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Oregon’s struggling economy is front and center after Gov. Tina Kotek’s economic advisory council released a sweeping set of recommendations Thursday aimed at reversing the state’s position near the bottom of national employment rankings. The 33-page report calls for lower taxes, less regulation, and hundreds of millions in targeted business investment — though divisions within the council itself reveal how difficult the road ahead may be.
Why It Matters
Oregon’s economic trajectory stands out in the region — and not in a favorable way. The state is the only West Coast state to have shed jobs overall in the past year, and its 5.2% unemployment rate reflects a labor market that has consistently underperformed neighboring states. A striking 41% of Oregonians either fall below the federal poverty line or cannot meet their basic everyday costs — a figure the council called unacceptable.
“We have to chart a better future for everyone,” Kotek said at Thursday’s council meeting. “We are hearing constantly about the challenge for everyday Oregonians working hard [who] can’t make ends meet.”
What Happened
The Governor’s Prosperity Council convened Thursday afternoon and approved the report, which lays out 10 key solutions intended to spur job growth and business investment. The council found broad agreement — described internally as a “supermajority” — on most issues, though tax code changes proved more contentious. Two council members opposed proposed short-term tax adjustments and raised concerns about business incentive structures. The report ultimately defers the most complex tax questions to the Oregon Legislature, with a work group tasked to deliver a long-term proposal by 2029.
Among the regulatory recommendations, the council voted to call for eliminating Oregon’s Climate Protection Program, replacing it with a cap-and-trade system modeled on programs already in place in California and Washington. The move signals a shift from direct state emissions mandates toward a market-based approach. The council also recommends directing $250 million in state funds per biennium toward business infrastructure. K-12 education improvements were explicitly excluded from the report’s scope.
By the Numbers
- Oregon ranks 49th nationally in employment growth
- 5.2% — current statewide unemployment rate
- 41% of Oregonians below the poverty line or unable to cover basic expenses
- Proposed estate tax exemption raised from $1 million to $3–$5 million
- Corporate Activity Tax threshold would double from $1 million to $2 million under the recommended changes
- Proposed R&D tax credit of 15% for company-led research, and 2% for projects conducted within Oregon universities
- Disconnecting from a 2025 federal small business stock sales exemption would save Oregon roughly $40 million in the current two-year budget cycle
All proposed tax changes are framed as revenue neutral, though the council acknowledged it could not reach full internal consensus on those provisions.
Pushback from the Left
Progressive critics wasted little time responding. Daniel Hauser, deputy director of the Oregon Center for Public Policy, argued the recommendations prioritize the wealthy over working families. “The Council’s recommendations respond to this dire challenge by cutting taxes for millionaires and by prioritizing corporate handouts over direct investment in the success of working families,” he said.
The criticism echoes a broader debate in Oregon over whether tax relief actually stimulates broad economic growth or primarily benefits high earners and corporations. Oregon voters delivered a related signal in May, rejecting proposed transportation tax increases — a sign that the public appetite for new tax burdens remains limited even as state leaders wrestle with revenue needs.
The council’s recommendation to modify the Corporate Activity Tax threshold — a levy that has drawn sustained criticism from Oregon businesses since its introduction — also comes amid ongoing disputes over how the state structures tax breaks and incentives for large employers.
What’s Next
The council’s report now heads to the Oregon Legislature, which will have the final say on whether any of the recommended tax changes become law. A formal work group is expected to begin developing a comprehensive long-term tax reform package, with a target delivery date of 2029. In the near term, the fate of the Climate Protection Program replacement and the business infrastructure funding commitment will depend on legislative appetite for structural economic reform in one of the West’s most economically troubled states.
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