U.S. Tax Systems Need Anti-Racist Restructuring

Abstract

#BlackTaxpayersMatter

The world has witnessed the brutal suffocation of George Floyd on a concrete sidewalk in Minneapolis. While this is but one more example of centuries of relentless violence against Black people, many are hoping that this tragic death might be a catalyst for meaningful change. Around the world, rallies, marches, and vigils have filled public spaces to call out institutional racism and demand systemic change. The rage, despair, exhaustion, and frustration with targeted discrimination has not only permeated cities and streets, but racism is being condemned at kitchen tables, by businesses, in social media, and from groups as sweeping as Sesame Street, KPop fans, and NASCAR. People across the globe are raising their voices and insisting that something be done to stop the routine ruin of Black lives.

Many are looking to Black leaders in every discipline, including finance, economics, and tax, and asking what they can do to help. And Black leaders — once again, after centuries of explaining, exposing, discussing, writing, speaking, preaching, demanding, and demonstrating that American institutions are implicitly and explicitly discriminatory and must fundamentally change — are providing thoughtful, cogent answers. They rise to the challenge again and again, hoping that this horrific racist episode will be different from countless previous episodes. They call for a transcendent time of tangible change. However, they are rightfully saying that this is not their burden to bear, and that those with the privileged status of race, income, wealth, and platforms must step up, move forward, and finally do something. We have heard from many of our Black and brown colleagues that they are “sick and tired of being sick and tired.”

As writers, we understand the power of words. But it is also true that actions speak louder than words. As Maya Angelou said so poetically, “When someone shows you who they are, believe them the first time.” (Emphasis added.) What can we as tax professionals, scholars, and advocates do to show our commitment to racial justice?

First, we must recognize that tax injustice is economic injustice, which leads directly to income and wealth inequality; pervasive poverty; and the compromised health, welfare, and safety of communities of color. The immorally high and persistent 32 percent rate of poverty for Black children and the 380 percent higher death rate of Black individuals from COVID-19 as compared with their white counterparts are real-world problems that can be remedied. However, real remedies will require all hands on deck, because these issues are long-standing systemic harms created and perpetuated by federal, state, and local institutions over the last 400 years.

This article will help you think more critically about these issues. It discusses the racist history of U.S. tax systems, prescribes anti-racist action items, and provides a wealth of referenced readable resources.

Keywords: racism, progressive, regressive, anti-racist, earned income tax credit, state & local tax systems, Jim Crow, red-lining, child tax credit, unauthorized workers, #BlackTaxpayersMatter, wealth tax, capital gains tax

JEL Classification: K34, H2, H21, H22, H24