Essay · Oregon economic prosperity
Oregon economic prosperity: paying down the state's complexity tax
Oregon ranks 49th in the nation for job growth, and the Governor's own bipartisan council has now said why. The diagnosis is right. The prescription is too cautious, too slow, and too sure that better government is the answer. The way back is to compete to win, return agency to the people who build, and get out of their way.
The state names its own problem
On June 25, 2026, Governor Kotek's Prosperity Council delivered its final report. The council was not a think tank or an opposition campaign — it was fifteen of the state's own business and labor leaders, working with a Republican former Senate leader installed as Oregon's first Chief Prosperity Officer. That makes its headline number hard to read past: Oregon ranks 49th in the nation in non-farm employment growth — second worst. Unemployment sits at 5.2 percent, above a national rate of 4.3 percent. More than four in ten Oregonians — 41 percent, by the state's own count — cannot comfortably afford the basics of the places they live.
The council's word for the cause is not underinvestment, and not bad luck. It is structural. Oregonians, the report says, are "paying more while feeling they receive less." That is a striking thing for a state's own commission to put on paper, and it is worth taking seriously — because it is the same diagnosis I keep returning to, arrived at independently and from the inside.
Who was in the room — and who wasn't
Look at who the Governor convened. The council's strength was its standing: a port authority, the general counsel of a public company, the heads of the largest regional construction firms, a timber company, a century-old fruit packer, a creamery cooperative, two senior labor leaders, a nationally known semiconductor executive. These are serious Oregonians, and their experience is real.
But notice who is thin on the bench — the scrappy founder, the small operator, the entrepreneur three years into building something that does not yet have a lobbyist or a government-affairs office. A body weighted toward established institutions and organized labor will, by its nature, reach for answers that protect established institutions: fund what exists, coordinate what exists, add a layer to manage what exists. That is not a knock on any member; it is what the composition makes likely. Ask a room of incumbents how to grow an economy and you tend to get a careful plan to defend the present. The future is underrepresented, because it has not been built yet — and the people who would build it were mostly not at the table.
In depth: Who was in the room — the council's composition.
What they are describing is the complexity tax
The report sorts Oregon's troubles into five areas: economic development, taxes, permitting, site readiness, and talent. Read them together and they are five faces of one problem. The cost of doing anything in Oregon has crept upward a rule, a fee, a form, and a delay at a time, until the doing itself became the obstacle.
That creep is a tax — the largest hidden one a state levies — and it is not only paperwork. It is real money: filing fees, system-development charges, the Corporate Activity Tax that lands before a small firm has earned a profit, the years of carrying costs while a permit waits. And it is a tax other states are working to undercut. They are not standing still; they actively recruit Oregon's talent and capital with lower costs and faster answers. It would be one thing for Oregon to be merely neutral. It is another to stack barriers while its competitors roll out the carpet. Like every complexity tax, this one is regressive: a large firm absorbs the lawyer and the wait; the small operator, the family business, the founder with a thin balance sheet cannot. Complexity quietly tilts the field toward whoever is already big enough to pay it — the opposite of what a growing economy needs.
In depth: The complexity tax in fees and dollars.
Right diagnosis, timid cure
To the council's credit, several recommendations point the right way: an enforceable permitting "shot clock," a push to clear duplicative rules, a simpler Corporate Activity Tax, estate-tax relief so a family can keep its business. These are real, and worth doing.
But set the prescription next to the size of the problem and the gap is hard to miss. A state ranked 49th does not climb back by trimming regulation "twenty percent by 2029." That is too little, and 2029 is too late. And the deepest reform is not made here at all: the structural rebalancing of Oregon's tax system is handed to a working group asked only to produce a proposal by that same distant 2029, while the near-term business-tax fix is bound in advance to "maintaining overall revenue levels." The boldest move on the table is a study. The same caution runs through the tax recommendation — align Oregon's tax policy with its neighbors. But its neighbors are not winning. California and Washington are themselves losing employers and residents. Benchmarking to the middle of a struggling pack is not a strategy; it is a way to stay 49th more comfortably. The goal is not to match the states losing the race. It is to become the easiest place in the country to build.
In depth: Compete, don't benchmark.
"Modernize" is not a plan; simplify is
Much of the report reaches for the word modernize — modernize the agencies, modernize the statutes, modernize the tools. Modernize does not mean anything. The verb that means something is simplify. Simplify the permit, the tax, the path to opening a business, until an ordinary person can walk it without hiring someone to translate.
Simplicity is not an aesthetic preference; it is what unlocks individual agency and productivity. And the job is two-sided. The state should make it simple and rewarding for individuals and small businesses to build and contribute — and it should deter the fraud, waste, and abuse that grow inside government itself. Simple rules and aligned incentives do both: they reward the voluntary act of producing something other people value, and they leave fewer dark corners for waste to hide. A state that gives everyone who can produce a reason to do so grows. One that does not decays over time into a larger, costlier, more centralized dependence. Every layer removed is a person freed to build.
Why the complexity grew — the part a council cannot say
Complexity is rarely an accident, and it rarely leaves on its own. Every rule had a sponsor and a reason, and most were well meant. But layers persist long after their reason fades because, by then, they serve someone — the incumbent shielded from a new competitor, the intermediary whose service the complexity itself requires, the agency whose budget tracks the size of the rulebook. A stakeholder commission can recommend a cut; it is structurally less able to explain how the buildup happened, because some of the people around the table benefit from parts of it.
