Oregon

If your parent company has pled guilty to criminal price fixing, should you as a subsidiary still be able to receive local tax breaks?

That is the question that faces officials in Oregon. From the Eugene Register-Guard:

[Attorney Bern] Johnson said he was glad to hear the state is trying to recover money for Oregonians who were harmed by price fixing. But he questions whether Hynix should still be getting tax breaks, including those for the latest upgrade, if corporate officials have broken the law.

"It would be too bad if with one hand the state is giving this company tax breaks, and with the other hand, the state has to be suing the company to recover on behalf of consumers who were harmed by illegal activity," he said.

"It seems that if a company is doing illegal activity that is harming people in Oregon, the state of Oregon shouldn't be giving that company tax breaks."

. . .

Eugene city councilor David Kelly said he thinks the council will want to know whether the price fixing offenses affect Hynix's tax waiver, and if Hynix in Eugene was strongly connected with the price fixing.

"The amount of tax that Eugene is forgoing is significant," Kelly said, "so I think the council would have an interest in getting answers to these questions."

That said, he added that "after a rough start-up (Hynix has) been a very good corporate citizen. So I'm not thinking of Hynix in Eugene as a bad guy in any way."

Pat Eagan, the governor's chief of staff, said that the underlying criminal behavior - the price fixing - didn't happen anywhere near Oregon.

Hynix officials "have agreed that behavior that was criminal and fit the definition of antitrust occurred," Eagan said. "They've gotten rid of those individuals, and our understanding is there's not more of that behavior going on."

The governor's June trade mission to South Korea had a duty to meet with Hynix officials in Seoul because Hynix is a large regional employer in Oregon and the company had been hinting at expansion, Eagan said. Hynix employs 1,150 workers in Eugene.

"If we had shunned them for something they had already agreed had happened and was four years old, I'm not sure that that would be wise behavior on our part, and I'm not sure that anyone would argue that that's what we ought to do," Eagan said.

Eagan is probably right that it would not be wise to kick a dog while it's down. But it would have been even wiser if Oregon officials did not have to incentivize Hynix to locate in Eugene. Had there been a low and uniform rate instead of the company receiving $50 million in property tax breaks, the issue would be moot and lawmakers could consider more important items.