Raises the tax rate on corporate income; increases the state conformity to federal taxation of corporate profit shifting; and imposes an additional tax on…

◆ The sponsor's argument

Why the sponsor says this is needed

New York is an exceptionally wealthy state. Treated as a separate coun- try, it would have one of the world's largest economies. With such a strong economy, all New Yorkers should have fundamental economic rights: access to high-quality education, affordable healthcare, guaranteed housing, and basic social services and social insurance. New York must also finance investments in green energy, green jobs, and green infras- tructure in order to mitigate the catastrophic risks of climate change. New York is also the most unequal state in the nation, in part because our tax system has not kept pace with changes in the economy, leaving the many high-earning professionals and wealthy families in this state undertaxed. Economic growth from recent decades has overwhelmingly bene- fitted a small segment of elites, while inflation-adjusted wages have stagnated for the vast majority of working people since the 1970s. The state government, lacking adequate tax revenues, has been unable to afford essential public investment and social spending, including upgrading our infrastructure, repairing public housing, protecting public education, and financing Medicaid. While the federal government could aid the states in providing essential services through progressive tax and spending measures, it instead continues to give tax benefits to corporate interests. In 2017, the federal government enacted the tax legislation known as the "Tax Cuts and Jobs Act" (the "TCJA"), which reduced the corporate tax rate from 35% to 21%. The TCJA also created a 20% deduction for business income received from pass-through entities --- with additional benefits for the real estate industry --- and added a global intangible low-taxed income (GILTI) provision to target multinational corporations hiding profits in overseas subsidiaries. Big business, already adept at dodging taxes, hardly needed a tax cut. Moreover, these tax cuts cost the federal government trillions of dollars in tax revenues. Tax revenues from corporate income are now at a historic low. Now, instead of funding desperately needed social services and social insurance, these revenues have been diverted to artificially boosting corporate earnings and inflating stock values. New York can respond to regressive federal tax policy by imposing addi- tional taxes that offset these cuts. The state is full of both large corporations and pass-through business owners that were doing perfectly well before these tax cuts in 2017. This bill raises New York state corporate tax rate using a graduate rate structure, where corporations with incomes over $2.5 million pay an 8% corporate tax rate, corporations making over $10 million pay a 12% corporate tax rate, and corporations making over $20 million in income pay a 14% corporation tax rate. For the latter two tax brackets, only the income over $10 million, and $20 million may be taxed at the 12%. and 14% rates, respectively. To address the 2017 20% federal pass-through entity deduction, this bill also reduces the state pass-through entity tax rebate from 100% to 75% of a partner's share of the federal pass-through entity tax. The bill increases the amount of GILTI included in a corporation's taxable income for state corporate tax purposes.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.