One of Oregon Gov. Tina Kotek’s top economic advisers on Monday suggested that a new economic prosperity effort the governor championed last year could recommend the state reduce its corporate activity tax.
Former Senate Minority Leader Tim Knopp’s comments came during a wide-ranging speech at a forum hosted by the Salem Area Chamber of Commerce, where he was joined by local business leaders to preview the work of the governor’s prosperity council. Kotek announced the council’s creation in December with the goal of bringing together a diverse sector of industry leaders to issue potential recommendations on policy issues such as permitting reform, global trade and corporate tax incentives.
Knopp, a Republican from Bend, said on Monday that he doesn’t know specifics but that “everybody knows that we need to take a look” at the state’s corporate activity tax and “figure out how to make it work better.” The tax is measured based on a business’ amount of commercial activity in Oregon totaling more than $1 million. Critics have labeled the tax, intended to fund education, Oregon’s “hidden” sales tax.
Kotek “will determine which one she wants to do, which one she thinks will move the needle, which things are politically available and possible. Politics is the art of the possible, and she will move on those (recommendations) and I will be helping her and you,” Knopp told attendees. “This new economy that is coming, it’s just a question of whether it’s coming to Oregon in a significant way, or whether it’s going to pass us by somewhere else.”
Knopp also said that Kotek will likely put forth legislation in the 2027 legislative session to ensure Oregon “can become the new prosperous state.” He pointed to an evolving economic landscape with the development of artificial intelligence and high-profile layoffs at tech companies, suggesting that states such as Texas and Arizona have attracted companies due to lower tax and fewer regulations.
Oregon has for years struggled with its reputation for overburdening businesses with regulations and taxes, and several high-profile recent rounds of layoffs spurred concerns that businesses are fleeing the state. A March letter to the business council from one of the state’s top business group coalitions warned that Oregon is facing high housing costs, poor public school performance, outdated land use rules and climate-related risks such as wildfires.
Though he didn’t call for any specific policy changes, Knopp also took aim at Oregon’s $1 million threshold for the estate tax, arguing that people are leaving the state in response to it and collecting tax status outside of Oregon instead.
He also said that the main types of businesses that will improve Oregon’s business climate include the semiconductor industry, energy companies, natural resources, and various manufacturing companies such as food production and sawmills.
“I told the governor, this is a no-fail mission,” Knopp told attendees. “Because if we don’t turn this around and turn it around fairly quickly, as I say, we will be Detroit for four decades with a slightly better view.”
Knopp defends Kotek
Kotek tapped former political rival Knopp to lead her economic efforts as chief prosperity officer. He is a former GOP Senate minority leader who in 2023 led a six-week quorum-denying walkout over bills on gender-affirming care, abortion and guns. He was unable to run for reelection due to a 2022 voter-approved constitutional amendment, which bars any lawmaker with 10 or more unexcused absences from serving another term.
Since his selection, the council has continued to hold regular meetings until it plans to issue formal recommendations for the governor in the summer. Kotek has declined to take any clear positions on potential policy changes ahead of the council’s findings. In the meantime, the council’s competing factions have sparred over how and whether the state should be cutting taxes for businesses as a solution.
One point of controversy on Monday, and among some prosperity council members, has been a 2026 law Oregon Democrats passed to partially disconnect the state from the GOP’s 2025 federal tax and spending law tax breaks. Republicans and business groups have painted the legislation as an effective tax hike, though Democrats said failing to disconnect from federal tax changes would’ve left the state without around $300 million in state revenue needed for the next year-and-a-half.
Oregon GOP lawmakers have launched a ballot veto referendum to gather signatures to undo the legislation, and Kotek has said she is looking to the council to recommend legislation addressing the issue in 2027.
Pressed by an audience member to reconcile the law’s passage with supporting business in Oregon, Knopp said that the “governor is committed to action. I don’t think she would have hired me if she wasn’t.”
He warned that failing to pass the legislation would have created a significant financial hole in the state’s education system.
“The short session is a difficult place to make big policy, and that was budget policy,” he said. “I think some of those policies are going to have to be relooked at in order for Oregon to reach its full potential, and to keep companies here.”
