Dorothy Brown on Racism in the Tax Code
A ProPublica Report published this week documents how some of the richest Americans are taking advantage of legal loopholes to avoid paying federal income taxes. As the report focused on billionaires like Jeff Bezos and Elon Musk, Dorothy Brown – originally from the South Bronx and professor of law at Emory University in Atlanta and with a master’s degree in tax law from the University of New York – challenged how history ignored the role of race. “Is there ANYTHING more racialized than wealth in America?” she tweeted.
In his new book “The whiteness of wealth”, published in March by Crown, Brown details how the modern tax code relates to racial inequality and contributes to the racial wealth gap between white and black Americans. Her book details the barriers black Americans face compared to white Americans when filing taxes, buying a home, retiring, and making other important financial decisions. And he argues that the tax system can be made fairer through three main solutions: publishing tax data by race, reverting to a progressive income tax system without exclusions, and establishing a tax credit as compensation for systemic racism. .
Brown draws on research in sociology, political science, and economics, and it includes anecdotes about black Americans in the Atlanta area who navigate the finances and the federal tax system. It also provides historical background on the modern tax code, which began in the early 1900s when the government began increasing tax collection to fund public services. The tax code did not initially disadvantage black Americans because they were not considered taxpayers, but the laws of World War II reduced tax exemptions while policies and initiatives such as the GI Bill, Federal Housing Administration home loans, and redlining excluded and deprived black Americans of their rights. , like Brown’s details.
Brown’s book focuses on the modern federal tax code, but state tax policy has also contributed to racial inequality, particularly in the South. During the period of post-Civil War reconstruction, for example, qualified majority demands to change tax policy were included in state constitutions, while license fees and infamous voting taxes targeting blacks were introduced. been created, according to an article from 2020 by Vanessa Williamson, Principal Investigator at the Tax Policy Center.
Brown’s book comes at a pivotal time, as the United States grapples with systemic racism and the realities of wealth inequality that have been exacerbated by the coronavirus pandemic. The Biden administration has taken steps to address injustices in federal tax policy. For example, the American Family Plan – a proposed federal investment of $ 1.8 trillion in education, child care and paid family leave – would raise the tax rate on the richest Americans from 37% to 39.6% and increase the tax rate on capital gains, which are now taxed at a lower rate than income earned through labor. Biden also expanded the child tax credit; Beginning in July, qualified Americans with children will receive a monthly payment for one year of up to $ 300 for each child under 6 and up to $ 250 for children aged 6 to 17.
Brown recently spoke to Elisha Brown from Facing South. (They are not related.) She discussed the Biden administration racial equity order and the Treasury Department’s lack of action thus far, how income tax credits earned at the federal and state levels could help low-income Americans, and which inspired her to write the book. The interview has been edited slightly for clarity.
Many of your examples of tax unfairness in “The Whiteness of Wealth” center around Atlanta. Tell me about the regional differences you’ve seen in your research on racism in the tax code and how the South might differ from other regions or the country as a whole.
Well, you have a significant percentage of Black Americans living in the South, so what happens in the South is going to impact a significant percentage of Black Americans. I used Atlanta families because people across the country think of Atlanta as a thriving middle class black community. I wanted to show that just because you may have a middle class job or just because you earn six figures doesn’t mean that you are not currently disadvantaged by our tax system.
What do you think would be the most effective measures that Southern states could take to tackle racial inequalities in their specific tax codes?
My book was about the federal tax system and how our tax laws benefit white Americans when they behave like black Americans, while disadvantaging black Americans. You mean state provisions, we could look at property tax, we could look at appraisals. There have been a number of articles that have shown that land assessments and the way they are done differ in black communities compared to white communities. So if a southern community wanted to do its part to work on dismantling racial wealth gaps, it could start with its own property tax assessment system.
