Corporations not responsible? At no cost to taxpayers, Intel/Nike are the two largest employers in the state. These employees spend their salaries in Beaverton and environs, pay income tax, buy houses and pay property taxes. In addition, Nike/Intel have padid for multiple inmprovements to infra-structure again at no cost to taxpayers.

In addition, Intel/Nike have made numerous charitable contributions. So saying these guys do not generate taxes is not true at all.

Beaverton has not made a good case for what Nike will get for the big rise in property taxes they will pay besides a $130K/year mayor. Moreover, the comment about Nike being stuck here - so lets extract every last penny of taxes from them - is pretty telling. I guess the endgame is keep taxing these guys until we drive them out?

Why on earth do we need taxes in the first place? Why not simply send everyone a bill for what services they use each month, or quarterly? That would, hopefully, eliminate the continual debate over tax abatements, deferrals, etc. Most of us receive a bill from the local water bureau. Why not have the fire department send out bills monthly, or quarterly for fire suppression services just like any other insurance we buy? Michael

yes, perfect solution...then i can ignore my monthly bill from the Pentagon until they finally come to collect my first born child.

Nice post Pat. We should keep in mind though that Nike isn't necessarily the only bully on the block. Some residents of neighborhoods such as Garden Home and Raleigh Park feel pretty bullied themselves... by the city of Beaverton. Higher property taxes with few appreciable benefits... Anywho, BHS fight fight fight.

I don't agree that a boycott would end the corporate practice of pitting local governments against each other in a "survivor" type of race to the bottom for tax-break incentives where the only real winner is the corporation that ends up paying the least amount of taxes possible.

What we need is for all local municipalities accross the nation to stop giving special tax-breaks in the name of economic development. Of course, as long as any other local government might give this type of tax break, no other local government will have the motivation to stop the practice. Classic case of a tragedy of the commons.

The best hope of ending these type of practices would be a court case, which would stop local governments from competing against each other. Of course, this wouldn't end the acrimony between Nike and Beaverton, but it would mean that Nike would have less leverage in terms of negotiating a special deal.

Change the rules of the game

If we admit that cities and counties are in a competitive situation for these companies, let’s look at whether different rules could make for a better outcome. I mean, it is definitely in Washington County’s best interest to offer tax abatement to Intel until the costs outweigh the benefits because otherwise Intel could shift investment elsewhere. Likewise, it would be in Multnomah County’s best interest to offer tax abatement to get some Intel investment.

The problem is, there is no benefit to counties overall (all counties in the US for instance) to offer Intel tax abatement since, Intel has to reside somewhere (avoiding the question of Intel leaving the US) and in the aggregate the counties overall would be better off saving the tax abatement.

So, if instead of having counties compete for who can shift their revenue sources around enough so that they can offer companies deals (all things being equal, residences are being taxed more, by the way), why don’t we make them compete at what they are good at, providing services for their citizens as efficiently as possible.

If the state of Oregon or the US government made a rule that counties could not offer deals to companies, all the skirmishes over location would go away and counties would have to resort to doing their best at creating an educated, stable, community to attract companies or better yet, to foster companies. Heck, the counties would probably thank us for changing the rules. I would bet they have little interest in spending time and money cutting these deals.

The above comments that quickly rise in defense of Nike and Intel seem to me a little spurious. First, why don't we extend to all businesses a holiday from taxes? They all create jobs, generate tax revenue through salaries etc.

The answer is that we have to pay for public services in some way. And these companies benefit from these services.

For instance, Nike has police and fire protection, streets that take workers to and from the Nike campus, sewer and water so that the Nike workers can have showers there. They also benefit from having some education take place in the state, from having educated workers qualified to work there and allow them to generate their tremendous profits.

While both Nike and Intel have provided donations and infrastructure development, I can't imagine that it is anywhere near the value that they have recieved from community investment and tax revenue.

What is really at issue here is that these corporate entities are engaging in modern day extortion by threatening, or implying a threat that if we don't continue to give huge breaks they'll pull up stakes and move elsewhere. The problem is that around the country we've allowed ourselves to give into this, and even bought into arguments that this type of behavior is good for us.

At the end of the day, we have to ask the question: are we here to serve the corporations, or are they here to serve us?

OK, clearly I am a newbie in these complex economic discussions, but I'd love to see more discussion about community-based, economic self-reliance. No, not a short-term solution to what you're talking about, but rather an important and fundamentally different way to re-frame our society's development to avoid corporate bullying.

As we strive to make government more accountable to local communities, so too, we should strive for our economy to be more accountable to the long-ignored needs of local communities.

