by Ben Schreiner
At the behest of Nike, Oregon hastily convened a special one-day legislative session on Friday in order to ensure the global behemoth retains its preferential tax status in the state.
The spectacle of an emergency legislative session to pass a tax break for a single company was prompted by Nike threats to take a planned expansion out of state. As Nike warned, other states are “heavily courting” the company.
Not wanting to “lose” Nike, which houses its 200-acre corporate headquarters in Beaverton, Ore., Democratic Governor John Kitzhaber eagerly called a special session and deemed cowing to Nike threats a “no-brainer.” And with the support of Democrats, and calls from lawmakers to “just do it,” the Nike tax break easily passed both legislative chambers—the demands of Nike lobbyists codified by Oregon legislators into law.
Under the terms of the Nike tax-break deal, Oregon’s governor is now free to reach an agreement with the company in which the state will guarantee no changes to Nike’s current tax status will occur over the next 30 years in return for a company promise of 500 new jobs and a $150 million expansion.
Of course if one listens to the governor and Nike, the planned expansion will ultimately lead to 12,000 direct and indirect jobs and boost the state’s economy by $2 billion annually. Naturally, such rosy projections come from an “independent” economic study commission by none other than Nike. The data of the study, meanwhile, remains hidden from the public.
The sudden urgency Nike proclaimed in seeking to lock-in its current tax status stemmed certainly in part from a need to mask such shoddy claims from public scrutiny. It also, though, derived from a desire to protect another sweetheart tax deal it had previously wrested from the state.
Back in 2001, once again under pressure from Nike lobbyists, Oregon began to phase in a “single-sales factor” tax formula. This formula leaves only a company’s in-state sales taxable by the state—a boon for multinationals like Nike. In fact, according to the Oregon Center on Public Policy, this changed formula saved Nike $143.2 million in Oregon taxes from 2005-2009. That equates to a 90 percent reduction in the company’s state tax burden.
Still, prior to Nike’s Friday victory, the future of its privileged tax status was appearing slightly more tenuous. For amid drastic cuts to public education, social services, and mounting furlough days for state employees, Oregonians have demonstrated a repeated eagerness to increase taxes on corporations.
In November, for example, Oregon voters passed Measure 85, reforming the state's rather inane “corporate kicker.” Under the provisions of the old kicker, all tax collections exceeding state revenue projections by 2 percent or more over a two year span were rebated to corporate taxpayers. Now, that rebate is slated to go for public education.
The reform of the state’s corporate kicker follows on the success in 2010 of state Measures 66 and 67, which saw voters pass modest tax increases on corporations and the state’s wealthy. In an op-ed appearing in the Oregonian newspaper at the time, Nike co-founder Phil Knight deemed the measures to be “anti-business, anti-success, anti-inspirational, anti-humanitarian,” among other things.
Nike's most recent shakedown, however, now preempts any future citizen initiative which could have potentially targeted the company's privileged tax status. It appears all inspirational humanitarians can now rest at ease.
Of course, corporate extortion of the kind Nike employed against Oregon is nothing new. Doling out corporate tax breaks in return for dubious corporate promises of jobs is a growing national trend. A recent New York Times series on corporate subsidies, for instance, found that state and local governments in the U.S. relinquish an estimated $80 billion every year in corporate tax incentives. At the same time, as the paper reported, state and local governments were forced to cut public services and raise taxes by a combined $156 billion last year.
In Oregon, the special Nike tax break comes at a time when the austerity fetish has led the governor is seek a cap on cost of living increases for current retirees enrolled in the state’s Public Employees Retirement System. But such is the real nature of the bipartisan dictum of “shared sacrifice.”
As Sheldon Wolin writes in his book Democracy Inc., we are living in “a system that represents the political coming-of-age of corporate power.”
“Exit the citizen,” Wolin writes, “enter the corporate actor.”
And in the age of corporate power, the brazen blackmail of a state government by a private corporation is not held to be a disgrace, nor even the least bit troubling. Instead, it’s merely business as usual.
The corporate actor now reigns supreme; all hail the corporate actor. As Oregon State Senator Ginny Burdick gushed on Friday of Nike, what a “wonderful, wonderful company.”