# SB 1507 QSBS Fiscal Impact Simulator

> Monte Carlo fiscal impact simulator for Oregon SB 1507 (QSBS tax decoupling).
> Models four loss channels across a configurable time horizon with 4,000+ iterations.

Current model version: August 17, 2026 (Generation 3)
Version history: https://yex.ai/tools/sb1507-fiscal-impact-model/history
URL: https://yex.ai/tools/sb1507-fiscal-impact-model
API: https://yex.ai/api/tools/sb1507/simulate

## Scope — read before citing

This is a **revenue** model, not a fiscal model in the Legislative Fiscal Office sense, and not an economic-impact model. Every reported output is denominated in tax dollars collected.

- **No expenditure side.** There is no spending term anywhere in the simulation: no program costs, agency budgets, caseloads, transfers, or Department of Revenue administrative cost of implementing the disconnect.
- **Economic quantities are intermediate, not findings.** Firm counts, headcount, and founder counts feed the revenue calculation and anchor the sensitivity analysis; they are not reported as outputs.
- **Institutional placement.** Oregon's Legislative Revenue Office scores revenue; the Legislative Fiscal Office scores expenditure. This model sits on the LRO side and is not a substitute for an LFO score. What distinguishes it from LRO's published estimate is not the fund measured but the behavior allowed — LRO's estimate is largely static, this one is dynamic.
- **Fund basis.** The gain and loss sides are not drawn on the same fund. The comparison revenue schedule is LRO General Fund dollars. Modeled losses are combined state, dedicated-fund, and local tax revenue: personal income tax and corporate excise are General Fund; the Corporate Activity Tax, TriMet employer payroll, statewide transit, SUI, Paid Leave Oregon, and Portland/Multnomah business taxes are not. Characterize net figures as total public revenue at stake, not as a General Fund balance.
- **Direction of the omission.** Excluding the expenditure side is directionally conservative against the model's own conclusion: high earners and the firms employing them are net fiscal contributors whose departure reduces revenue in full while reducing spending obligations by considerably less. That is reasoning about a known omission, not a modeled result.

## Navigation Guide

The tool uses hash-based routing within a single page. All URLs below are anchored to `https://yex.ai/tools/sb1507-fiscal-impact-model`.

### Tabs

| Tab | Hash Route | Description |
|-----|-----------|-------------|
| Dashboard | `#dashboard` | Interactive simulation with summary cards, channel breakdown, and main chart |
| Model & Parameters | `#model` | Channel drill-down with posterior distributions and parameter controls |
| Research | `#research` | Evidence report with 15 sections of data, tables, and citations |
| SB 1507 | `#sb1507` | Bill text analysis and legislative context |
| Agent Guide | `#agent-guide` | Machine-readable simulation overview with live data |

### Model Channel Sections

| Channel | Hash Route | Description |
|---------|-----------|-------------|
| Companies | `#model/companies` | Mid-size firm departures (500+ employee pool) |
| Startups | `#model/startups` | VC-funded startup formation loss |
| Investors | `#model/investors` | HNWI angel/LP out-migration |
| Founders | `#model/founders` | Founder relocation and inbound deterrence |

### Research Sections

| Section | Hash Route |
|---------|-----------|
| Executive Summary | `#research/executive-summary` |
| Research Map | `#research/research-map` |
| QSBS National Landscape | `#research/qsbs-national-landscape` |
| Projected Revenue | `#research/projected-revenue` |
| New: LRO Estimate Audit | `#research/lro-estimate-audit` |
| Behavioral Scope | `#research/lro-methodology` |
| Revenue Baselines | `#research/revenue-baselines` |
| OR vs WA Tax Comparison | `#research/tax-comparison` |
| Migration & Demographics | `#research/migration` |
| Per-Company Fiscal Impact | `#research/fiscal-impact` |
| Behavioral Economics | `#research/behavioral-economics` |
| The Vancouver Arbitrage | `#research/vancouver-arbitrage` |
| Company Departures | `#research/case-studies` |
| The Proponent Case | `#research/proponent-case` |
| Scenario Analysis | `#research/scenario-tables` |
| Works Cited | `#research/works-cited` |

## Parameter Reference

The simulation uses 17 parameters across four loss channels. Each parameter defines P20-P80 calibration targets rather than hard sampling bounds. Normal and lognormal fits map those targets directly to quantiles; beta fits use a method-of-moments approximation.