You talk about the federal earned income tax credit in the book. Most of the states in the region covered by Facing South do not have income tax credits earned by the stateapart from Virginia, South Carolina, and Louisiana, and I believe Louisiana is the only refundable. Why are income tax credits important in reducing racial inequalities?
The income tax credit is available for low-income earners, and in many parts of the South the minimum wage is low. They have right to work laws. So what the earned income tax credit does is provide additional income to compensate for the fact that they are working full time but their income is so low that the federal government says it is not. is not acceptable. Expanding the earned income tax credit to the state level would provide additional resources to people who work full time but still cannot make ends meet.
You discuss three main tax policy solutions to help close the racial wealth gap: publishing tax data by race, reverting to a progressive income tax system without exclusion, and establishing a tax credit to combat the systemic racism. Is there one solution that you think is more important than the others, or do you think that without all three solutions we will not get any closer to closing the racial wealth gap?
I do not think that with the three solutions we will come close. But if you were to say “Dorothy, you only have one,” the one I would choose would be to publish tax statistics by race, as that would give people the information that would hopefully make them angry enough to want change them.
You also argue that under our current tax system, black people need to be defensive and strategic when choosing college, buying a home, and planning for retirement, among other major life decisions. In your opinion, are there any strategies that would particularly help black southerners navigate the tax system and inequalities?
I think my strategies are national, so yes, they would apply to the South. When thinking about where to buy a home, think about the difference in appreciation between an all-white neighborhood and a racially diverse or all-black neighborhood. Live where you want, but recognize that there will be consequences associated with any choice you make.
At the end of the book, you said that you oscillated between pessimism and optimism while writing it. Has the reaction from the public and policymakers tipped you one way or the other?
The two. I testified before Congress recently, which was essentially the second time this had happened to me, even though I have been doing research for over 20 years. The good news is that there are people on Capitol Hill who are interested. I don’t think the Treasury Department of the Biden administration is up to what it should be. This leads me to pessimism, but it is still early days. I hope that I will see more coming out of the Treasury dealing with transparency around race and taxation. I still oscillate between pessimism and optimism.
What is the Biden administration’s Treasury Department doing in terms of policy that you think could be improved?
For example, I looked at what other government agencies did in response to President Biden’s decision racial equity order. I’ve looked at the Department of Labor, I’ve watched the State Department, I’ve watched a lot of government agencies that seem to do a lot, a lot more, and the Treasury seems to just do press releases. I see the treasury as a government agency not doing what their counterpart government agencies are doing.
Going back to the beginning of your book, you explain how the late Professor Duke Jerome Culp item Calling on black lawyers to create a framework for black legal scholarships and apply it to all facets of law, including tax law, that concerns you. Besides his job, was there a particular time in your personal life when you decided to sit down and start writing “The Whiteness of Wealth”?
I would say doing my parents’ tax return and thinking something was wrong, but not understanding what it was – that combined with reading Professor Culp’s article. Reading made me say that I will write about race and taxation. When I started writing about race and taxation, I understood what was going on with my parents’ tax returns, which just encouraged me to keep going. Without reading Professor Culp’s article, I don’t know if I would ever write about race and taxation.
In chapter two, you argue that there should be tax subsidies to move to predominantly black neighborhoods – 10%, to be exact. What would you say to people who say this could potentially lead to gentrification?
What I’m ultimately arguing in the book is that there shouldn’t be any tax subsidies for homeowners, period. But if you are going to have tax subsidies for home ownership, then it should be for the disadvantaged, the people who live in [or] completely black quarters. Gentrification is a very real problem, and it exists right now and it pushes back black Americans who have been in the neighborhood for a very long time once house prices have gone up and they can’t afford to afford them anymore. property taxes. Part of me says this solution was designed to do was compensate black homeowners for being subject to market penalties. I don’t know if a tax subsidy would make white Americans suddenly want to live with a lot of black Americans when history shows they don’t care. I just don’t think a tax subsidy would be a big incentive.