47. Tax Fairness Oregon
47. Tax Fairness Oregon
June 8, 2026 Governor Tina Kotek 900 Court Street NE Salem, OR 97301 Prosperity Council Co-Chairs Renée James and Curtis Robinhold Members of the Oregon Prosperity Council RE: The Prosperity Council’s Final Recommendations Dear Governor Kotek, Co-Chairs James and Robinhold, and members of the Oregon Prosperity Council: We understand the Prosperity Council is considering draft recommendations to improve the Oregon economy. We are aware that these recommendations may change and are not final. As a result, Tax Fairness Oregon would like to offer our opinion in the hope that it might modify the final result. We agree with the goal of improving the growth in the Oregon economy. It has been underperforming in comparison with other states since the start of the pandemic and the damaging protests in Portland in 2020. Commercial property values in Portland have suffered, reducing revenues needed to support the city and the county. The state is suffering from federal funding cutbacks and cannot support the needs of the citizens without increasing revenue. At the same time, we need to remember that over the longer term, Oregon has outpaced national growth and some of the problems we face today are transitory and not based upon current state public policies. Portland suffered from significant vandalism in 2020. The badly implemented attempt to legalize drugs caused additional damage. Intel and Nike, our two largest companies, suffered major layoffs due to their internal problems causing additional economic pain for the state from their local suppliers. Oregon’s trade dependent and small business sectors are a bigger share of the national economy than in most states and were hurt by national tariff and trade policies. Fortunately, the impact of these events is reversing and what has been a drag on our economy is shifting to a more positive environment. The drug policy was reversed, vandalism and crime overall are down sharply, Intel and Nike have stopped their bleeding and should begin adding employment and the Supreme Court ended some of the tariffs. Given this background, we agree with some of the recommendations, have concerns about some, and offer a few we think are missing. What we like • Elevating economic development priorities within the executive branch makes sense. We recognize that Oregon is in a serious competition for beneficial growth. Competing means having a clear idea of what benefits Oregonians, a deep knowledge of business conditions, and the flexibility to act when conditions are right. • Implementing a sales tax would allow us to reduce income taxes to make our tax structure more like other states. However, the total package must remain at least as progressive as it is today to retain our support. California, which has a significant sales tax, also has a more progressive tax system overall than Oregon, showing that adding a sales tax does not necessarily create a regressive system. • Establishing a process to systematically reduce regulations that are counterproductive. Announcing a goal is easy. Establishing a process to continuously review and eliminate low value regulations is the hard part. We read the bills and follow the money
What we don’t like • Simply cutting taxes across the board is counterproductive. Taxes pay for public services. Cutting services reduces economic activity, offsetting the stimulus effect of tax cuts. Further, states with successful economies demand more and better public services. – better schools, safer streets, healthier and adequately-housed people, good roads, and clean air and water. In a healthy economy, a working person should be able to buy healthy food, adequate housing, and consistent health care. Navigating this dynamic requires more than simple solutions. • At the highest level, this means our state and local governments need to do their job better. In competing for beneficial growth, we can do a lot better. For example, there is ample evidence that we massively overpaid and do not have to continue to give data centers hundreds of millions each year in tax incentives to attract them to Oregon. Yet we continue to do so. This does not deny that data centers have brought some benefits. Thousands of Oregon businesses provide public benefits every day without special incentives. We’ve constructed a system in which the incentives are an entitlement. You get them if you meet the (very) minimum standards regardless of how large the incentive is. We’ve built an administrative system that incentivizes capturing the surplus at the expense of other governments and the public at large and allows mega corporations to pit local governments against each other. And we’ve justified it all with woefully inadequate analysis of public benefits and costs. • Oregon’s treatment of foreign “tax haven” income is equally wasteful. Exemption of this income not only reduces our revenue by hundreds of millions each year, it creates unfair competition for businesses lacking foreign operations and, because corporate income is allocated to the state by sales, provides no incentive to locate facilities or jobs in Oregon. • Similarly, attaching to other federal level incentives to encourage investment, such as bonus depreciation, does nothing to encourage investments in Oregon. The bulk of the funds just reward investments in other states. • Finally, TFO supports adjustments to the estate tax exemption to make it more equitable. However, doing it in the pursuit of economic development is misguided. Studies clearly show that taxes are a very minor reason that people choose to move, a conclusion supported by the rapid growth in revenue from the tax itself. What we think is missing • Public investments in higher education. Oregon has starved our public universities for decades. We know that an educated workforce will produce positive economic benefits over time, but we keep failing to make those investments. • Addressing our infrastructure needs. The public has voted down the transportation package, but without addressing our deteriorating roads and bridges we will do long term damage to the state economy. Going forward • Reducing tax rates in the pursuit of economic growth without dealing with existing wasteful practices is fiscal folly. The state should eliminate wasteful tax incentives based on a careful analysis of benefits and costs and awareness of economic opportunities. New or modified incentives should be structured to reward investments that maximize public benefits rather than just meet minimum standards. The incentives should recognize the benefits provided by Oregon-based businesses. At minimum, the incentives should be judged by their ability to efficiently incentivize family-wage jobs, such as the recently passed jobs credit for qualified businesses. We read the bills and follow the money
• The state should replace the current administrative system that focuses solely on increased activity regardless of the external costs and who must bear them. Instead, the structure should be focused on maximizing the benefits for the citizens of the state, be empowered to act when conditions are right, and be accountable for results. Such a system would seek investments that use Oregon’s resources efficiently, minimize negative impacts on the things that make Oregon a good place to live, and would not otherwise occur. • Any reduction of overall tax rates should be conditioned on the elimination of wasteful incentives and tempered by the realization that the federal government is actively making it harder for working people to live off their income and shifting the cost of dealing with the consequences to the state. Sincerely, Jody Wiser, John Calhoun, Jim Scherzinger Tax Fairness Oregon We read the bills and follow the money
Parent: Appendix E: Submissions & Feedback · PDF: pp. 397-399