What Was Not Inside Intel’s Economic Report

Chuck Sheketoff

Intel recently released a report on the “Economic Impacts of Intel’s Oregon Operations,” the third in an irregular series of reports it commissions from ECONorthwest. Sadly, the report omits an important fact about Intel — its state corporate income tax payments. That omission confirms that Intel no longer contributes in any significant way to pay for the public services from which it benefits.

Once upon a time, Intel was a responsible and model taxpayer and made sure the public knew that by reporting facts about its corporate income tax payments.

For instance, the 1998 Intel-ECONorthwest report pointed out, “In 1997, Intel paid $54 million in corporate income tax to the State of Oregon, the largest amount of any corporate taxpayer and 14% of all corporate income tax receipts in that year.” According to the report, Intel’s total output in Oregon was $3.5 billion (in 1997 dollars).

The 2003 Intel-ECONorthwest report said, “Intel’s Oregon corporate income taxes averaged $50.9 million per year over 1998 to 2001.” According to that report, Intel’s total output in Oregon in 2001 was $6.9 billion (in 2001 dollars).

Although the 2011 Intel-ECONorthwest report (PDF) boasts that Intel's overall output grew to $17.3 billion in 2009, the report is notably silent on the matter of how much the company paid in Oregon corporate income taxes that year.

How did it come to be that ECONorthwest no longer reports the corporate income taxes Intel paid to the state?

Intel successfully lobbied for a major tax loophole that slashed its corporate income tax bill in Oregon. Add to that a handful of income tax subsidies (e.g. credits and deductions) it enjoys and you understand why Intel escapes its responsibility for paying for the public services which benefit the corporation — a well-trained workforce, a good education system, and a court system open five days a week, for example.

Reiterating what Intel used to post on its website, this latest Intel-ECONorthwest report notes that tax policy was not a factor in why the company came here: “abundant water supplies, reasonably priced electricity, a strong education system and labor force, and convenient travel distance from the Silicon Valley.” It wasn’t tax loopholes and subsidies that brought Intel to Oregon.

Consider that in 1997 Intel’s net revenue was $25 billion and it paid $54 million in corporate income taxes to Oregon. Compare that to 2009, when Intel’s net revenues were $35 billion and the company won't tell us what it paid in corporate income taxes to Oregon.

With its output in Oregon up and net revenues company-wide up as well, Intel’s failure to mention any corporate income taxes paid to Oregon speaks volumes.

While Intel points out that “contributions to Oregon-based charities, nonprofits and schools between 2005 and 2009” averaged $5.8 million a year, selectively donating to charity is no substitute for paying taxes to support the public services and public investments which continue to make Oregon a great place for Intel to do business.

You don’t need “Intel Inside” to process that Intel is no longer a model corporate taxpayer.

Oregon Center for Public PolicyChuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

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    Intel successfully lobbied for a major tax loophole = our elected leaders sold us out.

    BTW, anyone know how much they pay in property taxes?

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      Intel benefits from the property tax limitation for semiconductor investments. Basically they pay property taxes equivalent to what a typical business would pay, not what their high priced equipment is worth. The result is that they pay the typical local property taxes for school districts, but not the income taxes that finance the majority (?) of k-12 school funding in Oregon today. For a company that claims it is all about education this is pretty rampant corporate hypocrisy.

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        What do you suggest they do? I am sure they are paying all the taxes they are required to pay. Sounds like the problem is with the legislators, not intel. Did intel set the tax rate?

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    I am looking forward to seeing the reports on this one - the rural issues can be quite distinct.

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    Hey I think I scrolled thru to the next one, not the right spot for my remark. Multi-tasking can be dangerous!

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    A few random thoughts:

    1. Just to be clear, the "loophole" you're talking about is single-factor apportionment, right? If so, that's not an Intel-specific deal, that's just how Oregon apportions world-wide income to Oregon for all taxpayers.

    2. Luckily Measure 67 took care of this problem, right? Oh wait, the minimum tax is based on Oregon sales, so Measure 67 had no impact on Intel.

    3. Do you agree with Intel that tax policy had no impact on why Intel located here, or are you saying that in fact the absense of corporate income taxes is a significant reason why Intel is here?

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    1. That's right, Intel was part of a coalition with Nike, Columbia Sportswear, Monaco Coach, and others who pushed for the loophole in the way their profits are apportioned to Oregon. Back when Intel was paying $50+ million a year they were not able to use that loophole because it was not part of our tax code.

    2. OCPP never said Measure 67 would once again make Intel a good taxpayer; Measure 67 was not designed to reverse the loophole that allows Intel to avoid taxes. For all we know Measure 66 may have only changed their tax bill from $10 to $150. Disclosure would tell us.

    3. Tax policy had nothing to do with why chose to locate and invest in Oregon. And the absence of income taxes is not why they are still here. State and local taxes were and are a small share of the cost of doing business to Intel.

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    When Intel arrived corporate taxes were based on three factors: sales, property and payroll in Oregon. By 2005 the change was completed, and only sales matters.

    The change hurt many companies, but helped some big players reduce their contribution to the state.

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