Amazon is among the companies in Oregon that have benefitted from big tax breaks. The companies’ delivery truck are seen all across Oregon. (Getty Images)
Here’s a question for Elon Musk, recently appointed to lead a new “Department of Government Efficiency”: isn’t it wasteful to use taxpayer dollars to subsidize corporate jobs at a rate of more than $300,000 per worker? That’s how much Twitter (now X) received in property tax breaks in 2022 for its data center in Washington County.
Musk’s company is but one of the tech giants whose data centers Oregonians have been heavily subsidizing for years. With few benefits and big downsides, these inefficient subsidies grow the wealth and power of the nation’s biggest billionaires, to our detriment. It’s time to change course.
In 2022 alone, big tech companies — Amazon, Facebook, Google, Apple and Twitter — together reaped $180 million in property tax breaks for their data centers, according to extensive reporting by The Oregonian’s Mike Rogoway. The following year, Morrow County gave Amazon yet another massive tax break for data centers, this one valued at $1 billion over 15 years.
While supporters of the tax giveaways justify them on the grounds of economic development, the reality is that the returns are low and the costs are high. As the paltry 18 employees at X’s facility in Washington County attest, data centers produce few full-time jobs. They swallow up land that could be used for more productive resources. They gobble up lots of energy driving up utility bills for Oregonians. They guzzle water, putting the environment and communities at risk.
Of course, property tax breaks mean foregone revenue — resources that would otherwise fund local services like libraries, fire departments and parks. Property taxes also remain an important source of funding for K-12 schools. And because Oregon rightly seeks to equalize funding for schools across the state, property tax breaks for data centers reduce school funding statewide.
But here’s the most frustrating part: Big tech likely would build data centers in Oregon without the tax giveaways. Tax subsidies “play almost no role in data center site location decisions,” researchers point out. Factors such as the availability of cheap electricity, proximity to customers and favorable climate are way more important in determining data center location than tax breaks.
Wasteful property tax breaks, however, are only one way in which big tech plays Oregonians for fools. These corporations are also notorious for their income tax avoidance. As one analyst notes, “Highly credible research suggests that just six Big Tech companies — Apple, Cisco, eBay, Facebook, Google, Microsoft — may have dodged a quarter trillion dollars in U.S. federal tax over the past 15 years.”
How much these companies have avoided in Oregon income taxes is hard to say, due to the lack of transparency. But given that federal taxable income tax is the starting point for Oregon income taxes, tax avoidance federally likely means tax avoidance at the state level.
The tax subsidies that Oregonians give to big tech corporations pad their profits and, ultimately, contribute to the exorbitant wealth of their owners. Companies owned by the country’s three richest people — Musk, Jeff Bezos and Mark Zuckerberg — are all recipients of property tax breaks in Oregon.
In 2023, the Oregon Legislature had an opportunity to change course. The Enterprise Zone and Long Term Rural Enterprise Zone tax programs that allow the massive property tax breaks for big tech were set to expire.
But rather than pull the plug, the Legislature opted for a modest measure requiring that companies pay a “school support fee” of between 15 to 30 percent of the property taxes they otherwise would have paid. Those fees, however, kick in several years into the life of the tax break, meaning big tech gets a free ride for a number of years. Given how wasteful these tax breaks are, the legislature should not wait until 2029, the next time they are up for renewal, to implement reforms.
Separate from changes to the programs allowing the massive property tax breaks for data centers, there are other steps the Legislature can take in the upcoming legislative session. One of those is simply to demand tax transparency from big tech and all big corporations so that Oregonians can better understand which companies are paying their fair share and which ones are freeriding on the backs of Oregonians.
Another step would make it difficult for multinational corporations to avoid Oregon income taxes by artificially shifting profits abroad. “Complete reporting” or “combined worldwide reporting,” as this policy is called, could raise an additional $290 to $550 million per budget period — taxes that big corporations should be paying Oregon but currently are not.
For too long, big tech and their billionaire owners have been playing Oregonians for fools. We need to wise up.