GO
Loading...

Nike's New Tax Deal With Oregon

Nike shoes are displayed at Modell's Sporting Goods in Philadelphia.
Matt Rourke | AP
Nike shoes are displayed at Modell's Sporting Goods in Philadelphia.

If you don't think corporate taxes are important, then please, keep reading.

Nike was founded in Oregon, and as a $44 billion company, it remains headquartered there, serving as the state's second-biggest employer.

So, when the company says it wants to expand, the state pays attention. When the company threatens to expand beyond Oregon, the state SNAPS to attention.

About a month ago, Nike said it would consider investing in growth outside the state unless there were guarantees that the company's tax status would not change in the near future.

(Read More: As State Budgets Rebound, 'Cliff' Cuts Still Loom)

In response, Governor John Kitzhaber has called a special legislative session for Friday to vote on legislation that stipulates that any business that spends $150 million and adds 500 new jobs - over a five-year span - can retain its current tax status.

In a nutshell, Nike is currently taxed on a single sales factor. That means, it is taxed on sales executed inside the state, instead of taxing a combination of sales, payroll and real estate.

Since almost all of Nike's sales are outside Oregon, this is a huge benefit that Nike will now be guaranteed for anywhere between five and 40 years.

Reportedly, a recent study by AECOM said the Nike expansion could be worth 12,000 direct and indirect jobs and $2 billion a year in economic impact by 2020.

The actual impact is likely less than that, but enough for the Governor to take action.

(Read More: US Factories Humming at 8-Month High)

"This is a huge win for Oregon," Governor Kitzhaber told CNBC in a statement. "Nike is seeking an assurance the state won't change tax rules after they make this new investment.

"It's an easy call and a perfect fit with our strategy to attract and retain companies that create jobs and boost per capita income."

For Nike, they reportedly received strong attention from several states about taking the investment elsewhere. The company had leverage, and it used it.

"Nike is a global company with a long history in Oregon," Nike CFO Don Blair said. "We support this proposed legislation as a way to help us continue to grow in Oregon."

Companies always talk about wanting certainty, whether it be on regulation or tax policy.

Now, Nike has that certainty, to go along with a sweet deal and the knowledge that the state of Oregon will do just about anything to keep Nike happy ... and profitable.

(Read More: 6 Savvy Tax Moves to Make This Year)

—By CNBC's Brian Shactman; Follow him on Twitter: @bshactman