### Companies Channel

#### Starting Firm Pool (500+ employees)

- **ID**: `companyStartingPool`
- **Unit**: firms
- **Default Range (P20-P80)**: 280 - 360
- **Slider Range**: 150 - 500
- **Distribution**: normal
- **Evidence Level**: research
- **Description**: Year-0 count of Oregon firms with 500+ employees. This is the initial stock from which the simulation draws Binomial departures; organic replenishment partially offsets exits each year.
- **Rationale**: QualityInfo 2025 census reports 319 firms at 500+ employees. Uncertainty arises from classification boundaries (contractors vs W-2, seasonal workers, multi-state headcount allocation). Firms near the 500-employee threshold may shift in or out quarter-to-quarter.
- **Sources**: [QualityInfo: Snapshot of Oregon Firms by Size Class (2025)](https://qualityinfo.org/-/a-snapshot-of-oregon-firms-by-size-class-2025)

#### Employees per Departing Firm

- **ID**: `companyEmployees`
- **Unit**: employees
- **Default Range (P20-P80)**: 350 - 650
- **Slider Range**: 100 - 1000
- **Distribution**: lognormal
- **Evidence Level**: research
- **Description**: Number of employees at a typical departing mid-sized firm. Drives payroll and PIT withholding calculations.
- **Rationale**: The at-risk pool is firms with 500+ employees (QualityInfo 2025). The 400-600 range captures the most mobile tier — large enough to generate significant tax revenue, small enough that relocation is feasible. Larger firms (1000+) have more inertia.
- **Sources**: [QualityInfo: Snapshot of Oregon Firms by Size Class (2025)](https://qualityinfo.org/-/a-snapshot-of-oregon-firms-by-size-class-2025)

#### Average Salary ($K/yr)

- **ID**: `companyAvgSalary`
- **Unit**: $K/yr
- **Default Range (P20-P80)**: 100 - 200
- **Slider Range**: 50 - 300
- **Distribution**: lognormal
- **Evidence Level**: research
- **Description**: Average annual salary at the departing firm. Directly determines PIT withholding and payroll tax base.
- **Rationale**: BLS starting salary for Oregon: $67,200. Portland tech salaries range $122K-$199K (QualityInfo), with senior roles at $184K-$281K (Built In). A $100K-$200K P20/P80 range captures the typical mid-to-large traded-sector firm.
- **Sources**: [QualityInfo: Snapshot of Oregon Firms by Size Class (2025)](https://qualityinfo.org/-/a-snapshot-of-oregon-firms-by-size-class-2025), [SB 1507 measure overview (OLIS)](https://olis.oregonlegislature.gov/liz/2026R1/Measures/Overview/SB1507)

#### Gross Revenue ($M/yr)

- **ID**: `companyGrossRevenue`
- **Unit**: $M/yr
- **Default Range (P20-P80)**: 150 - 300
- **Slider Range**: 50 - 500
- **Distribution**: lognormal
- **Evidence Level**: directional
- **Description**: Annual gross revenue of the departing firm. Drives Corporate Activity Tax (CAT) calculation.
- **Rationale**: Reference firm: $200M revenue for a 500-employee tech company. Revenue-per-employee ratios vary by industry: tech firms typically generate $300K-$600K per employee, traditional manufacturing $200K-$400K. The $150M-$300M range spans a reasonable mid-market tech firm.
- **Sources**: [SB 1507 measure overview (OLIS)](https://olis.oregonlegislature.gov/liz/2026R1/Measures/Overview/SB1507)

#### Net Profit Margin

- **ID**: `companyProfitMargin`
- **Unit**: %
- **Default Range (P20-P80)**: 0.08 - 0.22
- **Slider Range**: 0.01 - 0.4
- **Distribution**: beta
- **Evidence Level**: assumption
- **Description**: Net profit margin of the departing firm. Drives corporate excise tax and local business income tax calculations.
- **Rationale**: Reference: 15% net margin for a mid-sized tech firm. S&P 500 average net margin is ~11%. Tech sector averages 15-25%. A P20/P80 of 8%-22% captures uncertainty across industries and firm stages.
- **Sources**: [SB 1507 measure overview (OLIS)](https://olis.oregonlegislature.gov/liz/2026R1/Measures/Overview/SB1507)

### Startups Channel

#### QSBS-Sensitive Deal Loss Rate

- **ID**: `startupVcLossRate`
- **Unit**: %
- **Default Range (P20-P80)**: 0.15 - 0.24
- **Slider Range**: 0.01 - 0.6
- **Distribution**: beta
- **Evidence Level**: directional
- **Description**: Share of baseline VC deals that would not be funded once the state QSBS benefit disappears — before adjusting for how much of Oregon's startup funding actually comes from Oregon-resident investors (the next parameter).
- **Rationale**: Junqueira (2025, Oxford/PitchBook): VCs are 74% more likely to invest in pre-commercial startups with full QSBS. Oregon disconnects only the state slice — 9.9% of a ~29.9% combined federal-plus-state benefit, about 33% — scaling the multiplier to 1 + 0.74 × 0.33 = 1.24×. Inverting: P(funded | no state QSBS) = P(funded | QSBS) / 1.24, so θ ≈ 19.4%. The 15%-24% band spans that state-scaled point estimate, which was previously hard-coded with no uncertainty at all.
- **Sources**: [Campello & Junqueira: Tax Incentives and Venture Capital Risk-Taking (Oxford Saïd working paper, 2025)](https://oxfordtax.sbs.ox.ac.uk/sitefiles/wp25.10-guilherme-junqueira.pdf), [Q4 2024 PitchBook-NVCA Venture Monitor](https://nvca.org/wp-content/uploads/2025/01/Q4-2024-PitchBook-NVCA-Venture-Monitor.pdf)

