Racialized Tax Inequity: Wealth, Racism, and The U.S. System of Taxation
15 Northwestern Journal of Law and Social Policy 265
41 Pages Posted: 27 Aug 2019 Last revised: 9 Jun 2020
Date Written: August 25, 2019
As a whole, the U.S. tax system (federal, state and local) since 1980 has served more and more to increase racialized wealth inequality. The tax system is today operating to entrench the system of advantage based on race that centuries of racial exploitation and unequal access to wealth created. As the future face of the nation becomes less White, the U.S. tax system as a whole and the anti-tax rhetoric that has fueled its shift from progressive to regressive are driving economic inequality and racial inequity. More deeply, the tax system is inhibiting broad-scale public investment in the primary resource of the future: human capital.
This article presents a timely perspective of big-picture trends in federal and state taxation over the past 40 years — both a long-term sociological view (the why) of the historical racialization of wealth and a critical tax view (the how) of the shift from taxes on wealth to taxes on income to taxes on consumption. This shift from greater to less progressivity in taxes disproportionately benefits Whites while disproportionately burdening Blacks and other People of Color. Instead of focusing on the equity of a particular deduction or preferential tax rate, we view taxes holistically and systemically, with a focus on state and local taxes that is typically not addressed in critical tax literature. Before systematic changes can be made to tax systems to combat wealth inequality, an acknowledgement of the racialization of wealth inequality is a fundamental first step.
Keywords: wealth inequality, racism, federal taxation, state and local taxation
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