The Washington Post has denounced the inclusion of bonus depreciation in the just-passed tax extenders bill for 2014. The correct term is “partial expensing.” There is nothing “bonus” about it. The...
- The Tax Policy Blog
- Oregon Promises Not to Change Tax Code in Nike Agreement
Oregon Promises Not to Change Tax Code in Nike Agreement
Oregon-headquartered Nike reached an agreement with the state this week:
- The state promises to preserve “single sales factor apportionment” for the corporate income tax for 30 years, even if the law is changed for other companies. States have generally moved toward that apportionment formula, under which home-state companies pay tax based on the share of their sales in the state (which is often low for global companies), rather than on the share of their property or employees in the state (which is high for home-state companies).
- In return, Nike will add at least 500 new jobs and invest $150 million in the state.
Governor John Kitzhaber (D) hailed the agreement, passed by the Legislature last week, as vital to keeping Nike in the state. For its part, Nike said that single-sales factor is vital to their committing to the investment.
I share Politifact’s wonder as to whether this even qualifies as a tax break. Oregon, after all, is just promising not to make its tax system worse for Nike; nothing at this point actually changes. If every state promised that they wouldn’t make their tax system worse, that would be something. On the other hand, Nike is the sole beneficiary of this provision, even though it’s worded to be somewhat generally applicable:
The legislation authorizes the governor, in consultation with the Director of the Oregon Business Development Department and the Director of the Department of Revenue, to enter into contracts with taxpayers that guarantee single-sales factor apportionment of income for a term of at least five years but not more than 30. The contracts will require a taxpayer to make a capital investment in excess of $150 million within a five-year period, measured from the beginning of the term of the investment contract, and to engage at least 500 new full-time-equivalent employees. A contract may not be entered into before December 14, 2012, or after January 1, 2014.
Our most recent State Business Tax Climate Index ranked Oregon as having the 13th best business tax climate in the country.
Subscribe to the Tax Foundation Newsletter
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.