#### Oregon-Resident Funding Share

- **ID**: `startupResidentFundingShare`
- **Unit**: %
- **Default Range (P20-P80)**: 0.15 - 0.4
- **Slider Range**: 0 - 1
- **Distribution**: beta
- **Evidence Level**: directional
- **Description**: Share of Oregon VC deal funding supplied by Oregon-resident investors — the only investors whose QSBS math SB 1507 changes. An out-of-state fund investing in an Oregon startup keeps its full federal and home-state treatment, so its willingness to fund is unaffected by the disconnect.
- **Rationale**: Oregon startups are largely funded from out of state, particularly at larger round sizes (Oregon holds ~0.32% of national VC investment, and Oregon Venture Fund documents the dependence on out-of-state capital). Only Oregon-resident investors lose the state QSBS benefit, so a 15%-40% resident share multiplies the QSBS-sensitive loss rate, putting the effective deal-loss rate near 3%-8% rather than the full 19.4%.
- **Sources**: [Oregon Venture Fund: Trade-offs to Investing Regionally](https://www.oregonventurefund.com/perspectives/trade-offs-to-investing-regionally), [NVCA 2025 Yearbook: US VC Deal Flow by State (PitchBook data)](https://nvca.org/wp-content/uploads/2025/03/2025-NVCA-Yearbook.pdf), [Current State of Venture Capital: Oregon Trends](https://elevate.vc/current-state-venture-capital-industry-oregon-trends-challenges/)

#### Annual Tax Revenue per Lost Startup

- **ID**: `startupRevPerEntity`
- **Unit**: $M/yr
- **Default Range (P20-P80)**: 0.06 - 0.19
- **Slider Range**: 0.01 - 1
- **Distribution**: lognormal
- **Evidence Level**: directional
- **Description**: Annual state payroll-based tax revenue a representative Seed-stage startup would have generated: headcount × salary × (PIT 8.5% + employer payroll 2.0%). Corporate profit taxes are excluded — early-stage startups operate at a loss. Cohort growth and failure over time is applied separately via the maturation schedule.
- **Rationale**: Merges the previous employees (5-16) and average-salary ($96K-$130K) sliders into the product the model actually uses. Midpoint: ~9 employees × $113K × 10.5% combined tax yield ≈ $0.11M/yr; the $0.06M-$0.19M band propagates both input ranges. Headcount benchmarks: Pre-Seed <5, Seed <10, Series A median 44 (down from 57 in 2020); Elevate Capital's Oregon portfolio averages ~13 employees across all stages. Salary anchored to Oregon QCEW NAICS 51 average ($129K) and Kruze startup compensation data.
- **Sources**: [Oregon Blue Book: Economy — Wages](https://sos.oregon.gov/blue-book/Pages/facts/economy-wages.aspx), [A Guide to Startup Compensation (Kruze Consulting)](https://kruzeconsulting.com/blog/startup-compensation-guide/), [Oregon Payroll Tax Calculator & Employer Requirements (GoCo)](https://www.goco.io/blog/oregon-employer-payroll-taxes-guide), [Payroll and Self-Employment Tax Information (TriMet)](https://trimet.org/taxinfo/), [Elevate Capital Celebrates 10-Year Milestone (PRNewswire, 2025)](https://www.prnewswire.com/news-releases/elevate-capital-celebrates-10-year-milestone-in-funding-underrepresented-entrepreneurs-302701729.html), [Startup Fundraising Indicators: A Guide (OAK'S LAB)](https://www.oakslab.com/story/startup-fundraising-indicators)

### Investors Channel

#### Private-Market Ownership Rate

- **ID**: `investorPrivateMarketOwnership`
- **Unit**: %
- **Default Range (P20-P80)**: 0.03 - 0.056
- **Slider Range**: 0.005 - 0.15
- **Distribution**: beta
- **Evidence Level**: directional
- **Description**: Share of Oregon's high-income resident-return pool assumed to own a private fund or offering. The simulation derives the starting investor pool by multiplying this rate by the fixed DOR return count.
- **Rationale**: SEC Office of Investor Research survey data reports that 4.3% of accredited investors own a private fund or offering. The model centers the rate at 4.3% and uses a judgmental P20-P80 range of 3.0%-5.6% because the SEC estimate is national, the DOR denominator is tax returns rather than verified accredited individuals, and the SEC ownership category is broader than active angel investors and venture LPs.
- **Sources**: [Oregon DOR: Tax Year 2024 Personal Income Tax Statistics (Exhibit 20)](https://www.oregon.gov/dor/programs/gov-research/Documents/TY%202024%20Oregon%20Personal%20Income%20Tax%20Statistics%20Report-UA-Secured%20.pdf), [SEC OIR: Exploring Accredited Investors and Private Market Securities Ownership (2025)](https://www.sec.gov/files/exploring-accredited-investors-june-2025.pdf)

