- Paul Constant is a writer at Civic Ventures and co-host of the “Pitchfork Economics” podcast.
- In a recent episode, he spoke with Emory University tax law professor Dorothy A. Brown about the U.S. tax system.
- Emory says the current tax system actively benefits white Americans while disadvantaging black Americans.
It is an indisputable fact that the tax system in the United States offers many advantages to Americans with money. And it’s also an indisputable fact that overall white Americans are wealthier than other races: while only about 60% of the population is white, white Americans hold about 86% of the country’s wealth.
So with these two facts in mind, we can already conclude that the US tax code benefits white Americans over black Americans, creating racist outcomes. But in the latest episode of “Pitchfork Economics,” Dorothy A. Brown, professor of tax law at Emory University, explains how deep the gaps between black and white taxpayers really are under the current tax code.
In his book “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans – And How We Can Fix It”, Brown argued that “when black and white Americans engage in the same activity – whether it is getting married, buying a house, pay for college or try to build wealth – our tax system benefits the way white Americans engage in business and at the same time disadvantages the way black Americans engage in business. activity.”
âConventional wisdom is that when you get married you get a tax cut,â Brown offered as an example. But this tax cut only benefits families where one of the spouses is the main employee. The tax bill is even higher when both spouses work and earn exactly the same amount. Married couples who both earn around $ 50,000 a year, for example, pay a much higher tax bill than married couples where one spouse stays at home with the children and the other earns $ 100,000. per year.
Brown said: âWhat I found out was that white married couples were more likely to be in a single-earner household and eligible for the tax cut, but black married couples, regardless. their income, were more likely to be in what I call marriage – penalized households, and therefore paying higher taxes. ”
The distinction here is important: If the tax code produced outcomes that hurt black American families, our solutions would be better focused on improving outcomes. But Brown said the joint return, to continue with our example, “started in 1948, when there was a higher percentage of black married couples whose wives worked outside the home. So was benign negligence, or were they just intentional advantages in favor of white taxpayers? I think it’s the latter, which of course, requires discriminatory impact on the part of black taxpayers.
In this example, the tax code was established for the benefit of white wealth, meaning the code itself needs to be rewritten to remove its inherent racist inequalities.
Brown enjoys offering his expertise to black families looking to minimize the impact of the tax code on them. “I urge black Americans to recognize that they need to take a defensive posture,” she said.
She cautions young black buyers that because the market traditionally underestimates and surcharges black and non-white neighborhoods, “you can be poor in housing if you live in a white neighborhood, but not in a racially diverse or black neighborhood.” don’t take out home equity loans if you live in a racially diverse or black neighborhood, âshe said.
She also advises black Americans to save as much as they can and “put it in your retirement account and maximize it, or create a $ 529 child savings account for your child or a niece or nephew. “.
But black Americans shouldn’t have to work twice as hard to manage their finances in order to benefit from a similar tax rate as their white counterparts. If Brown had the final say on how to fix the tax code, his solution is elegant: “First, I would tax all income the same,” she said. “Income from shares would be taxed at the same rate as income from wages.”
âAnd I would have very few, if any, exclusions,â Brown continued. âThere would be a deduction for what I call a living allowance, which means that if you don’t earn enough from your job to have a sustainable lifestyle, the federal government will write you a check for the difference. if you earned more than that, you would pay taxes at the graduated tax rate. So there would be virtually no loopholes. ”
A tax code that accurately assesses profits and living expenses, regardless of race, is a tax code that would benefit many people currently being left behind: poor Americans, married professional couples, and, yes, black Americans. This is because fairness is not a zero sum game – subgroups of people do not need to be held in order for others to be successful. When black Americans are not prevented from participating fully in the economy, it is better for all of us.