Intel-ligent Stimulus

Intel announced last week that it will bring almost 7,000 new jobs to Oregon by expanding in Hillsboro. That is 7,000 individuals who will be paying taxes and spending money in Oregon. This is unusually good news in this time of economic trouble and high unemployment.

But why did Intel choose Oregon when it could build anywhere? Especially when certain Oregon taxes are significantly higher than taxes in many other states. Intel has a number of special tax deals with the state of Oregon and local governments that allow it to keep a competitive edge in a world marketplace. It gets special tax exemptions on much of its property and equipment. Furthermore, most of its income is also exempt from Oregon’s corporate taxes because the company sells most of its products outside of the state. Yet, even many who a year ago claimed that Oregon’s businesses aren’t paying their “fair share” will be encouraged by this news. That’s because 7,000 private sector jobs will breathe fresh life into the area.

But why should Intel get special treatment? The same low taxes that encouraged Intel to build here in Oregon also would encourage other businesses to come or to stay here. Government can best “create” jobs by getting out of the way. Low taxes and a stable regulatory environment allow entrepreneurs to do what they do best – creating jobs and products that consumers value.


Christina Martin is Director of the Asset Ownership Project at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Posted by at 06:00 | Posted in Measure 37 | 51 Comments |Email This Post Email This Post |Print This Post Print This Post
  • John in Oregon

    Christina you are exactly right about the tax treatment of Intel. Sales outside Oregon are not subject to income or M67. That coupled with the tax exemption on production equipment makes the new plant here tax attractive.

    Nevertheless don’t forget that Intel is unique in another way. The Intel facility was established in the 1970’s and received land use approval back then. Of course those costs were far more reasonable 30 or more years ago. Intel doesn’t have to pay those costs a second time today.

    Were AMD, an Intel competitor, to attempt to locate here to receive the same tax advantage they would face millions in outlays. Property options, engineering firms, planning firms, and PR activities all consuming money by the boatload. And that all happens before the first building permit application. Oregon’s authoritarian top down doctoral land control process consumes capital investment funds without limit.

    But the worst tax may not be in money. That worse tax may be the time tax. The three to ten years to get approval, if they ever get approval. The repeated trips to LUBA, the governor’s office, the legislature, the courts and god help them if a federal bureaucracy becomes involved. Repeated appeals as every Tom, Dick, or 1,000 Friends files technical objection after technical objection.

    As one greenie spokesman said on state wide radio its not necessary to have a winnable or even a valid court case. All that’s necessary is to keep filing new objections and lawsuits as the previous is thrown out. All that’s required is to keep throwing road blocks and challenges until the applicant gives up or the project is no longer worth doing.

  • Rupert in Springfield

    >Yet, even many who a year ago claimed that Oregon’s businesses aren’t paying their “fair share” will be encouraged by this news.

    And thus the untenability of those peoples position. The fact is with the lack of uproar with the Intel exemptions, those who maintain taxes are too low give tacit admission that they know raising Oregons taxes is a job killer.

    If the crowd that thinks Oregons taxes, corporate or otherwise, truly believed that taxes could be raised without deterring growth they would be up in arms about this. Instead we will get absolute silence from them. We will hear no talk at all that the Intel exemptions should be removed immediately because they know absent those Intel would not expand. We will hear not a word from them about the “little guy” whom they always claim to stand up for but were glad to screw over during the measure 67 campaign.

    Is this hypocrisy on the part of the tax raising crowd?

    Not on your life.

    Indeed I would say rather than hypocrisy this represents absolute orthodoxy. The bestowing of tax favours from government, is the hallmark of those who believe in ever bigger government. The ability to bestow special treatment is just another exercise is power, the ability to let people or business flourish or die at the wave of a hand. Power is what they crave, and the special Intel deals are an example of that. Raising taxes is a means to an end, power and control. The ability to dispense special deals is what they want, not the tax revenue itself.

    We will see another example of this on Jan 1, when tax rates go up for all. A lot of those taxes cost more to collect than they bring in in revenue, capitol gains and estate taxes to name two. However raising them represents accumulation of power and loss of revenue to accomplish that means nothing to those obsessed with that power.

  • eagle eye

    Despite all the huffing and puffing, it looks like Oregon’s business climate can’t be all that bad if one of the world’s most successful companies — which could go literally anywhere — wants to have a major expansion in Oregon.

    Perhaps all of the bad-mouthing of Oregon’s business climate by certain elements of the “business community” here reflects more on them than anything else.

    • Steve Buckstein

      eagle eye, I think one conclusion from this post is that Intel is expanding in Oregon because it gets a better deal than most other businesses would here. Yes, it’s probably a good business climate here for Intel, but not for countless firms already here, and countless other firms that will never come to Oregon because the climate for them is not nearly as hospitable.