#### Annual Realized Private-Market Gains

- **ID**: `investorAnnualGains`
- **Unit**: $M/yr
- **Default Range (P20-P80)**: 0.055 - 0.125
- **Slider Range**: 0.01 - 1
- **Distribution**: lognormal
- **Evidence Level**: directional
- **Description**: Average annual capital gains a representative active angel investor realizes from their private portfolio. Drives both the revenue lost when an investor departs and — as a share of their total income — the effective tax increase SB 1507 actually imposes on them.
- **Rationale**: Merges the previous deployed-capital ($0.75M-$1.25M) and annual-realization-rate (5%-12%) sliders into the product the model actually uses. Midpoint: ~$1.0M deployed × 8.5%/yr realized ≈ $85K/yr; the $55K-$125K band propagates both input ranges. Angel returns are lumpy and power-law distributed — most years realize little, exit years realize a lot — so this is the long-run annual average, consistent with 8-10 year mean time to liquidity and Wiltbank-Boeker's 2.6× average multiple.
- **Sources**: [Angel Returns Beat All Asset Classes (ACA / Angel Resource Institute)](https://angelcapitalassociation.org/blog/angel-returns-beat-classes/), [Wiltbank & Boeker: ACEF Angel Performance Project (ACA / Kauffman Foundation)](https://www.angelcapitalassociation.org/data/Documents/Resources/AngelGroupResarch/1d%20-%20Resources%20-%20Research/ACEF%20Angel%20Performance%20Project%2004.28.09.pdf)

#### Migration Sensitivity (per 1pp tax increase)

- **ID**: `investorMigrationSensitivity`
- **Unit**: %
- **Default Range (P20-P80)**: 0.0015 - 0.004
- **Slider Range**: 0.0005 - 0.01
- **Distribution**: lognormal
- **Evidence Level**: research
- **Description**: Share of the at-risk investor pool that relocates each year per percentage point of effective tax increase. The simulation multiplies this by the effective average-rate change SB 1507 imposes on the representative investor — 9.9% × the private-gains share of their income — not by the headline 9.9 points.
- **Rationale**: Rauh & Shyu (2024) estimate ~0.27% of the affected tax base migrates per 1% tax increase, validated against CA Prop 30 (~0.8% departure response to a ~3pp hike). The prior model multiplied that elasticity by the full 9.9 QSBS points, implicitly treating the disconnect as an across-the-board income tax hike and producing a 2.67%/yr exit rate. The corrected form applies the elasticity to the rate change on total income: for the representative investor, 9.9% × ~20% gains share ≈ 2pp, giving ~0.5%/yr departures. The 0.15%-0.40% band spans the literature around the Rauh & Shyu midpoint.
- **Sources**: [Rauh & Shyu: Behavioral Responses to State Income Taxation of High Earners (NBER / AEJ 2024)](https://www.nber.org/papers/w26349), [Young et al.: Millionaire Migration and Taxation of the Elite (ASR)](https://cristobalyoung.com/wp-content/uploads/2018/11/Millionaire_migration_Jun16ASRFeature.pdf)

#### Investor Ordinary Income

- **ID**: `investorOrdinaryIncome`
- **Unit**: $K/yr
- **Default Range (P20-P80)**: 266 - 434
- **Slider Range**: 100 - 800
- **Distribution**: normal
- **Evidence Level**: directional
- **Description**: Annual ordinary income (salary, business income, market yields) for a departing investor. Combined with capital gains to compute total lost PIT at 9.9%.
- **Rationale**: OR DOR data: HNWI migrants ($200K+ AGI) carry avg $35,100 in state income tax liability, implying ~$354K taxable income at 9.9%. Consistent with SEC accreditation thresholds ($200K individual / $300K joint). Many angels are executives, serial entrepreneurs, or professionals.
- **Sources**: [Oregon DOR: Tax Year 2023 Personal Income Tax Statistics](https://www.oregon.gov/dor/gov-research/pages/personal_income_tax_statistics.aspx), [Rauh & Shyu: Behavioral Responses to State Income Taxation of High Earners (NBER / AEJ 2024)](https://www.nber.org/papers/w26349)

### Founders Channel

#### QSBS Realization Drop

- **ID**: `founderRealizationDrop`
- **Unit**: %
- **Default Range (P20-P80)**: 5 - 9
- **Slider Range**: 0 - 25
- **Distribution**: normal
- **Evidence Level**: directional
- **Description**: Percent reduction in QSBS gains actually realized in Oregon after the tax change. Captures lock-in, 1045 rollovers, and deferred exits.
- **Rationale**: Capital gains realization is highly elastic. A 5%-9% range captures a defensible first-order response to imposing a 9.9% state levy on gains that were previously fully exempt.
- **Sources**: [Tax Elasticity of Capital Gains (NBER)](https://www.nber.org/system/files/working_papers/w27705/w27705.pdf), [Behavioral Responses to Capital Gains (Budget Lab)](https://budgetlab.yale.edu/research/behavioral-responses-capital-gains-realizations)

