Thanks to loopholes in our tax code, giant corporations have dodged millions of dollars in Oregon taxes.
It’s no secret that some of the largest and most profitable corporations are also the most adept at finding ways to get out of paying the taxes they owe. When they aren’t paying Oregon’s already low minimum corporate tax, they’re hiding profits in overseas tax havens, taking billions of dollars in corporate subsidies, and using every loophole out there to boost dividends and stock prices.
In last week’s post, we named the biggest — and most well-known — recipients of both federal and Oregon subsidies. Today, let’s go a little deeper down the Oregon-subsidy-program rabbit hole, shall we?
Over the last 20 years, Oregon has given more than $6 billion in corporate handouts. Some of these subsidies come in the form of property tax breaks, and others come as tax credits or rebates. There are a few notable tax credit programs in Oregon, like Business Oregon’s Strategic Investment Program (which gave Koch Industries a big tax break) and the Oregon Investment Advantage Program, which has both Facebook and Lowe’s on its list of notable recipients.
Perhaps no other tax credit program is as notorious as the Business Energy Tax Credit, which ended up being far more expensive than originally anticipated. As an incentive to invest in renewable energy, corporations received tax credits for their energy efficiency projects. The problem though, began with how credits were given, and the amount of money that amounted to. “Credits were issued to projects that quickly went bankrupt or never operated; to projects that would have been built without the credits; and to developers who gamed the state’s loose rules to qualify for multiple credits.” They were even issued for things like transit passes for Nike employees and lighting upgrades at convenience stores. What’s more, BETCs were bought and sold left and right, so even though a company like Wal-Mart didn’t earn any BETCs for renewable energy projects, they still saved millions on their taxes by buying discounted credits.
The companies that bought the most credits almost certainly used them to get their tax bills down to $0 in at least one year. By buying BETC credits, U.S. Bank saved $14 million, Wal-mart saved $12.9 million, Costco saved $12.1 million, Comcast saved $9.2 million, Umpqua Bank saved $6.8 million, Union Pacific saved $6.2 million, and Kroger saved $4.9 million. Other major tax savers include Nordstrom ($5.3 million), Walgreens ($3.2 million), Dish Network ($2.3 million), Standard Insurance ($2.0 million), and Nestle ($2.0 million).
When our lawmakers passed these tax credit programs, they had the best intentions. But we’ve been handing out these credits so freely that some of the wealthiest corporations are in fact dodging millions of dollars in Oregon taxes — even while the programs haven’t necessarily generated the benefits they were expected to.
We think there are a few obvious things that should be done to address this problem. First, tax credits should be given more intentionally — that means better restrictions on what kinds of projects actually qualify for credits. There should also be a stronger review system to ensure the credits are working as intended. The secondary market for tax credits needs to be put in check — large corporations shouldn’t be getting such steep discounts on their tax bills. Finally, and perhaps most importantly, every corporation should be required to at least pay their minimum tax in Oregon. This past session the Legislature tried to close the Zero-tax Loophole (the loophole used by corporations to pay less than the minimum tax in Oregon) – but corporate lobbyists won concessions that made the reform temporary – we should close the Loophole permanently.
Oregon needs large corporations to pay the income taxes they owe. The least they can do is pay the bare minimum.