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Nike Presses Oregon for Tax Deal in Exchange for Jobs

SALEM, Ore. (AP) -- Instead of heading out on holiday vacations, Oregon's part-time lawmakers are back to work Friday. The reason: Nike (NYSE: NKE  ) , one of the state's largest employers, wants a tax deal in exchange for bringing hundreds of new jobs.

The governor stunned legislators and much of the state four days ago when he called a special session that will cost taxpayers $13,000 a day and is evidence of the lengths Oregon will go to protect its best-known company.

"I think Oregon has the opportunity to secure a huge win for our economy," Gov. John Kitzhaber said Thursday.

Critics question the need for the legislation and are considering changes, but it's expected to pass comfortably in the House and Senate later Friday.

Nike has deep roots in Oregon, where it was created in the 1960s by a former middle-distance runner and his college track coach. Together, Phil Knight and Bill Bowerman built it into the world's largest athletic shoe and apparel company and one of the globe's most influential brands. The company has its headquarters near Beaverton, a Portland suburb.

The governor has said Nike approached his staff about a month ago with an offer he couldn't refuse. Nike said it was being courted by other states but would expand in Oregon if the state would promise not to change the method it uses to calculate Nike's tax bill. The legislation being considered would authorize the governor to give Nike its promise.

It's unclear whether Nike would actually expand outside Oregon -- a company spokeswoman refused to say -- but the mere threat is enough to spur emergency legislative action that the governor acknowledged was "extraordinarily awkward."

Tax incentives have become a common tool used by politicians to lure large employers, but Nike's deal is unconventional. Rather than a lower tax bill, the company wants assurance that the status quo won't change. Over the past two decades, Oregon has transitioned its corporate tax code to a so-called "single sales factor," which offers substantial tax benefits to companies such as Nike that employ many people in Oregon but sell most of their goods elsewhere.

Nike has been mum about its expansion plans, refusing to say how many people it would hire, what they'd do or where they'd work. The company has also refused to say what other states it had discussions with.


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