Why Advancing Racial Equity Requires Correcting Our Broken Tax Code | Opinion
As we continue Black Philanthropy Month, a new Gallup poll has shown Americans have decreased confidence in our country’s ability to achieve racial equity in areas such as housing and employment. The results were the lowest numbers on record since Gallup began tracking this data in the 1980s. With black Americans particularly dubious about equal opportunity claims, this latest survey highlights how racial fairness is. inextricably linked to economic inequalities. If lawmakers hope to restore the confidence of the American public in equal opportunity, they must tackle issues of racial and economic justice in tandem – and a good place to start is the U.S. tax code.
Today the average white family has a net worth of $ 171,000 compared to the average black family net worth of just $ 17,150. This racial wealth gap has barely budged since over 50 years, in large part because of a key driver of our economy, the federal tax code. Basically, the tax code is designed to favor wealth over work. This continues to place black Americans at a significant disadvantage.
If the Biden administration is serious about tackling racial justice, it should prioritize bold and ambitious changes to the tax code that has long been rigged against black families.
As a biracial person, I have seen with my own eyes how the racial wealth gap has affected my family members and this country. I have been very lucky in my life and am fortunate to be the first person in my family to be able to pass on property to my children. But stories like mine are increasingly rare thanks to decades when the US government has deliberately blocked black families from opportunities for wealth creation. Whether it’s being denied FHA loans, GI Bill benefits or other banking and commercial programs, any advantage for pre-existing wealth puts black families at a disadvantage.
Today, our tax code perpetuates barriers for working black families protecting wealth and inheritances. As recent ProPublica billionaire tax return revealed, the rich and powerful are taking advantage of loopholes and pushing for special rules to avoid paying taxes. These preferences include a lower capital gains tax rate than earned income, the deferred interest loophole and the increased base that allow heirs to avoid paying taxes on the gains of a property. inherited. Put simply, if you make a living from a paycheck (as many black families do), you pay a much higher tax rate than someone who lives off the wealth of their assets or their wealth. heritage.
Even with these privileges, many wealthy people pay less tax, and do so without fear, because an underfunded and understaffed IRS does not have the resources to prey on people who can afford it. a legal challenge. Instead, the IRS targets a disproportionate share of those who claim the earned income tax credit, often Black working class Americans. How can anyone be expected to believe in the American Dream when the organization that’s supposed to catch cheaters lets them go while punishing those who struggle to make ends meet?
As someone relatively new to being rich, I have seen how easy it is to build wealth once you already have it. I had to work hard to get to where I am, but with policies like lower tax rates for wealth and a lack of enforcement for wealthy taxpayers, I know one of the many wealthy people who receive an unfair advantage designed to help the rich stay rich. The United States has made great strides towards a country where all are equal, but we are still a long way from that goal and policies like this only undermine it.
In order to close the racial wealth gap, we need to start with our tax code. We need to make sure workers and wealthy heirs pay the same tax rate, while closing loopholes and strengthening our enforcement of tax evasion. The United States has played an active role in creating the racial wealth gap and must play an active role in narrowing it.
Karen Edwards is a former media technology executive who volunteers for nonprofit media causes. She is also a member of the Patriotic Millionaires, Wealthy Americans, business leaders and investors united in their concern over the destabilizing concentration of wealth and power in America.
The opinions expressed in this article are those of the author.