[5]
Oregon Drops to 35th in State Tax Competitiveness Index
By Oregon Business & Industry [6]
What happened: Oregon has fallen two places in the nonpartisan Tax Foundation’s State Tax Competitiveness Index, dropping from 33rd to 35th, the state’s lowest ranking in the widely followed index in at least 20 years. Oregon has fallen an astounding 28 places since 2019, when the state ranked 7th (click here [7] for more).
Worrisome trend: Earlier this year, Oregon plummeted 11 places in CNBC’s America’s Top States for Business [8] rankings, falling from 28th place to 39th. Oregon’s overall score in that index is its lowest in the history of CNBC’s rankings and a stunning 22 places lower than its 17th-place ranking in 2017.
Inside the rankings: In addition to an overall score, the Tax Foundation ranks each state in five categories. In only one of these, sales taxes (4th), is Oregon among the top half of states. Other rankings include property and wealth taxes (28th), unemployment insurance taxes (41st), individual income taxes (41st) and corporate taxes (49th).
What the Tax Foundation said: “For the second year in a row,” the Tax Foundation wrote, “Oregon’s rank dropped due to competitive reforms in other states as Oregon stood still.” The organization also warned about the possibility of self-imposed damage. “At the time of publication,” it wrote, “Oregon lawmakers were considering changes in conformity to the federal Internal Revenue Code that could further harm the state’s tax competitiveness in future years.”
Other warning signs: This year’s State Tax Competitiveness Index is the latest of many warning signs state policymakers can no longer afford to dismiss. Others include:
- Oregon’s year-over-year GDP growth significantly lags [9] U.S. GDP growth
- The state economist has stated that Oregon is in the midst of a manufacturing recession [10]
- Oregon’s population has stagnated and is expected to increase [11] by an annual rate of only 0.4% between 2024 and 2025.
- Oregon’s total effective business tax burden increased by one third [12] between 2019 and 2023, eroding a historic competitive advantage
- Oregon is the 7th most heavily regulated state [13] in the nation.
Why it matters: Oregon’s business climate is chasing away investment, and that means fewer good jobs for Oregonians, less philanthropic support for Oregon’s communities and less revenue for public services.
Urgent action needed: To reverse this trend, policymakers must first recognize the problem. They must then resolve to stop making it worse and, crucially, make economic development a top priority. OBI’s Oregon Competitiveness Agenda [14] offers many concrete proposals for improvement.
Learn more: Visit OBI’s Oregon Scorecard website [15] for more competitiveness-related rankings and statistics, including Oregon’s performance over time.