Three days before a resurrected legislature is set to vote on it, the governor's office has released the draft text of the special tax agreement it hopes to secure for Nike.
You can read a PDF of the proposed bill here.
The bill argues that the state's current "single sales factor" method of determining how much a business pays in taxes "encourages businesses to locate and remain within this state, encourages existing Oregon businesses to expand their operations in Oregon and creates incentives for businesses to make significant capital investments within this state." It grants the governor power to lock in a company to paying taxes only based on their in-state sales, even if the state changes it tax structure to base taxes of things like payroll and property.
The bill says that the governor's agreement with businesses to lock-in the tax structure would run from five to 40 years. To qualify for the lock-in, the company must be hiring at least 500 new people in Oregon and invest at least $150 million in construction projects (like building a new headquarters) in the state over five years.
In addition to investing $150 million and hiring 500 people, the bill spells out two other factors to determine whether a business qualifies for the special agreement: wages exceeding the average salary in Oregon and creating jobs in rural Oregon.
The proposed law states that if a business fails to hold up its end of the investment deal, the state can sue the business to demand payment of the difference between what the business paid in taxes and what it would have paid in taxes without the deal (which may be nothing, unless the state changes its current tax structure).
As I reported yesterday, it's not entirely clear why the governor is rushing this through. There is no plan afoot to change the state's tax structure. But potentially driving the deal is a lawsuit California-based insurance company Health Net filed against the state in July. The lawsuit argues that Oregon’s single-sales factor tax structure is unfair, demanding the state switch back to its old tax structure and issue millions in refunds to corporations.