S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3690
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 3, 2023
                                ___________
 
 Introduced by M. of A. KELLES, SHRESTHA -- read once and referred to the
   Committee on Ways and Means
 
 AN  ACT  to  amend  the  tax law, in relation to raising the tax rate on
   corporate income; in relation to increasing the  state  conformity  to
   federal  taxation  of  corporate  profit  shifting; and in relation to
   imposing an additional tax on individual business income  in  response
   to federal tax benefits for pass-through business income
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph (b) of subdivision 6-a of section 208 of the  tax
 law,  as  amended  by  section  1 of part I of chapter 39 of the laws of
 2019, is amended to read as follows:
   (b) "Exempt CFC income" means (i) except to the  extent  described  in
 subparagraph  (ii) of this paragraph, the income required to be included
 in the taxpayer's federal gross income pursuant  to  subsection  (a)  of
 section  951  of  the internal revenue code, received from a corporation
 that is conducting a unitary business  with  the  taxpayer  but  is  not
 included  in  a  combined  report  with  the  taxpayer, (ii) such income
 required to be included in the taxpayer's federal gross income  pursuant
 to  subsection  (a)  of such section 951 of the internal revenue code by
 reason of subsection (a) of section 965 of the internal revenue code, as
 adjusted by subsection (b) of section 965 of the internal revenue  code,
 and  without  regard  to subsection (c) of such section, received from a
 corporation that is not included in a combined report with the taxpayer,
 and (iii) [ninety-five] FIFTY percent  of  the  income  required  to  be
 included  in  the taxpayer's federal gross income pursuant to subsection
 (a) of section 951A of the internal revenue code, without regard to  the
 deduction  under section 250 of the internal revenue code, received from
 a corporation that is not included in a combined report with the taxpay-
 er, less, (iv) in the  discretion  of  the  commissioner,  any  interest
 deductions  directly  or indirectly attributable to that income. In lieu
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD04589-01-3
              

