Industry research and development spending in Oregon has strengthened without a tax credit

Fact Sheet
February 22, 2023By Nhi Nguyễn

Following the expiration of its research and development (R&D) tax credit, businesses in Oregon have spent more on research and development than their counterparts in nearly all states — adding further evidence that reinstating the R&D tax credit would be a waste of public resources.

In 2017, the Oregon legislature chose not to renew the Qualified Research Activities tax credit. The legislature’s decision stemmed from the lack of sufficient evidence that this R&D tax credit resulted in companies undertaking activity that otherwise wouldn't occur. Since 2018, Oregon has had no R&D tax credit.

Even without the tax credit, industry’s spending on research and development in Oregon, adjusted to 2020 dollars, has continued to strengthen. In 2017, the last year the Qualified Research and Activities tax credit was in place, businesses spent nearly $8 billion dollars in R&D in Oregon. In 2020, the year with the most recently available data, that figure had risen to over $10 billion, a 30 percent increase.[1]

Oregon consistently remains near the top of industry R&D rankings. In 2017, Oregon ranked fifth in the nation in terms of business R&D spending as a share of the state's private-sector economy. Oregon's ranking had risen to fourth place by 2020, trailing only research powerhouses Washington, California, and Massachusetts.[2] Washington, the state that ranked first, let its High Technology Business and Occupation Tax Credit expire in 2015.[3]

Oregon's continued strong performance in business R&D spending even after its Qualified Research Activities tax expired shows that reinstating the tax credit would be a mistake. Senate Bill 55 proposes to reinstate and significantly expand the R&D tax credit. Enacting this legislation would reduce funds that could be used to build affordable housing, invest in workforce development, or improve the infrastructure that serves businesses and Oregonians — factors that help boost private investment.

[1]OCPP analysis of National Science Foundation data

[2] OCPP analysis of National Science Foundation data and Bureau of Economic Analysis data.

[3] Washington State Department of Revenue, Credits, High Technology Credit [830] (Expired January 1, 2015).