      • eagle eye

        Maybe Intel will do us all a favor and explain how they work such magic on the locals to get such a good deal.

        • Steve Buckstein

          It’s not magic; its programs like the Strategic Investment Program that allow county commissions to pick winners and losers in the economy. Of course, under the SIP, companies must state that they wouldn’t go ahead with the project without the SIP tax breaks. That may or may not be true in Intel’s case, but the law virtually forces companies to make such a statement or lose the tax breaks by default.

          I recall a number of years ago that, I believe, Fujitsu told the Multnomah County Commission that it would probably locate in the county even if it didn’t get the SIP tax breaks. That statement was quickly withdrawn with the explanation being that the Fujitsu manager’s first language was not English and he merely mispoke.

          • eagle eye

            Still sounds like magic to me if the out-of-staters can convince these county guys and the in-staters can’t. Maybe Oregonians are just stupid, I don’t know. I still hope Intel will explain how they do the trick.

          • valley p

            Its about the traded sector Steve. Its pretty basic. Traded sector economy makes everything else possible.

          • Steve Buckstein

            Why should some traded sector businesses get a pass on high taxes while others don’t? If you think that the traded sector economy “makes everything else possible” then why not give them all special treatment?

            Government is still picking winners and losers in programs such as the SIP. Perhaps we can agree that such discrimination is not appropriate.

          • valley p

            The traded sector that gets special treatment is the part that does not have to be located here. For example, the timber industry has to be here because we have the most productive forests in the nation. Intel does not have to be here. Its a simple as that.

            Is it fair? Nope. I hate it. But its reality. I hate some things about reality, don’t you?

          • Steve Buckstein

            Yes, I hate some things about reality too. It’s just that political reality is not like some other realities; say the law of gravity. Political realities can be changed by human action. So, if you hate the political reality of SIP type programs, why not argue against them and try to end them?

          • valley p

            2 reasons. First, I have other more important matters to worry about. 2nd, I think we don’t have much choice but to have our oar deeply in the tax break for millionaires who invest in Oregon river. Absent that we will really be a backwater.

    • John in Oregon

      eagle eye the point is that due to concessions and circumstances Intel enjoys tax advantages that no other company has access to. Not only will they not be paying income tax on income earned in other states, they won’t pay tax on production equipment. Beyond that Intel enjoys a very real advantage that keeps competitors and others out of Oregon.

      Were AMD, an Intel competitor, to attempt to locate here to receive the same tax advantage they would face millions in outlays. Property options, engineering firms, planning firms, and PR activities all consuming money by the boatload. And that all happens before the first building permit application. Oregon’s authoritarian top down doctoral land control process consumes capital investment funds without limit.

      But the worst tax may not be in money. That worse tax may be the time tax. The three to ten years to get approval, if they ever get approval. The repeated trips to LUBA, the governor’s office, the legislature, the courts and god help them if a federal bureaucracy becomes involved. Repeated appeals as every Tom, Dick, or 1,000 Friends files technical objection after technical objection.

      • valley p

        “The three to ten years to get approval, if they ever get approval. The repeated trips to LUBA, the governor’s office, the legislature, the courts and god help them if a federal bureaucracy becomes involved.”

        No need to go to LUBA or the courts unless you are trying to build your facility in a place not zoned for that purpose, and the local government won’t rezone it for you.

        As for the Feds, they apply the same laws and rules in every state, so we are on an equal playing field.

    • Rupert in Springfield

      >wants to have a major expansion in Oregon.

      Um, hate to tell you this, but when the only major job creation is from a company specifically exempted from the business climate (Oregons taxation) it actually confirms the climate is pretty bad, not the other way around.

      Might want to think about that next time before doing the huff and puff routine.

      >Perhaps all of the bad-mouthing of Oregon’s business climate by certain elements of the “business community” here reflects more on them than anything else.

      You are saying you know more about the business climate than those who actually are in business? Sorry, thats a bit of a leap.

      OK – Since you know so much about business, perhaps you could cite for us a single company that is expanding by 7,000 jobs without exemptions?

      Absent that, sorry, you are just another frustrated wannabe who knocks business at any opportunity because he probably couldn’t run a lemonade stand.

      • eagle eye

        If Intel can figure out how to do it here, maybe you local business geniuses can too.

        And if it’s so miserable in Oregon why did you relocate here, and why do you stay? After all, you could make and market your products just about anywhere, right? One would think you were a masochist or something!

        • Steve Plunk

          Some of us just don’t have as glamorous a business as Intel. Trucking is generally looked down upon compared to most. Of course most of my business revenue comes from out of state to pay in state employees and in state suppliers so I’m not quite sure why government types don’t see it as a net plus for Oregon.

