Race and Class Matters in Tax Policy

Abstract

The Earned Income Tax Credit (EITC) which is available only to low-income workers, is headed for extinction or at least the end of the EITC as we know it. Recently we were informed that 1.6 million low-income taxpayers had their tax refunds frozen over the last five years, although the vast majority did nothing wrong. Low-income taxpayers are far more likely to be audited than their high income counterparts. In fact, since 1998 over $1 billion has been spent auditing low-income taxpayers. This Essay shows that the EITC is headed for extinction because the EITC has a welfare taint. The EITC first received a welfare taint during the Clinton Administration and it has continued during the Bush Administration. In order to reverse the trend, EITC taxpayers will have to be painted in a more sympathetic or deserving light. This Essay suggests that the truth actually will help here, given that the racial analysis of the EITC shows that the vast majority of EITC taxpayers are white. Because scholars have ignored the race and class effects of the EITC, they offer no solution to improve the plight of low-income taxpayers. Building upon Professor Derrick Bell's interest-convergence thesis, I predict that if the race and class information can be properly packaged, the EITC's elimination can be prevented.