The $35.1 million increase in tax loophole spending not tied to a single job

Chuck Sheketoff

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 benefit 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.

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.

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

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