Ouch! I can hear the abuses being hurled at me already! Dreamer! Unrealistic hogwash! Fair enough, but don't all realities begin with a dream?

A little more substance to that dream from some other crazy Eugeneans: http://www.heliosnetwork.org/localfirst.htm

Good points, all, Jeff!

It all sounds like a vicious cycle, though. Especially, "The reason companies can extract these sweetheart deals is because cities are willing to give them. If cities quit offering them, big business would have to deal on a more level playing field."

Naturally, cities give them because they are desperate to create jobs and get that positive cycle going: every job created BOTH saves in various social support payments and starts to bring in taxes. Very important, obviously!

What is needed is a little research into a simple question: is it worth it? Leaving aside the question about what to do with current recipients of tax abatements like Nike, are these kind of publically-provided incentives worth it in terms of job creation?

Here's just one reference I found for review:

Do state and local economic development tax incentives help state and local economies?

I may be naive -- but to be competetive in keeping our Businesses in Portland (assuming we want the jobs, etc that they provide) -- the trick appears to be finding a mutual agreement that doesnt compromise our Portland-centric values and will lend towards addressing city-wide financieal issues.

So what if Nike got the tax break but -- on the condition that they had to re-invest a certain amount of their revenue back into the community --- through the non-profit sector to address specific city issues / needs (education immediatly comes to mind). If we can make it a win / win situation instead of a us / them disagreement then I think Nike gains a slightly cleaner Corporate image in the process while the city gets their assistance -- just not through taxation.

allehseya,

So what's the difference between a community benefit arrangement like you proposed and taxes?

The reason they don't want to pay taxes, and instead to PR driven community donations is that corporations can pay a whole lot less and generate the "goodwill" that causes people, like the ones in this thread, to allow them to get off of being taxed because they do such good things.

The strategy here is to get a marginally lower rate (amount of tax - community benefit payments = more profit) and have a more flexible effort on boosting the bottom line.

Oh, and Nike is in Beaverton. Intel is in Hillsboro. This is an Oregon discussion, not a Portland one.

Leslie,

We can keep good jobs in Oregon by investing what public resources we have (local taxes collected for local government) in locally-owned smaller businesses. Dollar for dollar, almost any study will prove, such incentives and investments create more jobs than thrown at big factories. We have to vote for people that believe in better investing of tax incentives, that is, tax policies that produce real results for the average working person.

If I had an investment councilor that had such poor results, I'd have fired them a long time ago.

Another angle: look at creating communities of consumers that go out of their way to buy locally-produced products.

Think Wal-Mart is cheap? How expensive will it be for our culture in its race to the bottom, fueled by corporate blackmail?

This article came across as ignorant to me. Just wait until a company like Nike leaves, then you will be writing a column stating that our economy is in jeapordy and you will be wondering why other companies are not moving to Beaverton. I know, lets rely on the government for everything...I would be more than happy if my taxes doubled because I know the government will take care of me.

In the 50's it wasn't regulation that brought about good pay, benefits and wages, it was high unionization, roughly 34%, of American workers. It's now about 12%, 9% in the private sector. That's why wages and benefits are lower.

Why do you think Wal-Mart fights so aggressively to keep unions out?

Rorovitz,

It's a multiplicity of factors that have brought us to our present circumstances: less union membership, greater concentration of wealth and income, greater concentration of media conglomerates, fewer independent media options, less regulation of business, etc. However, your point on unionization rates is well taken. Notice the level opf social supports European nations have? The power of unions is a key factor in creating that kind of society. Oh, and it hasn't significantly affected their per capita income or overall level of wealth!

The right-wing's long term plan is very simple: Total reliance on corporations for everything. Sure stockholders have a vote, but most working folks don't have stock and in any case, you're stockholder vote affects only one company on an agenda set by management. Sound familiar? Not to me. Voting at all levels of government has far more affect on public policy and rule through government offers far better possibilities for change in the direction of fairness and a better community life.

For every post that lambasts the role of government in our lives, we take one baby step backwards to the "Golden Age" of Robber Barons before the social supports of The New Deal. Things we take for granted, like: Child Labor laws, overtime pay laws, Social Security, public health standards, etc. Can we do better? Of course. Let's start with government cutting back on all the corporate welfare and eliminating all the damn tax loopholes for the rich.

Pat,

Technically a worker in a union setting can be fired for cause, then there's a process for contesting that procedure. I understand what you're trying to say, but you don't have it correct.

And it wasn't cronyism or corruption that led the decline, it was a lack of organizing of the "new economy" workers as manufaturing, mining and other industries that were the backbone of the economy were shipped overseas. Again, I understand what you're trying to say, but you're off on this point as well.

