21. Portland Metro Chamber — Tax Reform & Regional Economy Letter
21. Portland Metro Chamber — Tax Reform & Regional Economy Letter
March 31, 2026 Governor’s Prosperity Council Office of the Governor State of Oregon Dear Members of the Governor’s Prosperity Council, On behalf of the Portland Metro Chamber, I write to thank you for your leadership at a pivotal moment for Oregon’s economic future and to offer our perspective informed by the Chamber’s recent State of the Economy report and aligned with the concerns outlined by the Oregon Business Council. The data is clear: both the Portland region and the state of Oregon are at an inflection point. What we are experiencing is not a typical cyclical slowdown, but a structural shift that demands urgency, alignment, and a higher level of policy ambition. Consider the major conclusions of the 2026 State of the Regional Economy Report: • The Portland region has been in a localized recession since 2023 • The region’s consumer sentiment has been last or nearly last of the top 50 metropolitan regions in the country. • The region is nearly last multifamily housing permitting in the nation, and 60% of all permitting activity in the region is in SW Washington. • Portland’s commercial office vacancies are the highest in modern history and one of the highest in the nation. • Portland is one of the last in the nation to recover our downtown foot traffic for office workers. • While foot traffic is incrementally growing due to Herculean public private effort, at this pace, it will take us an additional decade to fully recover from the pandemic. • The Portland region, dependent on trade, saw the largest drop in export value in the country. • The regio is 80 out of 81 on real estate invest-ability
• The Portland metro region has consistently been at or near the bottom of 50 American cities in terms of employment. To make matters even more concerning, population growth has slowed to historic lows and will stagnate or decline for the foreseeable future. With the era of natural population growth clearly behind us, future growth will be increasingly dependent on international migration and intentional attraction instead of the consistent domestic in-migration that fueled the region’s expansion over the past 50 years. This aligns with the Oregon Business Council’s observation that the state is entering an era of “population scarcity,” fundamentally changing the economic equation from managing growth to generating it. Taken together, these trends point to a region—and a state—facing mounting structural pressures: slowing growth, declining competitiveness in traded sectors, constrained housing supply, and weakening economic confidence. This has resulted in broad private sector divestment from the region and a loss of approximately $3 billion in taxable income from Multnomah County alone. We strongly agree with the Oregon Business Council’s core premise: Oregon is at a “moment of economic reckoning.” Incrementalism will not be sufficient. The scale of the challenge requires a coordinated, durable strategy that restores Oregon’s value proposition for businesses, workers, and investment. From the Chamber’s perspective, the work of the Prosperity Council should focus on a clear set of priorities that directly address these structural challenges:
- Reform taxes by December 31, 2029: In 2017, Congress passed tax reform that nearly eliminated State and Local Tax deductions (SALT). As a result, high income tax dependent states like Oregon faced a massive decline in competitiveness for middle and high-wage jobs. While a practical reaction to the reduction in the SALT deductions would have been to pivot from dependence on income taxes, however, we did the opposite by enacting two new local income taxes in 2020. Not only are we the highest marginal tax rate in the nation, as well as the only county in America that has four income taxes, but also the highest effective tax rate in the nation. Subsequently, in 2025 Congress enacted HB1 which temporarily raised SALT deductions, but this temporary relief will expire on December 31, 2029. If we have not reformed our taxes to a more sustainable, broad based, revenue system by that date that significantly reduces dependence on income tax Oregon will be at a permanent structural disadvantage. It is critical that we shift our primary revenue sources by introducing some version of a broad based, low rate, consumption tax. If we do not make this shift, Oregon will have virtually no economic case to make to job creators to keep and grow middle income jobs here. We urge you to develop a multi-biennium legislative plan that brings labor and business to the table to craft historic tax reforms that reduce income tax rates and moves Oregon out of th the top 10 highest income tax states (currently Wisconsin is the 10 highest income taxed 121 SW Salmon St., Suite 1440, Portland, OR 97204 PortlandMetroChamber.com
state). Resulting tax reform must be enacted for an effective date of no later than January 1, 2030. 2. Restore traded sector competitiveness. Oregon’s long-term prosperity depends on its ability to attract and grow industries that bring new income into the state. Recent losses of major industrial and clean-tech investments— often due to site readiness, regulatory complexity, and infrastructure constraints— underscore the need for immediate action to improve competitiveness. 3. Unlock housing production at scale. The region cannot grow—or compete—without significantly increasing housing supply. This will require meaningful reforms to land use, permitting, and development processes, as well as new approaches to financing and delivering housing at all income levels. To be clear – there is no path toward meeting Governor Kotek’s annual housing production goals without adopting aggressive policies that will incentivize private sector, market rate housing development. 4. Rebuild the state’s economic value proposition. As talent and capital become increasingly mobile, Oregon must address the cumulative impact of its tax structure, regulatory environment, and cost profile. Competitiveness today is not defined by a single policy, but by the overall experience of doing business and living in the state. 5. Modernize regulatory and infrastructure systems. Delays, uncertainty, infrastructure constraints, and antiquated land use policies — particularly related to industrial land and energy capacity—are increasingly determining whether Oregon wins or loses major investments. Oregon's permitting system needs to be transformed from one of the most cumbersome and slowest in the nation to one of the most efficient and predictable. Oregon must make the necessary updates to land use and infrastructure policy necessary to grow, st attract, and retain the high wage jobs of the 21 century. 6. Strengthen talent pipelines and population growth. With natural population growth near zero, Oregon must compete more effectively to attract and retain talent, while improving education and workforce alignment with industry needs. These priorities are not new—but the urgency is. Today’s economic challenges are different from the past in that the consequences of inaction are becoming visible in the data: fewer jobs, fewer investments, slower growth, and reduced fiscal capacity to support public services. At the same time, Oregon’s strengths remain significant. Our innovation economy, natural assets, and entrepreneurial culture continue to provide a strong foundation. The question before us is whether we will align policy, investment, and leadership to build on those strengths—or allow structural challenges to erode them over time. The Governor’s Prosperity Council has a critical role to play in answering that question. Its recommendations must be clear, actionable, and commensurate with the scale of the 121 SW Salmon St., Suite 1440, Portland, OR 97204 PortlandMetroChamber.com
challenge. Just as importantly, they must signal—to businesses, workers, and investors—that Oregon is prepared to compete and to lead in a more competitive national and global economy. The Portland Metro Chamber stands ready to partner with the Council, the Governor’s office, and stakeholders across the state to advance solutions that restore growth, expand opportunity, and strengthen Oregon’s economic future. Thank you for your leadership and your commitment to this important work. 121 SW Salmon St., Suite 1440, Portland, OR 97204 PortlandMetroChamber.com
Parent: Appendix E: Submissions & Feedback · PDF: pp. 241-244