Intel jumps through Oregons tax loophole
Oregons Strategic Investment Program saves Intel tens of millions of dollars in property taxes every year. While the states Gain Share program rebates income taxes generated from Intel back to the public coffers in Oregon and Washington County, Intel still gets a huge tax break while those not in the game get to pay higher taxes to make up the gap between needed services and revenue to deliver those services.
Over 15 years, Intel will be exempt from $579 million in local property taxes in Washington County, which translates to $38.6 million per year. Intel, like other firms that take part in this program managed by Business Oregon, pay set fees in lieu of property taxes every year. But those fees dont make up the difference in the cost to the taxpayers for schools, roads, water, sewers and other infrastructure needs.
The county budget shows Intel will pay $11.5 million in fees this fiscal year, which is almost a 4 to 1 savings ratio on property taxes. However, Intel pays an additional $5.7 million in property taxes per year, so when adding that in, its a 2 to 1 ratio still a good return on investment, thanks to the taxpayers. (And thats before factoring in the long-term savings from Measures 5, 47 and 50, which limit property tax liabilities.)
Intels deal means that $21.9 million is lost each year to local governments, including Washington County, Hillsboro schools, the city of Hillsboro, the areas Education Service District, Portland Community College and the Port Authority. While the Gain Share fee in lieu of property taxes is intended to help defray the cost of services local government provides, such payments dont match the net loss of revenue and lost services in tough economic times.
The 50/50 split in Gain Share is good for Washington County, the economic hub of Oregon. But since Intels $11.5 million in fees go to the general fund, they become a slush fund for the county board to distribute as they see fit. Given their priorities for roads and more roads not schools or affordable housing the countys share becomes a hidden subsidy for the likes of Intel and Nike.
While the money coming from Washington County is the states money before being rebated back, the 50/50 split denies revenue to counties that are in bad shape, especially the timber counties of southern Oregon.
Granted, the voters of those counties have sowed their soured oats by voting NO time and again. Ironically, the Gain Share formula allows our county board to avoid having to raise property taxes, keeping our county taxes at the low end, just like in at-risk counties.
Supporters of the program, including the editorial board of The Hillsboro Tribune, claim that the economic impact of Intel in Washington County more than makes up for this tax break. I dont buy this argument, especially at a time when the social safety net is shredded, when teachers are furloughed and class sizes are increasing. And I dont buy the argument that without such tax giveaways, Intel would leave Oregon. Intel, like Nike, has a huge investment here. Why would the company walk away from it?
Such tax giveaways eat at the core mission of government and increase the tax burden on those who have no means to escape their property tax obligations under the law. And when one factors in federal and state tax loopholes that big box enterprises like Intel and Nike get, the inequity is even more fiscally obscene. Firms come here because of our good work force, schools and quality of life not for tax breaks. In fact, tax breaks put those attributes more and more at risk.
Why doesnt the county negotiate a grand bargain to have Intel develop a public/private partnership with local nonprofit housing developers to build work force housing to reduce commute times for Intels own employees, enabling them to live closer to work which would be a huge benefit to their families and kids? It would also keep employees and their tax dollars from fleeing to Vancouver.
Needless to say, from our governor to our Legislature to our county board, there is no will to make such an ask.
Russ Dondero is professor emeritus,
Department of Politics and Government, Pacific University. Read his blogs at
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