Oregon Prosperity Council Adviser Signals Corporate Activity Tax Could Face Cuts
Why It Matters
Oregon’s business climate has been a growing concern for employers and workers across the state, with high taxes and heavy regulations pushing some companies toward Texas, Arizona, and other lower-cost states. Any move to reduce the corporate activity tax — which affects businesses with more than $1 million in Oregon commercial activity — could reshape the competitive landscape for thousands of employers statewide.
What Happened
Tim Knopp, a former Republican state Senate minority leader now serving as Gov. Tina Kotek’s chief prosperity officer, told a Salem business forum Monday that Oregon’s corporate activity tax needs a serious review. Speaking at an event hosted by the Salem Area Chamber of Commerce, Knopp previewed the work of Kotek’s economic prosperity council, which the governor launched late last year to generate policy recommendations on taxes, permitting, and trade.
Knopp said he doesn’t have specifics yet, but that the state needs to examine the corporate activity tax and find ways to make it function better for Oregon businesses. Critics have long called the levy a “hidden” sales tax, given that it is calculated on total commercial activity rather than profits.
Kotek, a Democrat, tapped Knopp — a political rival who led a lengthy GOP walkout in 2023 — to head the council’s efforts. Knopp was barred from seeking reelection under a voter-approved constitutional amendment after accumulating unexcused absences during that walkout. Since joining Kotek’s team, he has positioned himself as a pragmatic voice for economic reform.
By the Numbers
- $1 million — the commercial activity threshold that triggers Oregon’s corporate activity tax
- $300 million — the estimated state revenue at stake from Oregon’s 2026 law partially disconnecting from federal tax changes
- $1 million — Oregon’s estate tax threshold, which Knopp suggested is driving high-net-worth residents out of state
- 2027 — the legislative session when Knopp indicated Kotek will likely advance major economic legislation
- 6 weeks — the length of the 2023 Republican Senate walkout Knopp led over social policy bills
Zoom Out
Oregon’s economic challenges are part of a broader fiscal pressure mounting on Western states, with wildfire risks, housing costs, and sluggish private-sector growth straining state budgets and business confidence. A coalition of major Oregon business groups warned earlier this year that the state faces compounding problems — underperforming schools, outdated land-use rules, and climate-driven costs — that will require aggressive policy changes to reverse.
Knopp drew direct comparisons to competing Sun Belt states, arguing that Texas and Arizona have successfully attracted investment by offering lower taxes and fewer regulatory hurdles. He warned that if Oregon doesn’t act quickly, it risks decades of economic stagnation. “This is a no-fail mission,” he said. “If we don’t turn this around fairly quickly, we will be Detroit for four decades with a slightly better view.”
The council is also navigating internal disagreements. One flashpoint is a 2026 law Oregon Democrats passed to partially sever the state’s tax code from federal Republican tax cuts. GOP lawmakers and business groups have framed that move as a tax increase on Oregon employers. Local governments across Oregon are already stretched thin, and any additional business departure could further erode the tax base that funds public services.
What’s Next
The prosperity council is expected to issue formal recommendations to the governor this summer. Kotek has withheld taking public positions on specific policy changes until those findings are delivered. Knopp indicated the governor is committed to translating the council’s work into legislation during the 2027 session, with a focus on sectors including semiconductors, energy production, natural resources, and manufacturing. Oregon Republicans, meanwhile, are pursuing a ballot referendum to reverse the 2026 tax disconnection law.
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