On a similar, yet slightly different note, did anyone catch Perle in the Dean debate saying that ANY worker or environmental protections in developing nations would cause ALL foreign trade to cease?

He was essentially making the argument that we will move to the standards of Cambodia and China, at which point America will match those standards. For the posters above who implied we may loose child labor, minimum wage and other protections under the Right-wing regieme, Perle basically endorsed the notion.

Oh and Pat, Nesbitt and I don't need your apologies. Thanks anyway.

Frank,

No disagreement. Much better post than Pat's. He was drastically oversimplifying in a Righty kind of way.

pat ill agree with with jp said...both about the communities and the high school

I'm a union supporter, but there certainly was a lot of cronyism and corruption in organized labor. Most of it is gone now. There are a couple for it. Employers were so heavy-handed in dealing with labor that tough-guy tactics were the onl way for unions to suceed, for one. Another was the socialist/communist purges that forced many of the most worker and justice friendly folks out of union leadership.

All things considered, unions, like all organizations, will never be perfect. all things considered, we would be better off with more unionization.

Oops, hit post instead of preview. Should be - There are a couple of reasons for it - and "onl" should be "only."

A submission by Frank Dufay makes a huge factual error regarding Fujitsu. FUTISU NEVER RECEIVED AN ABATEMENT! This is not a hard fact to figure out, if you make a phone call or two or send an email to some people to inform your opinion. They did have a Strategic Investment Program Agreement that WOULD have eventually granted an abatement. However, BEFORE the abatement kicked in, sometime in 1996-1997, they negotiated their way out of the agreement. The economics of their market segment completely changed, and so did their investment plans. So, while they eventually retooled the plant, boosted hiring, went in the tank again, closed, laid everyone off, and left, they did so without the benefit of a tax abatement.

If we had a uniform federal prohibition on providing selective tax breaks it would encourage better government. Governments would still have pressure to lower the overall tax burden, but at least each government (state, county, city) would have an internally level playing field (no favorites).

Selective tax breaks for businesses are often classified as "corporate welfare", but it's actually closer to "public investments". When the rules are changed (or preferential treatment is offered) for a business, public money essentially in invested in their success. Businesses are bargaining for tax breaks because it has become acceptable for government entities to muddy the line between public and private investment under the justification of "business development."

Instead of handing out sweetheart deals to big businesses and making up the difference by shaking down pizza shops, municipalities should be competing with each other to offer the best overall business climate (we can all agree to disagree on what set of policies produce the best business climate, eventually the proof is demonstrated in the long term bottom line).

This sort of approach (stop government from playing favorites in the marketplace) generally finds more support on the libertarian right than the the progressive left. The PDC and the Ore. Dept of Economic Development are government creatures that dwell in the muddied line between public and private investment - in other words, the are essentially Corporate Welfare Offices.

But as long as the term "corporate welfare" is only selectively applied to certain types of disdained public investments in the private marketplace, everyone will keep talking past each other on this issue.

While I agree that the bottom line is paramount to corporations (and, frankly, to a lot of individual citizens whose actions are only motivated by money--witness the passage of Measure 37)

Not to threadjack, but you dont think that maybe certain Oregonians who voted for M37 might want to be able to use their land? Maybe even [gasp] LIVE on it? And lets not forget that those Oregonians who want to divide their property and build many homes to sell or whatever, will provide a new property tax base for the area. But Mr. K in Salem and his little gaggle of followers don't give a flying crap about that...they just don't want anyone to be able to use their land for something besides a pretty area inside a fence. This is evident by our governor's stated goal of just paying people off instead of letting them build something.

Sometimes I am glad I rent. At least I know where I stand.

allehseya, So what's the difference between a community benefit arrangement like you proposed and taxes?

The goal is the same – only re-contextualized into a win/win ‘spin’. They get what they want, on a condition – the condition allows them to ‘invest in the community’ in such a way that they can choose specific city issues / area to address.

The reason they don't want to pay taxes, and instead to PR driven community donations is that corporations can pay a whole lot less and generate the "goodwill" that causes people, like the ones in this thread, to allow them to get off of being taxed because they do such good things. While I admit to being somewhat naïve or idealistic in this regard, the fact that they are interested in their corporate image in funding non-profit activities could act as a leveraging element in negotiations.

Oh, and Nike is in Beaverton. Intel is in Hillsboro. This is an Oregon discussion, not a Portland one. Regarding my Portland centric values comment earlier, I was responding to Jeff’s comment:

Intel and Nike are very important to Portland, and if they moved to Toledo, the Metro area would lose a lot of high-paying jobs.

Anyone catch Bill Gates reprimanding state governors for the status of education across the country? (I'll post links when I get back to my studio)