Guess what corporate tax loophole will cost an additional $35.1 million next biennium without requiring that the beneficiaries create a single job?
That tax code spending provision is none other than single-sales factor apportionment, the topic of Friday’s special legislative session convened by the Governor. About 10 years ago, Nike and the Loophole Lobby persuaded the legislature to create this gimmick, which shields profits of multistate corporations with employees and property that benefits from Oregon’s public structures from Oregon taxation. Now, Nike seeks a special deal whereby the Governor — after being granted the legal power to do so by the legislature — would agree to keep that tax break in place for up to 40 years.
See A Highly Dubious Assumption in the Governor’s Proposed Nike Deal.
According to the 2013-15 Tax Expenditure Report, Oregon’s lost revenues as a result of single sales factor apportionment will grow from $129.8 million in the current budget period to $164.9 million in the upcoming two-year budget period. That $35 million increase — a 27 percent increase in spending through the tax code allegedly to support economic development — is not directly tied to any new jobs for Oregon. Put another way, companies benefitting from the loophole could shed jobs and still pocket the tax subsidy.
The lame duck legislature is set to consider legislation which may tie the hands of future legislatures from closing the single-sales factor loophole. If Nike gets its way, other corporations are sure to follow in asking for a similar deal. As presently drafted, the legislation would allow the Governor to cut deals lasting up to 40 years.
With single-sales factor apportionment locked-in for some corporations, perhaps for as long as 40 years, would the legislature be willing to consider repealing the single-sales factor tax break? It seems highly unlikely.
Even if the Nike deal (and any subsequent deals with another company) has some job creation requirements, the rest of the application of single-sales factor apportionment — the one whose price tag will go up $35 million next biennium — in no way requires the corporate beneficiaries to create a single job. For all practical purposes, Oregonians likely would be stuck with that bad public policy for years, maybe decades, to come.
Chuck Sheketoff is a founder of the Oregon Center for Public Policy. The OCPP was established due to the “public interest pioneer award” Chuck received from the Stern Family Fund in September, 1997. Prior to coming to the OCPP, Chuck lobbied the Oregon State Legislature on behalf of legal aid clients (1993, 1995) and the Oregon Law Center (1997).
Ron – considering the tragedy of today’s events I think I’ll leave the sparring for another day.
OK by me. i’m not sure what one has to do with the other.
I would if I could. It’s just the double talk you spew forth I won’t deal with.
I don’t know what you mean by that statement, Ron, but it appears that you would prefer to ignore the facts.
BS by any other name still carries the exact same aroma.
In 2006 Phil Knight donated $105 million to the Stanford Graduate School of Business. In 2008 he and his wife pledged $100 million to the OHSU Cancer Institute, the largest gift in the history of Oregon Health & Science University. In 2012 Phil and his wife (Penny) donated another $125-million to Oregon Health & Science University to launch a cardiovascular research center. Google is full of philanthropic donations from both Nike and Phil Knight to causes outside of sports. Being a sports company it stands to reason that they would donate money to further sports, but donations have not been exclusively sports driven.
How does making personal, tax deductible charitable donations with profit derived from not paying a fair share of taxes help fund public safety, schools, roads and infrastructure necessary for successful commerce?
I still say an inordinate amount of time, money and attention is paid to college sports at the expense, and detrimant of these same institutions providing and emphasizing an education. Why doesn’t Nike donate monies to academia?
Who’s expanding in this economy? Maybe they’re just trying to avoid layoffs.
And what the hell is an ideological sales pitch?
By the way: corporations horde cash in tough economic times for many good reasons, and none of them have a thing to do with destroying jobs.
I’m guessing that $35 million will pay for a LOT of jobs. But they’ll be private sector jobs – not state.
Your guess would be little more than wishful thinking at best and probably more of an ideological sales pitch because companies are not reinvesting their tax savings by hiring more workers – http://mgx.com/blogs/2012/07/16/corporations-hoarding-cash-and-destroying-jobs/
Nike has spent tens of millions buying favors by suporting U of O athletics. I figured they had a tax break in mind when that happened. After all, it’s obvious the large State funded universities across the country are only there to promote football and to operate as a farm system for the NFL. Sports programs are fine as long they are kept in perspective. Not anymore. I’d love to see a hall of fame for the kids with good academic records. Not the case.