Confidential Draft Recommendations From Kotek’s Prosperity Council Suggest Tax Cuts and Reforms

By Nigel Jaquiss
May 14, 2026

Gov. Tina Kotek’s Prosperity Council will meet May 15 in Eugene to finalize its recommendations for release next month.

But in advance of that meeting, the Oregon Journalism Project has obtained a confidential draft of the 16-member panel’s calls for action, and that draft proposes significant changes to Oregon’s tax system, which the document calls an unbalanced “one-and-a-half legged stool,” overly reliant on income taxes and a distorted property tax system and lacking a sales tax.

The 20-page draft includes 10 specific recommendations that it says are necessary to reform Oregon’s tax system and reverse the state’s economic ills.

“Businesses of all sizes face a complex and often costly mix of state and local taxes,” the draft says, “which together create uncertainty and increase the cost of investment.

“The state needs a tax system that is competitive, predictable and supportive of long-term growth,” the draft report continues. “That will require fixing structural inefficiencies, improving alignment between state and local tax policy, and building a broader, more resilient revenue base.”

The draft, developed after a series of meetings across the state, recommends considering longer-term fixes to Oregon’s property tax system, such as a potential reduction of top marginal income tax rates and trying again to implement some form of a sales tax. But it makes more specific recommendations for the 2027 legislative session as well, including:

On the estate tax: The draft calls on Kotek and the Legislature to “reform Oregon’s estate tax,” which OJP has reported is the most aggressive of any of the 12 states (and the District of Columbia) that levy taxes when people die. The goal: “to align more closely with West Coast states in order to reduce the out-migration of Oregon-based business owners, investors and multigenerational family enterprises. This recommendation appears most clearly aimed at reducing current taxes.

On the corporate activities tax: The draft suggests that the tax—which acts as a corporate sales tax and raises $1.5 billion annually for schools—should be streamlined to reduce “pyramiding,” which stacks taxes as goods move through the supply chain.

Reconnecting to the federal tax code: In the February legislative session, lawmakers disconnected Oregon’s tax code from Trump-backed tax breaks related to depreciation of new capital investments and the sale of stock in small businesses. That saved Oregon about $300 million in revenue for the current biennium and the same amount over the following four years. That’s revenue the state would otherwise have forgone, so reconnecting would constitute a de facto tax cut.

Other tax reforms: The draft recommends looking longer term (in the 2029 legislative session) at a “consumption-based” (i.e., sales) tax, “property tax reforms,” and the elimination of “distortive unequal local tax regimes across the state.” That last item appears to refer to Multnomah County’s Preschool for All Tax, a big target of the business community. A recent study by Reed College finds more evidence that buttresses fears the tax is driving high income earners away.

Adopting a “market-based cap and invest program for greenhouse gas emissions”: Upon passage of such legislation, “the governor should repeal the Climate Protection Program,” which OJP recently reported is inferior to emissions reductions laws in other states.

Other probably less controversial recommendations in the draft suggest cutting state regulations; replacing the state’s economic development agency, Business Oregon, with a more robust, nimble operation; creating an outside cabinet to advise the governor on economic issues; and freeing up more money and land for industrial development.

The draft does not say whether there is unanimous support on the council for the tax reforms, and at least two council members almost certainly oppose them—Alice Dale, a retired Service Employees International Union official, and Robert Camarillo, executive secretary of the Oregon State Building and Construction Trades Council.

Although the union representatives are in the minority on the council, Dale and Camarillo gave a presentation at the April meeting that rejected the negative framing of Oregon’s economy that spurred Kotek’s decision to form her Prosperity Council in the first place.

Rather than making big changes to the tax code, the union leaders said, the council’s goal should be “improving the income and lives of all Oregonians at every income level in every part of the state, with a particular emphasis on low- and middle-income Oregonians,” their presentation said.

Because the document OJP obtained is only a draft of the Prosperity Council’s recommendations, there’s no guarantee what the council’s final recommendations will look like or how much of an appetite Kotek will have for acting on any of them.

The governor created the Prosperity Council last fall, on the eve of launching her reelection campaign. The Oregonian reported polling results last week that show voters are extremely unhappy with Kotek even though Oregon voters have elected a Democratic governor in every election since 1986.

Voter discontent may put pressure on Kotek to act on the council’s recommendations, although the draft pointedly notes that an earlier blue-ribbon panel Kotek convened in 2023, the Portland Central City Task Force’s Tax Advisory Group, “identified needed changes that remain unimplemented.”

The draft emphasizes the need for decisive action now, however: “Oregon’s future is uncertain, and we are in danger of missing an entire generation of growth and prosperity,” it says.

A spokesman for Kotek, Luke Harkins, says the governor looks forward to receiving a report next month that advises her “on near- and long-term strategies to accelerate Oregon’s economy, create good paying jobs, and recruit and grow Oregon businesses,” but he referred questions on the draft recommendations to Prosperity Council co-chairs Renée James of Ampere Computing and Curtis Robinhold, executive director of the Port of Portland.

“This has been a great set of discussions with the Prosperity Council and feedback from thousands of Oregonians,” the co-chairs said in a joint statement. “We are still doing our work. Oregonians are demanding things get better, and we are committed to making meaningful recommendations that will help us all do that together.”