#### Pre-Exit Flight Risk

- **ID**: `founderFlightRisk`
- **Unit**: %
- **Default Range (P20-P80)**: 15 - 30
- **Slider Range**: 0 - 60
- **Distribution**: normal
- **Evidence Level**: research
- **Description**: Share of each annual founder exit cohort that changes domicile before realizing the gain — typically across the river to Vancouver, WA. Border proximity is included in this rate; there is no separate multiplier.
- **Rationale**: A 15%-30% range reflects high-earner migration evidence under large one-time tax exposures, widened upward for the Portland-Vancouver corridor: a founder can change domicile before an exit without leaving the metro labor market, investors, or social graph. The prior model expressed this as a 10%-20% base rate multiplied by a separate 1.3x-2.0x Vancouver multiplier; the multiplier is now folded into this range so border proximity is never applied twice. This applies to the current year's liquidity cohort, not the whole founder population.
- **Sources**: [Rauh & Shyu: Behavioral Responses to State Income Taxation of High Earners (NBER / AEJ 2024)](https://www.nber.org/papers/w26349), [WA Dept of Revenue Border Tax Study](https://dor.wa.gov/sites/default/files/2022-02/Border%2520Issues.pdf), [Portland (OR) & Vancouver (WA) Tax Comparison 2024](https://www.greaterportlandinc.com/media/userfiles/subsite_214/files/OR%20%26%20WA%20Tax%20Comparison%202024.pdf), [Portland to Vancouver Relocation Trends (2025 Guide)](https://greenbuckrealestate.com/blog/portland-to-vancouver-relocation-trends-explained)

#### Long-Run Inbound Founder Flow Reduction

- **ID**: `founderInboundReduction`
- **Unit**: %
- **Default Range (P20-P80)**: 0.06 - 0.17
- **Slider Range**: 0 - 0.6
- **Distribution**: beta
- **Evidence Level**: directional
- **Description**: Long-run percentage reduction in the annual flow of QSBS-scale founders arriving in Oregon once the state disconnect is in place. Because a §1202 exit requires a five-year minimum holding period, this reduction cannot touch exit cohorts inside the first five horizon years — it phases in linearly from year 6 to year 12. Everyone exiting earlier already held Oregon QSBS when SB 1507 passed.
- **Rationale**: Derived from Moretti & Wilson (2017), Table 2A column 6: a net-of-tax elasticity of 1.8895 (s.e. 0.6160) implies the annual founder flow falls to (0.901/1.000)^1.89 ≈ 82.2% of baseline — a 17.8% reduction — when Oregon's after-tax QSBS keep rate drops from 100% to 90.1%. Scaling that empirical response by a 40%-80% transportability judgment (founders share the star-scientist study population's income and national labor-market access, but many have family, operating-company, or investor ties) gives the 6%-17% P20-P80 band.
- **Sources**: [Moretti & Wilson: State Taxes and the Geographical Location of Top Earners (AER, 2017)](https://eml.berkeley.edu/~moretti/taxes.pdf)

#### Annual Tax Base per Departed Founder

- **ID**: `founderAnnualTaxBase`
- **Unit**: $M/yr
- **Default Range (P20-P80)**: 0.25 - 0.55
- **Slider Range**: 0.02 - 2
- **Distribution**: lognormal
- **Evidence Level**: directional
- **Description**: Annual state and local tax revenue lost for each founder-equivalent who leaves Oregon or never exits here: personal income tax on ongoing post-exit income plus the follow-on business and payroll footprint their next venture would anchor in-state.
- **Rationale**: $0.25M-$0.55M/yr merges three previous sliders into the quantity the model actually uses: post-exit annual income ($1.2M-$2.0M/yr) × an effective state rate (8.5%-9.9%) ≈ $0.10M-$0.20M/yr of personal income tax, plus a founder-linked business tax footprint of $0.15M-$0.40M/yr covering payroll, transit, and local business taxes from the companies and teams a post-exit founder anchors.
- **Sources**: [Oregon Income Tax Calculator (SmartAsset)](https://smartasset.com/taxes/oregon-tax-calculator), [Portland (OR) & Vancouver (WA) Tax Comparison 2024](https://www.greaterportlandinc.com/media/userfiles/subsite_214/files/OR%20%26%20WA%20Tax%20Comparison%202024.pdf), [Portland Metro Chamber 2025 State of the Economy](https://portlandmetrochamber.com/resources/2025-state-of-the-economy/), [SB 1507 measure overview (OLIS)](https://olis.oregonlegislature.gov/liz/2026R1/Measures/Overview/SB1507)

