Economics ETDs

Publication Date

6-11-1975

Abstract

The objectives of this study are two-fold: first, to illustrate and analyze comprehensively the historical and current principal administrative features of New Mexico's corporation income tax (CIT); and second, to derive a methodology for estimating the revenues from this tax. These objectives were established because there exists very little literature concerning the CIT used by New Mexico, and in response to the current difficulty experienced by the state's Bureau of Revenue (BOR) in obtaining relatively accurate revenue projections for this tax. The illustration of the administrative aspects of the CIT centers around five factors: 1) the tax rate, 2) the tax base, 3) filing requirements, 4) taxable corporations, and 5) interstate corporation taxation. Each of the five factors is discussed from its initial legislated enactment in 1933 to the present. Additionally, New Mexico's CIT is compared with the CITs currently in use by other states. The second objective, which involved the designing of a CIT revenue estimating model for suggested use by the BOR, was achieved through the development of a statistically based methodology. An extrapolative model using time as an all inclusive proxy variable was established for use in computing the BOR's initial projections of the CIT for the upcoming fiscal year. Since the BOR currently adjusts its initial estimate twice during the fiscal year being projected, this study also developed an econometric model using New Mexico total personal income and its unemployment rate as explanatory variables. The econometric model serves as the first adjustment current fiscal year projection for CIT receipts. For the last adjustment in CIT projections, which is the estimate used by the BOR in forming its final total state tax revenue projection, the study suggested the use of an expanded procedure. This procedure incorporates two inputs: 1) the results of the econometric model (which also serve as the first adjustment projection); and 2) the results of questionnaires to corporations. Using the results from these two inputs the BOR would then make its final adjustment in their projection for CIT revenue. Though the methodology developed in this study was severely restricted by insufficient observations, the suggested estimating procedure offers the BOR an alternative method. Furthermore, the comprehensive illustration of the CIT's administrative aspects and state comparisons permits the BOR to have a fuller understanding and awareness of the tax.

Degree Name

Economics

Level of Degree

Masters

Department Name

Department of Economics

First Committee Member (Chair)

Gerald Joseph Boyle

Second Committee Member

Albert Marion Church III

Third Committee Member

Franklin Lee Brown, Jr.

Language

English

Document Type

Thesis

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