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 of subtracting from its exempt CFC income the amount of  those  interest
 deductions,  the  taxpayer  may  make a revocable election to reduce its
 total exempt CFC income by forty percent. If  the  taxpayer  makes  this
 election,  the  taxpayer  must  also  make the elections provided for in
 paragraph (b) of subdivision six of this section and  paragraph  (c)  of
 this  subdivision.  If  the taxpayer subsequently revokes this election,
 the taxpayer must revoke the elections provided for in paragraph (b)  of
 subdivision six of this section and paragraph (c) of this subdivision. A
 taxpayer  which does not make this election because it has no exempt CFC
 income will not be precluded from  making  those  other  elections.  The
 income described in subparagraphs (ii) and (iii) of this paragraph shall
 not  constitute  investment income. The income described in subparagraph
 (iii) of this paragraph shall not constitute exempt unitary  corporation
 dividends.
   §  2.  The  opening  paragraph  of  paragraph  (a) of subdivision 1 of
 section 210 of the tax law, as amended by section 1 of part HHH of chap-
 ter 59 of the laws of 2021, is amended to read as follows:
   For  taxable  years  beginning  before  January  first,  two  thousand
 sixteen,  AND  BEFORE JANUARY FIRST, TWO THOUSAND TWENTY-ONE, the amount
 prescribed by this paragraph shall be computed at the rate of seven  and
 one-tenth  percent  of  the taxpayer's business income base. For taxable
 years beginning on or after January first,  two  thousand  sixteen,  the
 amount prescribed by this paragraph shall be six and one-half percent of
 the  taxpayer's  business income base. For taxable years beginning on or
 after January first, two thousand twenty-one and before  January  first,
 two  thousand  twenty-four  for any taxpayer with a business income base
 for the taxable year of more  than  five  million  dollars,  the  amount
 prescribed  by  this paragraph shall be seven and one-quarter percent of
 the taxpayer's business income base. FOR TAXABLE YEARS BEGINNING  ON  OR
 AFTER  JANUARY  FIRST,  TWO THOUSAND TWENTY-FOUR FOR ANY TAXPAYER WITH A
 BUSINESS INCOME BASE FOR THE TAXABLE YEAR OF MORE THAN TWO AND  ONE-HALF
 MILLION  DOLLARS, THE AMOUNT PRESCRIBED BY THIS PARAGRAPH SHALL BE EIGHT
 PERCENT OF THE TAXPAYER'S BUSINESS INCOME BASE; FOR ANY TAXPAYER WITH  A
 BUSINESS  INCOME  BASE  FOR  THE  TAXABLE  YEAR IN EXCESS OF TEN MILLION
 DOLLARS, THE AMOUNT PRESCRIBED BY THIS PARAGRAPH SHALL BE TWELVE PERCENT
 OF THE TAXPAYER'S BUSINESS INCOME BASE IN EXCESS OF TEN MILLION DOLLARS;
 FOR ANY TAXPAYER WITH A BUSINESS INCOME BASE FOR  THE  TAXABLE  YEAR  IN
 EXCESS  OF  TWENTY  MILLION DOLLARS, THE AMOUNT PRESCRIBED BY THIS PARA-
 GRAPH SHALL BE FOURTEEN PERCENT OF THE TAXPAYER'S BUSINESS  INCOME  BASE
 IN EXCESS OF TWENTY MILLION DOLLARS. The taxpayer's business income base
 shall  mean  the  portion  of the taxpayer's business income apportioned
 within the state as hereinafter provided. However,  in  the  case  of  a
 small  business  taxpayer,  as defined in paragraph (f) of this subdivi-
 sion, the amount prescribed by this paragraph shall be computed pursuant
 to subparagraph (iv) of this paragraph and in the case of a  manufactur-
 er,  as  defined  in  subparagraph  (vi)  of  this paragraph, the amount
 prescribed by this paragraph shall be computed pursuant to  subparagraph
 (vi)  of  this paragraph, and, in the case of a qualified emerging tech-
 nology company, as defined in subparagraph (vii) of this paragraph,  the
 amount  prescribed  by  this  paragraph  shall  be  computed pursuant to
 subparagraph (vii) of this paragraph.
   § 3. Paragraph (b) of subdivision 5-a of section 210-A of the tax law,
 as amended by section 3 of part I of chapter 39 of the laws of 2019,  is
 amended to read as follows:
   (b)  For  New  York C corporations, global intangible low-taxed income
 shall not be included in the numerator of  the  apportionment  fraction.
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 [Five]  FIFTY  percent  of  global  intangible low-taxed income shall be
 included in the denominator of the apportionment fraction.
   § 4. Paragraph 2 of subsection (kkk) of section 606 of the tax law, as
 added  by  section  2  of  part  C of chapter 59 of the laws of 2021, is
 amended to read as follows:
   (2) The credit shall be equal to SEVENTY-FIVE  PERCENT  OF  the  part-
 ner's, member's or shareholder's direct share of the pass-through entity
 tax.
   §  5.  The  tax  law is amended by adding a new section 608 to read as
 follows:
   § 608. ADDITIONAL TAX. (A) THERE IS IMPOSED AN ADDITIONAL TAX UPON THE
 AMOUNT OF AN INDIVIDUAL'S NEW YORK TAXABLE INCOME  THAT  CORRESPONDS  TO
 ANY  DEDUCTION  TAKEN  PURSUANT  TO SECTION 199A OF THE INTERNAL REVENUE
 CODE, OR ANY SUCCESSOR PROVISION THERETO. THIS SECTION SHALL  NOT  APPLY
 TO  A TAXPAYER WITH A FEDERAL TAXABLE INCOME BELOW THE THRESHOLD AMOUNT,
 AS DEFINED IN SECTION 199A(E) OF THE INTERNAL REVENUE CODE,  PLUS  FIFTY
 THOUSAND  DOLLARS  FOR  A  SINGLE FILER TAXPAYER OR ONE HUNDRED THOUSAND
 DOLLARS IN THE CASE OF A JOINT RETURN.
   (B) THE RATE OF THE ADDITIONAL TAX IMPOSED PURSUANT  TO  THIS  SECTION
 SHALL BE EQUAL TO THE HIGHEST FEDERAL INCOME TAX RATES IN EFFECT FOR THE
 TAXABLE  YEAR THAT WOULD APPLY TO THE AMOUNT DEDUCTED UNDER SECTION 199A
 OF THE INTERNAL REVENUE CODE, OR ANY SUCCESSOR  PROVISION  THERETO,  BUT
 FOR  THE  APPLICATION OF SUCH SECTION. THE AMOUNT OF AN INDIVIDUAL'S NEW
 YORK TAXABLE INCOME THAT CORRESPONDS TO  THE  AMOUNT  OF  ANY  DEDUCTION
 TAKEN  PURSUANT  TO  SECTION  199A  IS  THE  AMOUNT  THAT BEARS THE SAME
 RELATIONSHIP TO THE TAXPAYER'S TOTAL NEW  YORK  TAXABLE  INCOME  AS  THE
 AMOUNT DEDUCTED UNDER SECTION 199A BEARS TO THE TAXPAYER'S TOTAL FEDERAL
 TAXABLE INCOME AS DETERMINED WITHOUT REGARD TO SUCH DEDUCTION.
   (C)  THE  ADDITIONAL TAX UNDER THIS SECTION SHALL BE ADMINISTERED, AND
 PENALTIES SHALL BE IMPOSED, IN  THE  SAME  MANNER  AS  THE  OTHER  TAXES
 IMPOSED BY THIS ARTICLE.
   § 6. This act shall take effect immediately and shall apply to taxable
 years commencing on and after such effective date.