          Government often picks winners and losers in a way that confounds us. Wind power is getting subsidized while returning poor results. Solar the same. But both of these are “cool” things to support. I’ve seen government employees blinded by flashy presentations and smooth operators in turtlenecks and tweed. They check common sense at the door so they can hang out with the cool guys. That’s why we don’t want them picking the winners and giving those advantages over everyone else.

          • eagle eye

            I’m not sure who the “government types” are who don’t see your business as a “net plus for Oregon.” In any case, I don’t believe those matters have been discussed here today.

            But just so we’ll know, what exactly does Oregon do that hampers your business so much?

          • Steve Plunk

            How about raising the weight mile tax during the worst recession of the last 60 years? Is that smart governing? What about land use policies that impede development and drive up the cost of land? How about my city doing and end run around Measure 5 property tax limitations by now charging more in fees than taxes to pay for traditional municipal services? The list goes on and I’m sure you have heard it before so why keep asking? Oregon, for that matter all government, sees business not as the foundation of society but as a cash cow to be milked. We create wealth and prosperity while they act as a parasite sucking as much as the host will bear.

          • eagle eye

            Aside from the weight mile tax, those are things that all the rest of us have to deal with. My residential property taxes in Eugene have followed a very reasonable trajectory — actually went down a bit this year — and I pay essentially zero in fees for city services. Maybe they charge more in Medford, maybe they persecute businesses in particular there, I don’t know.

            Re the weight mile tax, I’d have to know how much they went up and how they compare with the other west coast states, before making a judgment about that.

            As for land use laws, everyone in Oregon has to put up with them, business or not. Including, by the way, Intel, which doesn’t seem to have been deterred by high land prices. (I wonder how land prices in Oregon compare to California or Washington?)

          • Steve Plunk

            Moving the goal posts? You asked what Oregon did that hampered my business and then proceeded to excuse most of it. Keep apologizing all you want but those of us out here fighting everyday know the score. Government has become the unbearable parasite that will kill it’s host.

          • eagle eye

            That’s moving the goal post? Most of the stuff you mentioned just doesn’t feel like that much of a burden to me. I just don’t burn with resentment when I pay my property taxes (which I did two days ago). When I buy gas and pay fuel taxes. Or when I have to pay to use a state park or a forest service area. I may not like some of this, but it just isn’t that big a deal to me.

            Or to most other people I know, including a lot of business people in Eugene. And apparently not to Intel — they don’t seem to mind the land use laws, or service fees. I just don’t know anyone who feels as put upon as you do.

            I used to know the late mayor of Eugene, Ruth Bascom. She socialized constantly with local business people. Nobody ever acted as if she had been the leader of “the unbearable parasite” that was out to “kill the host” i.e. their businesses. And believe me, some of these people are pretty far out on the conservative scale, and pretty big donors to Republican causes.

        • Rupert in Springfield

          >If Intel can figure out how to do it here, maybe you local business geniuses can too.

          Talk about resentment. Guess I was right about the lemonade stand.

          The rest of your post looks pretty much like trying to deflect because you can’t back up your point very well.

          Therefore I will ask you again to support your point:

          *Can you come up with a single business in Oregon that supports your contention?*

          *Name one that is adding the same amount of jobs as Intel without having to get exemptions from “the business climate” you claim is so great?*

          That would go a lot further to establishing your contention than this bunch of resentful nonsense.

          • eagle eye

            Sorry, Rupert, you were so gracious — with your kind remarks about my abilities — and I was so resentful. I should go flagellate myself.

    • SacatcatPDX

      Oregon’s buisness climate is like the old insult of being so ugly one had to tie pork chops around their neck to get the dogs to play with them.

  • Bob Clark

    Oregon has a lot of potential as Intel shows, but it currently lacks the political will to unleash economic prosperity. Case in point: Kitzhaber while governor in the 90s actually coaxed Intel to expand its Oregon operations at a reduced level from what it was planning otherwise. For all the hype about Oregon planning and thinking, Oregon still gets the economic lows but doesn’t enjoy anything close to its potential economic highs. Maybe tomorrow things will begin to change at least a little if Dudley Do Right wins otherwise its back to economic medocrity.

  • valley p

    “But why should Intel get special treatment? The same low taxes that encouraged Intel to build here in Oregon also would encourage other businesses to come or to stay here. ”

    Because INTEL, Solar world, Vestas, and other companies that qualify for these tax breaks and incentives are *traded sector* businesses that are location flexible. That is, they can locate pretty much anywhere and do business everywhere. 90% of Oregon businesses are not traded sector. They are here because they have to be, so offering them tax breaks or incentives is foolish. If the local dry cleaners moves to Utah another dry cleaners will replace them very quickly, or an existing one expand to fill the void.

