Nike Legislation Would Exclude Intel

When the Legislature meets in special session tomorrow, it will probably pass a bill that benefits Nike, Oregon's marquee home-grown company.

But the draft version of that legislation will make it difficult for Intel, the California-based tech giant that is Oregon's largest private employer, to get the same assurance.

Nike and Intel both already benefit from Oregon's current approach to corporate income taxes for companies active in multiple states—the so-called "single sales factor." Put simply, Oregon taxes such companies based on their sales within the state, rather than on a weighted value of property, payroll and sales as was once the case.

For companies such as Intel and Nike that have large investments in plant and equipment and big payrolls but relatively small sales in Oregon, the single-sales-factor approach yields a much lower income tax bill than would otherwise be the case.

Preserving that single sales factor approach for Nike is the sole reason for Friday's special session. In exchange for the state maintaining the status quo for Nike, according to draft legislation, the sporting goods company will agree to invest at least $150 million and hire 500 new employees in Oregon.

But one of the criteria for qualifying for the same deal Nike wants requires the "taxpayer [i.e. the company] has not received savings in property tax costs greater than $5 million under the strategic investment program."

The Strategic Investment Program is a 15-year property tax break that has helped convince Intel to plow billions of dollars in Washington County chip plants. The program has save Intel tens of millions in property taxes and yielded thousands of high-paying jobs since 1994.

The point of the exclusion appears to be to stop Intel or anybody else who gets a substantial property tax benefit from the Strategic Investment Program also locking in certainty on income taxes. 

In a rare appearance before the Legislature, Gov. John Kitzhaber this morning urged lawmakers to remove the section of the bill that might inconvenience Intel.

"I think it isolates one specific economic development tool and should be taken out," Kitzhaber told lawmakers. "I think keeping that language in the bill may limit options in the future."

WWeek 2015