Nov. 11, 2025
Oregon’s freefall: On Oct. 30, the nonpartisan Tax Foundation released its annual State Tax Competitiveness Index, which dropped Oregon’s ranking to 35th nationally. As recently as 2019, Oregon’s overall ranking was 7th, indicating a 28-place plunge in only seven years. Check out our blog post on the latest rankings here and the index itself here.
Oregon is an outlier: The Tax Foundation subsequently produced a graphic showing which states have experienced the greatest ranking changes since 2020. It is sobering. No state has experienced a bigger drop in the rankings than Oregon over the past six years. Oregon’s decline over that period – 27 places – is more than double that of Washington, which saw the second largest decline – 12 places.
Why it matters: Businesses invest in states that provide the conditions they and their employees need to succeed. Oregon’s rapidly eroding tax structure effectively pushes businesses to invest elsewhere. Jobs, philanthropy and tax revenue follow.
Behind Oregon’s fall: Why has Oregon fallen so far? Primarily because, the Tax Foundation explains, the state “adopted a modified gross receipts tax in addition to its normal corporate income tax. This new tax has relatively high rates, which compounds the tax pyramiding caused by typical gross receipts taxes.” Additionally, the Tax Foundation notes, other states have improved the competitiveness of their tax structures.
Improvement is possible: To become more competitive, Oregon must fix its business climate, beginning with its tax structure. OBI’s Oregon Competitiveness Agenda contains many suggestions to that end. So does the Tax Foundation, which explains some of the things the states that have boosted the competitiveness of their tax codes the most since 2020 have done. Over this period, for example, Tennessee’s ranking has improved even more dramatically than Oregon’s has fallen.
What they’re doing: Read the Tax Foundation’s full blog post here. Below is what it has to say about the five states that have seen the largest improvements in their competitiveness rankings over the past six years:
- Tennessee reduced the rates of its corporate gross receipts tax, improved its treatment of business expensing, and fully phased out its tax on individual interest and dividends income, becoming one of eight states to have no individual income tax.
- Iowa has been working toward comprehensive tax reform for several years, and its dedication is paying off. Since our 2020 ranking, the state repealed its alternative minimum tax, reduced its top corporate income tax rate from 12% to 7.1%, and consolidated four brackets into two. On the individual side, the state reduced its top income tax rate from 8.53% in 2019 (and 8.98% before reforms adopted in 2018) to a highly competitive 3.8% and converted a nine-bracket system to a flat tax.
- Georgia successfully turned its graduated individual income tax into a flat 5.19% tax. At the same time, it tied its corporate income tax rate to the individual rate, reducing it from 5.75 to 5.19% while adopting other reforms.
- Louisiana, too, has been working toward comprehensive tax reform for many years. Since the 2020 ranking, the state has eliminated its uncompetitive throwout rule and its policy of federal deductibility, reduced its corporation franchise tax rate, brought down the individual income tax rate from 6% to 3%, and consolidated five corporate income tax brackets into one, with a top rate reduction from 8 to 5.5%. Louisiana is also one of three states to adopt permanent full expensing separate from federal provisions.
- Arkansas saw rate reductions and bracket consolidation as well. Lawmakers reduced the corporate and individual income tax rates from 6.5 and 6.9% to 4.3 and 3.9%, respectively. The corporate income tax now features only four brackets, and the individual income tax has only two, while both previously had six. The state also improved its nonresident income tax provisions, among other reforms.