Bill proposed to fix corporate tax loophole that costs NY over $700 million each year

New York state is losing hundreds of millions of dollars in corporate taxes as multinational businesses shift their profits overseas – and Assembly Member Micah Lasher wants to put a stop to the tax avoidance with new legislation targeting the biggest corporations.

A new report from the Institute on Taxation and Economic Policy released on Thursday found that New York loses $737 million each year in state corporate taxes because big businesses don’t record their profits in the United States. It’s a common tactic for large multinational corporations, who can avoid U.S. taxes by recording a lower taxable profit within the country, while still raking in big bucks overall.

To help recover that money, Lasher told City & State that he plans to introduce new legislation he has dubbed the Multinational Earnings and Global Accountability for Corporations Act, or the “MEGA Corporations Act” for short. The bill would have New York begin using what’s known as “worldwide combined reporting” when determining a company’s tax liabilities in the state. Instead of just taking into account domestic profits, corporations making $1 billion or more in gross income would also need to include their international profits when figuring out how much they owe the state. Those corporations would still only pay based on the New York share of profits from sales in the state, but they would lose the benefit of shifting profits overseas to avoid higher taxes. 

“As a matter of basic fairness, we must put a stop to this,” Lasher said. “The MEGA Corporations Act will ensure that large multinationals don’t have an unfair advantage over domestic and in-state companies, and the bill will recover significant revenues for the state.” He said that in theory, if companies aren’t “playing games,” their tax liability would not change under the need calculator method. But if there is discrepancy between domestic sales and domestic profits compared to international sales and international profits, companies will no longer benefit from the loophole. “I don't view this as a tax increase,” Lasher said. “I view this as a tax reform that is going to make sure that all profits are accounted for when calculating New York's share of those profits.”

Lasher’s bill comes after President Donald Trump moved to withdraw the U.S. from talks on international tax agreement meant to discourage huge, multinational corporations from engaging in the very practice that is costing New York and other states money by shifting their profits to counties with low or no tax liability. Nearly 150 countries are part of the agreement, and former President Biden had worked to amend the country’s tax code to accommodate the global agreement as he sought to join as well. But Congress never passed legislation, and Trump reversed any progress. “It’s all the more important as Trump tears up agreements negotiated by the Biden Administration to stop global tax avoidance,” Lasher said of his bill. 

It doesn’t yet have a companion in the state Senate, but Assembly Members Robert Carroll, Zohran Mamdani, Yudelka Tapia, Dana Levenberg, Tommy Schiavoni and Harvey Epstein have already signed on as Assembly co-sponsors.