The recently issued report from Governor Kotek’s Prosperity Council stands out as much for its research into the Oregon economy as it does for its recommendations.

The report itself is just 32 pages, but it’s followed by hundreds of pages of survey results and economic research documenting the state of the Oregon economy, including comparisons to other states. It’s impressive and should be required reading for any policy maker working to improve Oregon’s competitiveness.

One finding really jumped out at me. If you include income taxes and sales taxes but exclude property taxes, middle income Oregonians have a higher effective tax rate than both Washington and California residents.

I already knew that Oregon’s tax system is regressive if payroll taxes are included. High state income tax rates are reached at relatively modest incomes. But high earners enjoy a payroll tax break when income surpasses $184,500 per year. The result is that Oregon high earners pay a lower effective tax rate than someone earning $50,000 per year. The Council’s finding comparing tax rates on the West Coast underscores how oppressive Oregon’s tax system has become for the middle class.

The Council also highlights another weakness in Oregon’s tax system: volatile tax revenues due to its high dependence on personal income taxes. Tax collections plunge when the economy is poor, forcing painful belt-tightening. During economic booms, revenues overshoot projections, triggering large kicker refunds. Neither of these outcomes is helpful. Everyone enjoys receiving a big kicker, but it ensures Oregon can never create a cushion for the next downturn.

To bring Oregon’s taxes more in line with its neighbors, the Council recommended restructuring personal taxes to include a sales tax (or the more business-friendly version, the value-added tax). People need to spend even when the economy is bad, so sales taxes tend to fluctuate less with economic cycles than income taxes, smoothing out tax revenues.

I’ve long opposed sales taxes because they place a larger burden on low- and middle-income people, who spend a greater share of their income on consumption. But after reading this report, I’ve changed my view, at least for Oregon’s system that already includes an income tax.

I now see that the path to a more progressive tax system doesn’t have to be a straight line. As everyone in New Orleans knows, sometimes you need to turn right to go left.

 A modest 3 percent sales tax with exemptions for basics like food, medical care, and childcare could enable Oregon to eliminate income taxes entirely for all lower income people and many with middle incomes, making our tax system far less regressive.

Reforms like these are long overdue in Oregon and more urgent than ever in this time of unprecedented economic inequality.

The only question now is whether policy makers will let the Prosperity Council’s findings fade away or treat them as a legitimate path forward for Oregon.