#### Average Founder Exit Size

- **ID**: `founderAverageExitSize`
- **Unit**: $M
- **Default Range (P20-P80)**: 12 - 22
- **Slider Range**: 2 - 50
- **Distribution**: lognormal
- **Evidence Level**: assumption
- **Description**: Average taxable QSBS gain per founder exit used to translate the LRO revenue baseline into the number of founder exit events in a typical year.
- **Rationale**: $12M-$22M represents meaningful founder outcomes short of unicorn-only exits, adjusted upward from $10M-$20M to reflect the OBBBA (July 2025) expansion of the QSBS gain exclusion cap from $10M to $15M and the corporate gross asset threshold from $50M to $75M. The larger cap shifts the distribution of qualifying exits upward. Smaller exits create many more founders; larger exits imply fewer, higher-value cohorts.
- **Sources**: [SB 1507 measure overview (OLIS)](https://olis.oregonlegislature.gov/liz/2026R1/Measures/Overview/SB1507), [SB 1507 LRO Measure Analysis](https://olis.oregonlegislature.gov/liz/2026R1/Downloads/MeasureAnalysisDocument/94494), [The OBBBA: How New QSBS Rules Affect Startups and Investors (Baker Donelson)](https://www.bakerdonelson.com/the-one-big-beautiful-bill-act-how-new-qsbs-rules-and-related-provisions-affect-startups-and-investors), [Tax Reform 2025: What the OBBBA Means for Startups & VC + QSBS in NJ (Lowenstein Sandler)](https://www.lowenstein.com/news-insights/publications/client-alerts/tax-reform-2025-what-the-obbba-means-for-startups-venture-capital-plus-qsbs-in-new-jersey-tax)

## LRO Projected Revenue Schedules

Published by the Oregon Legislative Revenue Office in the SB 1507 measure analysis. The dashboard uses the QSBS-only schedule by default and the full net General Fund schedule when company departures are enabled. Founder mechanics always use QSBS-only revenue.

| Biennium | QSBS revenue ($M) | Full General Fund net ($M) |
|----------|-------------------|----------------------------|
| 2025-27 | $38.9M | $311.6M |
| 2027-29 | $56.5M | $313.9M |
| 2029-31 | $83M | $123.7M |
| 2031-33 and later | $83M | $83M |

Past LRO's published window (tax year 2032 onward) the schedules are extended on each provision's stated life rather than held flat. The QSBS disconnect has no sunset and holds at $83.0M per biennium. The vehicle-loan interest addback ends with tax year 2028, the EITC expansion hits its current-law January 1, 2032 sunset, the job-creation credit applies only to tax years 2026 through 2031, and the bonus depreciation disconnect is a timing shift whose addbacks are offset by later subtractions. The two baselines therefore converge.

## Research Highlights

Key findings organized by research area, drawn from the evidence report.

### Revenue Baseline

Start with what the LRO says the bill raises before comparing any modeled loss channel.

**LRO Projected Revenue (Published 6-Year Window)**: $178.4 M over 6 years

The SB 1507 measure analysis reports QSBS disconnect revenue of $38.9M, $56.5M, and $83.0M across the 2025-27, 2027-29, and 2029-31 biennia.

_The dashboard annualizes those rows into Years 1-6 as $19.45M, $28.25M, and $41.5M. For custom horizons past Year 6, the model carries forward the 2029-31 annualized rate because the published LRO table stops there._

### Who Uses QSBS?

National Treasury data establishes the baseline: who files, how much is excluded, and how concentrated the gains really are.

**National QSBS Claimants (2012–2022)**: 217,000 individuals + 25,000 trusts

Treasury OTA WP-127 provides the first comprehensive empirical study of QSBS utilization. $140B+ in total exclusions claimed nationally over the period.

_Oregon's ~700 annual claimants represent roughly 2% of the national pool, consistent with the state's share of venture activity._

**Gain Concentration: 94% vs 75%**: 75% to >$1M TPI (Treasury) vs 94% (OCPP)

Proponents cite 94% concentration to households with income over $1 million. Treasury data from actual e-filed returns shows 75%. Both are concentrated, but the 19-point gap affects the distributional equity argument.

_The 94% figure comes from ITEP analysis with unpublished methodology. Treasury's 75% is from e-filed returns with full audit trail._

### Tax Stack & Competitiveness

The OR-versus-WA spread is the incentive shock that makes later migration and relocation evidence matter.

**Oregon Corporate Tax Competitiveness**: 49th in the nation (2026)

Tax Foundation's 2026 Index shows Oregon has fallen further in corporate tax competitiveness than any other state since 2020. CNBC ranked Oregon 39th for business, down from top 20.

_This baseline means any further disconnection operates on a firm base already statistically 'on the margin' for relocation._

**Portland Combined Top Marginal Rate**: 14.69% (2nd highest in US)

State 9.9% + Preschool for All 3.0% + Metro Supportive Housing 1.0% + other local. Only exceeded by New York City. Portland's top brackets trigger at $125K vs NYC at $25M.

