Representative McLane to fix Oregon Facebook Tax

Representative McLane to fix Oregon Facebook Tax
Interview, Rep. Mike McLane
Taxpayer Association Oregon lawmaker profile

Oregon lawmakers led by Rep. Mike McLane (R-Bend) will aggressively push legislation next month to protect billions of dollars worth of data center investment throughout Oregon. McLane proposed HB 4067 after the Oregon Department of Revenue notified Facebook that its recently built Prineville data center would be taxed like a utility—a move that effectively nullified the enterprise zone agreement with Crook County under which the data center was constructed and would likely result in a steep tax bill. Qualifying companies locating in a Crook County enterprise zone are taxed by the county, not the State, and enjoy certain property tax exemptions for 15 years.

According to McLane, the State’s move has created “a climate of uncertainty and undermined the integrity of our enterprise zones.” He noted that Facebook would not have located its data center in Prineville without the tax incentives provided through the enterprise zone agreement. Unless something is done, McLane believes that other data center projects, including additional Facebook projects, poised to move forward in Oregon will locate elsewhere, and Oregon will lose out.

McLane’s bipartisan bill makes it clear that any data center built in an enterprise zone and is in compliance with an enterprise zone agreement will not be taxed by the State as a utility. With 47 cosponsors, HB 4067 has the support of a majority of House members, 13 senators, both speakers, as well as caucus and key committee leaders.

Governor Kitzhaber favors a temporary administrative solution for Facebook through the end of 2013, at which time a comprehensive review of relevant statutes would ensue. McLane says that’s a bad idea.

“The problem with waiting until the end of 2013 is that Oregon will lose billions worth of data center investment. The data center industry and technology are moving so fast that companies need to be assured of what the terms are long-term or they will locate to other states. In this session, with our high unemployment and general fund problems, that would be a travesty.”

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  • Bob Clark

    The Oregon Treasury seems to be reaching to define a bank of computers as a utility.  The utility concept may actually be dying; and yet, here we have the state Treasurer leaping in to expand the utility ranks so as to grab more tax revenue but, in the process, stunting a means for economically suffering rural counties to expand their tax base through economic growth.  With rural economies suffering greatly in comparison to the Portland Metropolitan area, the state Treasurer’s move here is rather low and bizzare.

    The reason I say the utility concept may be in decline is take fixed land line phones, for example, which are considered a utility; and yet, the competition in the phone industry has made contentious phone service rate cases almost unheard of in the past ten years.  It’s a matter of competition.  Data centers are very competitive as they can be located in multiple locations to serve the same location(s) and nobody is stuck with a retail data center bill.

    No.  There’s no big call from other than the state Treasury to regulate data centers for their monopolistic power over their consumers.  So, we don’t need to study it as “retread” Kitzhaber routinely is inclined to do on most every issue.

    • 3H

      But why should the County be picking winners and losers?  Presumably they’re not offering other businesses the same break on their property taxes.

      • valley person

        My thoughts exactly

      • Rupert in Springfield

        Good point. It would be an even better point if you would apply the same logic when Obama does the same thing as far as picking winners and losers.

        Will you do that? Nope.

        Why not? Because questioning the data center tax abatement is not directly questioning someone you support and to some extent is questioning the business, not a politician you support.

        Will you be critical of Obama’s loan guarantees and other fluff for companies like the Solyndra scandal and the three Green Welfare companies that went belly up last week after getting loan guarantees?

        Nope – Because that’s questioning Obama and being critical of his actions.

        How will you defend this inconsistency? Probably by claiming its apples and oranges. Somehow you will either try and maintain that giving loan guarantees is different and does not amount to picking winners and loser, or you will say Green Welfare is different because it is of vital importance whereas a data center is not.

        Obviously both would be untrue, as loan guarantees are way more of a gift than tax abatement’s, and right now jobs are far more critical than subsidizing rich man playthings like electric cars. Nevertheless I think that’s what you will do.

        I doubt very much you will say “yes, Obama is wrong to be subsidizing the industries he does just as I think it is wrong for the state to give Facebook a tax abatement.”

        If you could say that I would be stunned and amazed. 

        • 3H

          It would be an even better point if you would apply the same logic when Obama does the same thing as far as picking winners and losers. 