    • Rupert in Springfield

      Lets leave aside the fact that the percentage of businesses tells you nothing about the percentage of jobs but rather concentrate on some real foolishness:

      “If the local dry cleaners moves to Utah another dry cleaners will replace them very quickly, or an existing one expand to fill the void. ”

      Ok this one is particularly idiotic as we see no evidence of this in real life.

      If a government raises its taxes to high levels, its quite true that dry cleaner might get sick of it and leave.

      However it hardly follows that another one would take its place. Were such a thing true then we would have no such thing as ghost towns, Detroit and Gary Indiana would be thriving places and the phenomena of New Yorks South Bronx in the 70’s and 80’s would never have existed. In short if a business closes because the owner moves out of the area – only a fool would conclude it is axiomatic that another one will move in if business conditions are poor.

      Please – again I implore you – excuse yourself from economic discussions, you simply dont have the head for the topic.

      • valley p

        “Were such a thing true then we would have no such thing as ghost towns…”

        Sure you would. If you lose your traded sector businesses you lose the ability to bring money in, and you start leaking out more money than you gain. This is exactly what happened to Detroit and much of the rust belt. They lost the incoming, but the outgoing remained because not everything one needs day to day is produced in Detroit or anywhere for that matter.

        If you leak out more than you take in, eventually people leak away as well, so there is less need for dry cleaners and every other service sector than makes up about 70% of any local economy. You hit a downward spiral that will remain until or unless you come into balance with whatever traded sector you have left, or generate new traded sector income.

        “Please – again I implore you – excuse yourself from economic discussions, you simply dont have the head for the topic. ”

        Yes, that is clearly the case. You on the other hand, who has apparently never heard of traded sector or economic leakage and thinks one business is as good as another, remain a fount of economic wisdom.

        • Rupert in Springfield

          >Sure you would. If you lose your traded sector businesses you lose the ability to bring money in, and you start leaking out more money than you gain.

          Say what?

          This is pure nonsense. First of all, look, get off the phrase “traded sector” as you clearly are caught up in it and have no ability to even consider what you are saying.

          A company being able to locate wherever it wants has nothing to do with whether or not it is bringing money into the area or not.

          Loss of all companies that have the ability to move, does not in the least mean a community now has no ability to bring money in.

          Got it?

          That’s lesson one here. I mean this is so basic I am stunned that even you would make this fundamental error.

          Need examples that would have occurred to just about anyone, but obviously not you?

          Here you go:

          Example 1 – A hotel at Mt Rushmore. Clearly it cant move anywhere it wants. Yet obviously being tourism it brings money in from outside the community.

          Example 2 – A farmer clearly cannot just pick uop and move wherever he wants, yet clearly he isnt selling tons of wheat just to the folks at the dry good store.

          Example 3 – A Chinese take out restaurant can clearly locate wherever he wants, yet he clearly is not bringing in money from outside the community.

          >You on the other hand, who has apparently never heard of traded sector or economic leakage and thinks one business is as good as another, remain a fount of economic wisdom.

          Once again I have to point out to you – I have never maintained to have superior knowledge of economics than that of the average person.

          What I have maintained is you have a lower ability to consider even rudimentary economic concepts than the average person

          I have demonstrated such time and time again, and have demonstrated once more to that effect with three examples above.

          The absolute illogical nonsense that the only business that can bring money into a community is one that has the ability to leave that community would be patently obvious to most on even a moments introspection.

          Seriously – you really need to think about your posts a little bit more. I honestly think that just about anyone would have realized the folly of your contention here in about five seconds.

          The only business that can bring money into a community is one that can leave it – ie “traded sector”?

          I mean did you think for even two seconds about how idiotic that is?

          • valley p

            Gee Rupert, quite a discovery you had there. Yeah, some traded sector enterprises are place bound. I said that in my post. We don’t have to cut tax breaks to place bound traded sector because they can’t locate elsewhere, or if they do someone takes their place. Its the traded sector that can locate wherever they want that tax breaks should be reserved for. Re-read my post way up above.

            And by the way, a Chinese takeout that is located in a hotel district is in effect bringing in outside money. So don’t diss all Chinese takeouts.

            “I have never maintained to have superior knowledge of economics than that of the average person.”

            Yes, well that is a good thing. Now tell me why you think that with your average knowledge of economics you are equipped to pass judgment on my knowledge.

  • Ricky

    I do not see why our state has to give in to these fat cats. I don’t get any property tax deals! What is going on??
    Can’t people see that helping Intel is just like helping the enemy?
    I say enough.
    If these rich fat cat companies want to work here then they should pay for it.

    • Anonymous

      Jerry, maybe you should cut it with the idiot act and get Intel to move to Arkansas!

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