That is not cynicism. It is why a one-time trim will not hold. And capture does more than protect incumbents — it is self-fulfilling. Each layer that shields the connected becomes a new problem the state is then asked to manage, so the complexity that protects the few quietly manufactures Oregon's need for more government, which produces more complexity in turn. A nominally capitalist system, run on capture, drifts toward the very collectivism it claims to resist. The durable reform is a standing bias toward simplicity — a default that makes every new layer prove its worth before it is added.
A simplicity plan with teeth
If the buildup is the problem, half-measures won't move it. Start with a moratorium on new rules and new bodies, paired with a framework to reduce what exists — fast, and in public. Oregon's roughly three hundred state boards, commissions, and committees are complexity made visible: many are staffed by unelected appointees, most operate with little transparency or accountability, and the public has almost no idea they exist or what they decide. That is a vast, quiet layer of power and control sitting inside a single-party state, and it should be audited and pared back as aggressively and as quickly as the law allows. A serious simplicity agenda starts there — not with a promise to trim a fifth of the rulebook over four years.
In depth: Oregon's hidden government — ~300 boards and commissions.
The answer is not more money
When the report reaches a hard problem, its instinct is often to fund it — a quarter-billion dollars per biennium for site readiness, tens of millions for a university innovation fund, more for talent programs. Its other reflex is to add machinery: the report's signature recommendations are three new government bodies — a Commerce Authority to replace Business Oregon, a Governor's cabinet to align the agencies, a working group to study the taxes — created to coordinate the very fragmentation the report diagnoses as the disease. Money is not the answer, and neither is more apparatus; confusing either with results is its own kind of error. Spending more on innovation does not produce innovation; aligned incentives and the freedom to act do.
There is a deeper asymmetry underneath it. Markets learn because they are allowed to fail — failure is how a system sheds what does not work and moves resources to what does. Government is built not to fail, which means it cannot learn the same way: it answers a failed program with a larger one, and spends more to solve the problem it funded into being. Letting individuals and communities build, take risks, and sometimes fail is not a flaw in the model; it is the engine of it. No learning, and no efficiency, happens in a system designed so that nothing is ever allowed to fail. Government's proper role here is narrow and powerful: clear the path, keep the field honest, and get out of the way of the people who actually build.
In depth: A state that cannot fail.
Look forward, not back
The deeper flaw in Oregon's economic planning is that it looks backward and reacts. It studies the last decade's losses and proposes the last decade's tools — a better agency, better coordination, another program. That approach produced the ranking; it will not reverse it. Planning that works looks forward and makes room.
And what it should be making room for is the development the report never mentions: broadly adopted, capable AI. Intelligence — the scarce input behind navigating any complex system — is no longer scarce. A state that pairs genuine simplification with rules legible to the tools now in everyone's hands does not catch up to its neighbors; it leaps past them. A permit an agent can assemble and track. Compliance built into the transaction rather than reconstructed a year later by a consultant. A shot clock enforced by software, not goodwill. Oregon could decide to be the place where someone with an idea and the ordinary tools of 2026 can build — wherever in the state they live — and let free enterprise, not a state program, carry it from there.
In depth: The AI leap — machine-legible government.
Prosperity is about agency
It is easy to read a report like this as a list of systems to fix. But every number in it is a person. The contractor who waits two years for a yes. The founder who quietly incorporates across the river in Washington. The second-generation family that sells the orchard rather than inherit the estate-tax bill. Prosperity returns when policy returns agency to those people — not a wider net of provision, but a lower wall in front of the many already trying to build, and room for more of them to try.
The case for caution
The strongest objection deserves room. Not all complexity is waste; some of it encodes protection that was learned the hard way, and a blunt across-the-board cut can strip the safeguard along with the sludge. And technology is not automatically a liberator — the same systems that could make rules legible to everyone could instead add a new, opaque layer only a new class of specialists can read. The test of any of this is simple and unforgiving: does the person with the least cushion find it easier to build, or only the incumbent who could already afford the lawyers or had connectivity into Oregon's policy power? If reform helps only the latter, it has failed.
A choice to grow
I write this as part of a sixth-generation Oregon family — my sons are the sixth. In my work building wealth strategies for families, I watch the arithmetic that pushes Oregon's most mobile people and capital to leave, and I have sat in rooms where a real employer was ready to grow here while the local conversation turned to extracting more tax revenue rather than winning and keeping the jobs. The incentives are pointed the wrong way, and the people who can leave eventually do.
Oregon's decline is not fate. It is the weight of accumulated choices, and choices can be unmade — but only by a state willing to be ambitious instead of cautious, fast instead of patient, and clear-eyed about what government can and cannot do. And timidity has a victim, even when no one names it: the next generation. Policies that protect what already exists, at the speed this report proposes, simply fail the Oregonians who aren't in the room yet — the founder who never starts, the graduate who leaves, the generation handed managed decline instead of momentum. The council did the hard part: it named the problem, across the usual divides. The better work now is to act at the scale the ranking demands — to stop managing decline politely and start competing to win. The tools to do it, including one no prior reform effort ever had, are in hand. Oregon does not have to settle for catching up. It can decide to be the place everyone else is trying to catch.
In depth: Why people and capital leave Oregon.
Supporting analysis
This essay is the pillar of a series. The companion pieces carry the evidence:
- Who was in the room — the council's composition
- Oregon's hidden government — ~300 boards and commissions
- The complexity tax in fees and dollars
- Compete, don't benchmark
- A state that cannot fail
- Why people and capital leave Oregon
- The AI leap — machine-legible government