          Will you do that? Nope.”
          Then no sense in responding since you are Rupert the All Knowing.   Must be a terrible burden to be so smart that you know what everyone is thinking.  Such insight.  Such analysis.  Such a firm grasp on the facts.  Maybe we should all just sit back and bask in your genius.  

          By the way, genius, I didn’t say that it was wrong, I was asking why it’s OK.  Perhaps you should stop and read a little more carefully instead jumping to erroneous conclusions.  Oh, wait, you can’t, you’re just too smart for that.

          Nice little rant.  You should try having a discussion with someone, some time, instead of trying to force conversations down a path that allows you to come the conclusion you had already formed.

          • Rupert in Springfield

            Wow, did I call that one or what? He shoots…he scores! Excellent!

          • 3H

            Nothing but air.  LOL, you called nothing.  

            Have you ever considered asking people how they think about things?  Or do you prefer to be intellectually lazy and assume you know?

          • Ardbeg

            Pyscho Speak-at least that’s what I’d call it-Starts off agreeing with you but then tries to rip you a new one all in the same breath. Then later has a lengthy post about exactly what you said.  There is something organically messed up there.

          • 3H

            No..  I think it’s obvious that Rupert is not only psychic but clairvoyant as well.  He went into a trance, and then channeled me.   He does a pretty mean Ouija board as well.

  • Rupert in Springfield

    Generally I think it is absurd to give some companies tax breaks rather than all. This is especially so when the state raises taxes on some companies and then gives tax breaks to others as Oregon has recently done.

    However at the same time to grant and then rescind tax breaks is even worse. What it does is create an environment where business feels attacked. The Freightliner case was probably the most egregious example of this. They wound up leaving thanks in part to the utterly outrageous actions by the state in that case.

    This case is less outrageous, but is still way up there on the scale of ridiculous behavior.

    I don’t think Facebook should be getting any tax breaks at all. I think ts damaging to business to put the government in a position of picking winners and losers and frankly opens up the door to the possibility of corruption. That said, I think what is more damaging is to have preferential tax breaks for the chosen few, and then rescind them by fiat like this.

    With that you have established the worst of both worlds. You have the liabilities of allowing government to pick winners and losers, along with none of the advantages of possibly attracting a new business here and there because who will trust you not to welsh on the deal?

    Oregon has steered the economic ship into the iceberg of idiocy with this one.

    • valley person

      “However at the same time to grant and then rescind tax breaks is even worse.”

      So you support continued tax breaks to alternative energy and ethanol companies?

      • Rupert in Springfield

        Nope – I do not support continuing tax breaks for anyone. I would let the  expire at the end of their term.

        Hint – the operative term there is “continuing”. Read it, know it, think about it before responding.

        Hey – How about Obama still trying to get T Boon the mega bucks on the natural gas thing in SOTU?

        I mean talk about trying to trot out an old corporate welfare warhorse for one more dip at the well.

        I couldn’t believe it.

        Somehow I doubt either you or 3H caught it though. I bet you were nodding your heads “Um Hm, yep, natural gas, that’s the ticket, wow Obama is a genius”.

        • 3H

          Of course Rupert!  Exactly!  WOW, it’s almost as if you were there!  

          You should start your own Psychic Network.   If you’re gonna make stuff up, may was well get paid for it 😉

        • valley person

          “I would let the  expire at the end of their term.”

          So you supported letting the Bush tax cuts expire? Good for you Rupert. So did I.

  • Pantsonfire

    If I were Facebook I would move the whole operation to Texas where they don’t have any state income tax and where they don’t lie to people to get their business. I would do it now.

  • Dan Meek

    Exactly what tax break was Facebook “promised”?  Who “promised” it?  What was that person or entity’s authority to make such a promise?  Where was this “promise” publicly disclosed?

  • Pantsonfire

    Who cares?

  • Oregon Engineer

    Why Tax them at all?  Want to see so many businesses move to Oregon that the treasury can’t keep up with the income revenue then eliminate all business taxes.  It also eliminates the hidden tax all the consumers pay.  Corporate taxes are paid by the consumer since it is a cost of business for the company passec to the consumer as higheer prices.

  • Pantsonfire

    I think most people are migrating to twitter, so it may all be moot.

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