A report released Thursday by Our Oregon details how the Schedule E tax break, approved as part of the 2013 grand bargain, disproportionately benefits the wealthiest Oregonians and makes our tax system more regressive. The tax break applies to some kinds of “pass through” business income that are taxed as part of business owners’ personal income taxes.
Among the report’s findings:
- About 70% of the top 1% of income filers report Schedule E income.
- In the bottom 60% of filers, less than one in 10 file a Schedule E.
- The top 1% claims 59% of Schedule E income; 83% goes to the top 5%.
Legislators are considering ending the controversial tax break, which was approved as part of the failed legislative compromise in 2013. Companion bills in the compromise were rejected by the Oregon Supreme Court in 2015, but the schedule E tax break has remained intact.
With deep cuts to schools and services looming this session, ending the runaway tax break should be a no-brainer. The only potential roadblock? A majority of Oregon legislators may be eligible for the tax break — based on 2017 Statements of Economic Interests, 79% of Republicans and 50% of Democrats appear to be eligible for the Schedule E tax break.