The Nike bill: good, but not enough

Sen. Jeff Kruse (R-Roseburg)

The Governor called us into Session yesterday to deal with one specific issue, and that is the single sales factor tax on Nike.  This became an issue with the passage of Measure 67 and was doubled down with the last election and the indication from the new Democrat majority in the House that they are going to pursue tax increases.  The essence of the proposal is to give Nike a level of certainty that the current tax rate would not change for a period of time.  Some are reporting this as a “tax break”, but it really is just an attempt to maintain the status quo.

I should point out the fact that Nike really is a very good corporate citizen and very valuable for our state.  One example would be the $125 million that Nike founder Phil Knight just gave to OHSU for their heart center – which is in addition to the $100 million he gave in 2008 for a cancer institute.  There were no strings attached, just a desire to improve heart care in our state.  There are many more examples, but this is the most recent one.

Nike is planning a massive expansion project with a front end investment of over a hundred million dollars and the creation of over 500 jobs.  What they are asking in return is a level of certainty in the current tax rate for a period of time.  I personally think this is reasonable.  What we have proposed is to expand this concept to any business wanting to do an expansion.  There is no “loss of revenue” in this proposal as taxes cannot be collected on something that doesn’t exist.  However, on the back end, there would be an increase in tax revenue based on all of the good family wage jobs created.  It should also be noted Nike has no problem with our proposed expansion of the proposal.

We have been told by the Governor that we need to do this now for Nike and we will look into the expansion we are proposing at a later date.  While this sounds good, we were given similar assurances in the areas of timber harvest, Columbia River water and tort reform.  To date we are still waiting.  If it is the right thing to do (and it is), we should be doing it now.  For the record I fully support Nike’s proposal, but will be voting against the bill because we should be doing better.

I have heard from people who are opposed to the bill on both sides of the issue.  For those who are objecting because it should not be Nike specific, I completely agree.  For those who are opposed because it is “helping the rich (the mythical one percent), I would suggest you are demonstrating your lack of understanding of basic economics.  The bottom line applies to all businesses from major corporations to the local grocery store.  It comes down to the ability to deliver a product within a competitive price structure, and taxes are clearly a cost of doing business.  If the taxes are too high it puts Oregon businesses at a competitive disadvantage with similar business in other states.  Our policies should be about helping our businesses to succeed.

It should be the responsibility of the Governor and the Legislature to do what is right, not what is politically expedient.  In this case we are not doing our job.

Ps.  It should also be noted what we are doing is unconstitutional on two points.  The first point is no Legislative Assembly can commit a future Legislative Assembly to any action or inaction, and this measure clearly does that.  The second point is the Constitution is very clear on taxes being equitable for all, and this measure does a specific carve out. 

[Editor’s note] The “Nike bill” passed the Oregon Legislature yesterday. The Oregonian reported that “The bill passed 50-5 in the House; 22-6 in the Senate. Kitzhaber plans to sign the bill and ink a tax guarantee contract with Nike within a week.”