_Washington state has 0% personal income tax (7% capital gains tax above $262K, QSBS exempt). A founder in Portland versus Vancouver faces a roughly 14.69% differential on income._

### Migration Pressure

These signals show Oregon is already losing income and higher earners before adding a QSBS-specific tax shock.

**Annual Millionaire Outflow from Oregon**: ~1,000 millionaires/yr

Oregon loses approximately 1,000 millionaires annually. IRS migration data shows Oregon losing about $530M in personal income per year due to outmigration.

_Average income of movers to Clark County is $105,800 versus $73,540 for those moving to Multnomah County, indicating brain drain of productive capital toward the tax-advantaged side of the river._

**Annual Personal Income Outflow**: $530 M/yr lost to outmigration (IRS data)

IRS migration data shows Oregon losing approximately $530 million in personal income annually. Average income of movers to Clark County is $105,800 versus $73,540 for those moving to Multnomah County.

_The critical insight is not just population movement but wealth-selective outflow toward the tax-advantaged side of the river._

**Portland Regional Job Performance**: -8,800 jobs (2025), 4th worst US metro

Portland lost 8,800 jobs in 2025 during a period of national expansion. Clark County, Washington employment is at 114% of 2020 levels. Portland ranked 80th of 81 cities in real estate attractiveness.

_The divergence is visible in the Portland-Vancouver corridor. Clark County accounts for 57% of regional multifamily permits, Portland 29%._

### Behavioral Response Evidence

These priors explain why a static, no-migration interpretation of the tax base is not credible.

**Star Talent Migration Elasticity**: 1.8895 (SE 0.6160; 99th percentile ATR)

Moretti & Wilson's preferred baseline specification estimates that a 1% increase in a destination state's relative after-tax income changes long-run net star-scientist flow by about 1.89%. The model applies the coefficient to Oregon's 90.1% post-policy QSBS keep rate.

_Table 2A, column 6 reports 1.8895 with a three-way-clustered standard error of 0.6160. The simulator converts those published values to a Normal(P20=1.37, P80=2.41) coefficient distribution._

**Massachusetts Surtax: Real-World Outcome**: $4.2B net AGI outflow (2023)

After Massachusetts imposed a 4% surtax on income above $1M in 2023, IRS data shows $4.2B in net AGI left the state — an 8% YoY increase. High-earners ($200K+) accounted for 70% of outflows, more than double the 2019 share. Massachusetts fell from 36th to 43rd on the Tax Foundation index.

_Direct empirical precedent for Oregon: a state added a surtax targeting high earners and immediately saw accelerated wealth-selective outmigration to zero-tax neighbors (NH, FL). Oregon's 9.9% top rate already exceeds Massachusetts' pre-surtax 5% flat rate._

**HQ Relocation Elasticity**: 16.8% increase per 1% tax hike

Chow et al. (Management Science 2022) found that a 1% increase in the corporate tax rate raises headquarters relocation probability by 16.8%. The response is asymmetric: cuts reverse less of the damage than hikes create.

_Peer-reviewed evidence with controls for economic and political factors. Oregon's 49th-place corporate tax ranking means firms are already on the margin._

### Border Arbitrage & Regional Capture

Clark County can absorb talent and firms without forcing them to leave the metro labor market, which makes local tax arbitrage unusually powerful.

**GPI vs CREDC Recruitment Pipeline**: GPI: 690 jobs realized of 13,204 potential (5.2%)

Greater Portland Inc secured 5 wins from 690 projects in 2024. CREDC (Clark County, WA) secured 9 wins, 42 total over 2021-2024, generating $1.69B in capital investment.

_The 12,514-job gap between potential and realized represents missed economic opportunity. Vancouver is capturing a disproportionate share of regional wins._

**Intra-regional Tax Sensitivity**: 10–15% activity loss per 10% relative tax hike

Meta-analyses show intra-regional taxes (Portland versus Vancouver) are more consequential than inter-regional taxes because firms do not need to abandon local labor markets or supply chains.

_WA DOR border work documents strong border elasticities. The Vancouver advantage is increasingly exploited for income-tax arbitrage by remote and hybrid workers._

**Traded-Sector Establishment Dynamics**: Metals/Machinery/Electronics: 1.00 entry/exit ratio

OSU analysis of Oregon business dynamics from 2012-2022 shows high-paying traded sectors at net stagnation while lower-multiplier sectors keep growing.

_The traded sector that brings export income and new capital into the state is stagnating, which increases the cost of losing scale-up firms and founders._

### Company Departure Signals

This is the concrete company pool and recruitment funnel that turns broad incentives into actual departures.

**Out-of-State Business Recruitment**: 24% recruited → 68% convert to exit

The IPRE study found that 24% of Oregon traded-sector businesses were actively approached by out-of-state recruiters, and 68% of those approached moved or expanded outside Oregon.

