The Discriminative Effect of Taxes

Abstract

How can we reduce gender and racial discrimination? One way relies on the "invisible hand"; another recognizes that people in the marketplace have racial preferences, and therefore that we need anti-discrimination laws in order to decrease discrimination. The surprising answer this paper proposes is that we can reduce gender and racial discrimination by reducing income and company taxes! This is because when the gains from discrimination are untaxed, a higher tax will lead to more discrimination. We will present this proposition, and then explain why it is realistic to think that gains obtained through discrimination are untaxed.

Keywords: Tax, Discrimination, Law and Economics, Gender, Race

JEL Classification: K00