section 3. Section 22-8-14 NMSA 1978 (being Laws 1967, Chapter 16, Section 69, as amended) is amended to read:

     "22-8-14. PUBLIC SCHOOL FUND.--

          A. The "public school fund" is created.

          B. The public school fund shall be distributed to school districts and state-chartered charter schools in the following parts:

                (1) state equalization guarantee distribution;

                (2) transportation distribution; and

                (3) supplemental distributions:

                     (a) out-of-state tuition to school districts;

                     (b) emergency; and

                     (c) program enrichment.

          C. The distributions of the public school fund shall be made by the department within limits established by law. The balance remaining in the public school fund at the end of each fiscal year shall not revert to the general fund [unless otherwise provided by law]."

     Section 4. APPLICABILITY.--The provisions of Section 2 of this act apply to taxable years beginning on or after January 1, 2010.

     Section 5. EFFECTIVE DATE.--The effective dates of the provisions of this act are as follows:

          A. Section 1 of this act is effective January 1, 2011; and

          B. Section 2 of this act is effective January 1, 2010.