To attract business to her state, New Mexico Governor Susana Martinez (R) has taken a page from the playbooks of Governors Bobby Jindal and Sam Brownback: cutting the corporate income tax. While Governor Martinez has yet to follow Jindal and Brownback in their (unsuccessful) attempts to abolish the tax entirely, she clearly wants to join the wave of tax reform sweeping Red America. The FT reports:
“Businesses have choices and they can go anywhere in the world and if we don’t provide a business-friendly economy they’re not going to come here,” says Ms Martinez, who took office in early 2011.
But it took weeks of tough negotiations with the Democratic legislature and a final all-night round of tense horse-trading for her to clinch a deal. “Without many many many conversations this doesn’t happen,” she says.…
The centrepiece of the New Mexican legislation cuts the corporate income tax rate from 7.6 per cent to 5.9 per cent, phasing it in over five years.
As with other states slashing tax rates, it remains unclear whether the cut will be accompanied by new revenue or just decreased spending. This is a problem that has bedeviled all Tea Party politicians: How do you compete for business and investment without harming low- and middle-income people who depend on social services? This is especially important for Martinez, whose state has some of the lowest educational standards in America and a very high poverty rate. And unlike Jindal’s Louisiana or Brownback’s Kansas, New Mexico is now a relatively blue state that in recent presidential elections has been a lock for Democrats.
As we’ve said before, intellectual ferment in policy reform has been greater in red states than blue ones in recent years. But as far as growth goes, GOP policy is still somewhat uninspiring and a difficult sell at the national level. The party still doesn’t seem to have come up with much in the way of reform and pro-growth policies other than spending cuts on the one hand and tax cuts on the other.
The GOP has the difficult task of convincing voters that it is concerned about those who are struggling in this economy, and of creating a forward-looking governing agenda that fits the times. Reaganomics and endless complaints about the Obama administration won’t get them very far.
[New Mexico Governor Susana Martinez photo courtesy of Getty Images. Red Dawn background courtesy of Shutterstock.]