_Primary recruiting states are Washington, Texas, and California. This is a general business-climate signal, not a QSBS-only measure._

**Oregon Mid-Size Firm Pool (Dynamic)**: 319 starting firms, decaying over horizon

Oregon has 319 private firms with 500+ employees as of Q1 2025. These firms are just 0.2% of all firms but account for 28% of private employment and 33% of wages. The model tracks this pool dynamically: each year ~2.5% organic growth (new firms graduating into the 500+ class) is offset by departures, yielding net decay.

_In Washington County, 500+ employee firms represent 0.5% of firms but 35% of jobs and 45% of wages, showing how concentrated the tax base is. Organic growth rate derived from BLS Business Dynamics Statistics (Oregon establishment entry/exit data)._

**IPRE Recruitment-to-Exit Funnel**: 24% recruited × 68% convert = 16.3% joint exit probability

The simulation uses the IPRE sample sizes directly: Beta(97, 305) for recruitment and Beta(66, 32) for conversion, annualized over a 3-year trailing window and amplified by the Chow elasticity.

_This is the modeling bridge between the broad business-climate evidence and the company-departure channel in the Monte Carlo model._

### The Case For SB 1507

Understanding the proponents' strongest arguments strengthens the analysis by testing where the model's assumptions diverge from the legislative rationale.

**EITC Return on Investment**: $1.58 per $1 allocated

The EITC expansion to 14% (17% for dependents under 3) reaches 200,000+ low-income households. Lower-income cohorts have marginal propensity to consume near 1.0, creating genuine economic multiplier effects.

_The EITC argument is genuinely strong economics. The question is whether the funding source — taxing highly mobile capital — is sustainable over the projection horizon._

### Startup & Capital Formation Stress

The startup channel sits on top of an already-contracted Oregon venture market rather than a healthy baseline ecosystem.

**Oregon VC Funding Trajectory**: $2.8 B (2021) → $586 M (2024), -79%

Oregon venture funding collapsed far faster than the national slowdown. Deal sizes fell 26% while the national average rose 28%. Oregon still forms companies, but it struggles to scale them.

_Those scale-up companies are the ones most likely to be recruited by other states, which makes the startup and founder channels more fragile than a static statewide average suggests._

## Source Catalog

- [SB 1507 measure overview (OLIS)](https://olis.oregonlegislature.gov/liz/2026R1/Measures/Overview/SB1507)
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- [Oregon payroll tax facts (Paylocity)](https://www.paylocity.com/resources/tax-compliance/tax-facts/oregon/)
- [OR current tax/contribution rates](https://www.oregon.gov/employ/businesses/pages/current-tax-rate.aspx)
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- [Tax Elasticity of Capital Gains (NBER)](https://www.nber.org/system/files/working_papers/w27705/w27705.pdf)
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- [WA Dept of Revenue Border Tax Study](https://dor.wa.gov/sites/default/files/2022-02/Border%2520Issues.pdf)
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- [Portland (OR) & Vancouver (WA) Tax Comparison 2024](https://www.greaterportlandinc.com/media/userfiles/subsite_214/files/OR%20%26%20WA%20Tax%20Comparison%202024.pdf)
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49. Ballard Spahr LLP. 'Oregon Would Tax Oregonians on All Gain from the Sale of QSBS Under Proposed Bill.' February 2026. [https://www.ballardspahr.com/insights/alerts-and-articles/2026/02/oregon-would-tax-oregonians-on-all-gain-from-the-sale-of-qsbs-under-proposed-bill](https://www.ballardspahr.com/insights/alerts-and-articles/2026/02/oregon-would-tax-oregonians-on-all-gain-from-the-sale-of-qsbs-under-proposed-bill)
50. Oregon Department of Revenue Research Section. Oregon Personal Income Tax Statistics: Characteristics of Taxpayers, 2026 Edition, Tax Year 2024. Exhibit 20. [https://www.oregon.gov/dor/programs/gov-research/Documents/TY%202024%20Oregon%20Personal%20Income%20Tax%20Statistics%20Report-UA-Secured%20.pdf](https://www.oregon.gov/dor/programs/gov-research/Documents/TY%202024%20Oregon%20Personal%20Income%20Tax%20Statistics%20Report-UA-Secured%20.pdf)
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52. Institute on Taxation and Economic Policy. 'Expanded QSBS in Trump Tax Law Threatens State Revenues, Enriches the Wealthy.' October 2025 (updated January 2026). Appendices A.1, A.2, and B. [https://itep.org/qsbs-trump-tax-law-threatens-state-revenues-enriches-wealthy/](https://itep.org/qsbs-trump-tax-law-threatens-state-revenues-enriches-wealthy/)
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56. Congressional Research Service. R41364: Capital Gains Taxes: An Overview (behavioral response coefficients). [https://www.congress.gov/crs_external_products/R/PDF/R41364/R41364.10.pdf](https://www.congress.gov/crs_external_products/R/PDF/R41364/R41364.10.pdf)