Expand Eligibility for the Rural Health Care Practitioner Tax Credit

Two bipartisan bills have been introduced to make New Mexico's tax policy friendlier for health care workers. Both bills are supported by Think New Mexico, which recommended these reforms in its recent report, How to Solve New Mexico's Health Care Worker Shortage.

Senate Bill 295, which would repeal New Mexico's gross receipts tax on medical services, is sponsored by Senator Jeff Steinborn (D-Albuquerque); Senate Minority Leader William Sharer (R-Farmington); and 13 other sponsors.

House Bill 52, sponsored by Representatives Miguel Garcia (D-Albuquerque); Jenifer Jones (R-Deming), among others, would expand the eligibility of the Rural Health Care Practitioner Tax Credit to additional categories of health care providers, including EMTS, paramedics, and licensed practical nurses. House Bill 52 passed the House Health and Human Services Committee unanimously and received a favorable hearing in the House Taxation and Revenue Committee, which will determine whether to include it in this year's omnibus tax bill.

New Mexico is one of only two states that impose a Gross Receipts Tax (GRT) on the medical services. (The other is Hawaii). Unlike most businesses, which simply pass on the gross receipts tax to their customers, medical providers cannot pass the tax on to insurance companies, Medicaid, or Medicare. As a result, doctors end up bearing the full burden of the tax, making it more expensive to practice medicine in New Mexico than in other states. Statewide, the GRT averages 7.05%.

Over the past two decades, the legislature has gradually repealed portions of the tax. Senate Bill 295 would repeal the remaining portions.

The Rural Health Care Practitioner Tax Credit provides an annual $5,000 income tax credit to licensed doctors, dentists, clinical psychologists, podiatrists, and optometrists who practice in rural areas. It also provides a $3,000 credit to licensed dental hygienists, physician assistants, midwives, certified nurse anesthetists, certified nurse practitioners, and clinical nurse specialists, among other health care professions.

However, several health care professions that are in severe shortage in New Mexico are not yet included in the credit. For example, New Mexico has lot 1,134 EMTs in the last decade and needs nearly 5,000 to meet the national benchmark, yet EMTs are not eligible for the credit.

House Bill 52 would expand the health care practitioners eligible for the tax credit to include EMTS, paramedics, occupational therapists, audiologists, speech and language pathologists, naturopaths, naprapaths, and licensed practical nurses. The annual cost of the expansion is $2.2 million, according to the Fiscal Impact Report from the Legislative Finance Committee.

"The urgently needed reforms in Senate Bill 295 and House Bill 52 would make New Mexico more competitive in attracting and retaining health care workers," says Fred Nathan, Jr., Executive Director of Think New Mexico.

More information is available on Think New Mexico's website at: www.thinknewmexico.org.