Hmm Chuck, you never cease to amaze me. I mean that as a complimant. Phil Knight, arguably one of the wealthiest men in Oregon makes ALL of his maoney based on off-shore manufacturing at near minimum level wages in 3rd world countries. His company has probably paid more to Michael Jordan, LeBron James and Tiger Woods than they pay out in manufacturing costs.

Personally I would think you would find that objectionable, sinc emanufacturing jobs in Oregon would mean more impact on the overall state employment and tax picture than a single person, but since Mr. Knight sees fit to sell of some of his stock options in a dubious rising market he becomes your poster boy to fit your pre-concieved notions about people making money in Oregon despit a rise in personal taxation.

A more caustic viewpoint might be:

a) He has figured out methods to donate enough to a tax free foundation to minimize his state/federal tax bite, or

b) He has good reason to believe that the recently passed Oregon tax hikes will be over turned at the ballot box in January.

"It goes to show that people, no matter what their income is, don't decide whether they will try to make more money based on tax rates. "

No, it just goes to show you that you're a complete idiot. Chuck, how much do you pay in taxes, and why aren't you paying more?

Please tell.

Kight is no doubt smart enough to see that current equity prices are totally bogus. My bet is that he puts the money into gold. The US economy is headed to ruin so why should he care about tax considerations?

Here's a portrait of your "recovery:"

http://mises.org/images4/TOTBKCR.png

"What DOES dissuade larger companies from locating in Oregon is if they have an unstable school funding mechanism."

Dude, are you for real? Ok, the auto companies that set up shop in Alabama or the other companies that moved to Mexico, India or China did so because of the incredible public education in those places... LOL!

"Why do you think Intel and Nike are here...and continue to stay here?"

Nike doesn't manufacture much here, do they? What's your explanation for the de-industrialization of this country that has been an ongoing affair for the past forty years?

Yeah... but note he's unloading less than ~10% of what he sold last year. Let's see... two cents on $1.35B = $27M - evidently enough to make a difference even to an ordinary multi-billionaire guy like Phil Knight.

Kari Chisholm wrote: How exactly does higher taxes make people uninspired to seek more money?

'Numerous studies, ably surveyed by Karabegovic et. al. (2004), have found that high marginal tax rates reduce people’s willingness to work up to their potential, to take entrepreneurial risks, and to create and expand a new business: The evidence from economic research indicates that ... high and increasing marginal taxes have serious negative consequences on economic growth, labor supply, and capital formation” (p. 15).

Federal Reserve Bank of Minneapolis senior adviser Edward Prescott, corecipient of the 2004 Nobel Prize in economics, found that the “low labor supplies in Germany, France, and Italy are due to high [marginal] tax rates (Prescott 2004, p. 7). He noted that adult labor force participation in France has fallen about 30 percent below that of the United States, which accounts for the comparably higher U.S. living standards.'

'Contrary to previous empirical research, but consistently with theory, we find that marginal effective tax rates and tax progressivity have a negative influence on economic growth.'(from abstract - subscription required to read full article)

I'll try to answer your question Kari.

Your (admitedly "made up") example contains an important assumption that causes it to miss much of the point. You assume a taxpayer who makes his income through wages. You assert that someone who can make more by working harder will choose to do so as long as the tax rate is less than 100%. I'm pretty sure that's wrong, but, more importantly, it ignors another type of taxpayer--one who puts money he already has at risk in a new investment. Risk capital such as this is essential to creating and growing job-creating businesses. This type of taxpayer has a chance of losing some or all of the money he puts at risk and (absent being politically important enough to merit a government bailout), if the investment fails, his money is gone. The investor may be willing to take that risk, however, if he believes that the after-tax return he can obtain if the investment is successful is high enough to justify the risk. And the tax rate matters a lot in that case. That is one of the justifications for the federal capital gains deduction, and one of the reasons Oregon's lack of a capital gains deduction (and very high personal income tax rate) puts this state at a disadvantage relative to other states (and why the legislature's tax hike would make things even worse).

The high personal tax rate may or may not cause a particular taxpayer to leave the state (many have; Mr. Knight, who thankfully is a loyal Duck, has not), but it absolutely affects the investment calculus of an investor subject to the Oregon income tax as to whether or not to make an investment in the first place. Bob Wiggins

Bob Wiggins, what if we, as Oregonians, do not want to subsidize risk investments with more favorable tax treatment?

I'm pretty sure the gain on his stock sale is taxed as capital gains, not ordinary income.

Theresa, I think you misuse the word "subsidize" when you assert that the state taking less of someone's income than it otherwise might is somehow a "subsidy", but you have little to fear at this point. Oregon taxes capital gains and ordinary income at the same very high rate. Robert, you are presumably correct in the treatment of Mr. Knight's gain for federal income tax purposes (though it is curious from a tax-plannoing perspective that if he intends to use the sales proceeds for charity why he would sell the stock himself and then give the net proceeds to charity rather than give the stock), but Robert you are incorrect for Oregon income tax purposes. Bob Wiggins

Bob Wiggins says: The high personal tax rate may or may not cause a particular taxpayer to leave the state (many have; Mr. Knight, who thankfully is a loyal Duck, has not), but it absolutely affects the investment calculus of an investor subject to the Oregon income tax as to whether or not to make an investment in the first place.

My Oregon tax rate is exactly the same whether my next investment dollar is put into an insured bank account, relatively safe stocks, corporate bonds, mutual funds or venture capital investment. When I’ve invested in pre-IPO ventures in the past, I’ve not considered the tax rate, and Bob Wiggins’ comments won’t convince me to consider the tax rate in the future….because the question I ask is whether I think the chance of an excellent return on the venture capital outweighs the risks.

if one of the ventures I’ve got money in now happens to make me a million, I’ll not be moving across the river before I sell.

Jody, I've lived in this state my entire life, and want nothing more than for our state to do well (which it isn't right now). That's why I am fighting the tax hikes; because I think they are bad for our state. (Having said that, I read the article about you and respect you for standing for what you believe in; I just don't happen to agree with you.)

When the legislature passed the tax measures they passed, they presumably concluded that more Oregon investors are like you (investing without any regard for taxes) than like me and most of the investors I know (who take tax consequences into account). If the tax hikes survive, I guess we'll see if the legislature was right. Regards, Bob Wiggins

The fact that Phil Knight remains an Oregon resident (and pays his capital gains here) is a charitable contribution to the State.

I'm sorry, Chuck, but we're supposed to believe that "most" rich people "don't care" enough not to try to avoid taxes. They're rich. It's what they do.

Wealthy people practically by definition have access to tax avoidance schemes not available to the rest of us. They switch residencies, buy houses, hide income, and open Swiss bank accounts, even if one of them, Phil Knight, doesn't mind making his honest contribution to his state.

The argument that tax rates, especially the top ones, "don't matter" defies common sense.

On a (related) sidenote that no one to my knowledge has picked up on: This sale should be a sizable boon to the state coffers at a pretty critical time. How many teachers, police officers and health plan recipients will these taxes on this fund? I think we should all thank Phil for paying his taxes and being an Oregonian, regardless of your feelings toward Nike and the Ducks (go Beavers!). So, I'll be the first: Thanks Phil!

<h2>Nike exists in its current cult-like state because weak media and rabid liberals have merged and obscured/diluted any real news investigations. Keep it up. www.youtube.com/luddite333</h2>