The Tax Code Is Not Set Up for Black Americans to Succeed

Black people are getting taxed out of the American Dream. Solving the problem will require a wholesale rethinking of America’s tax code.

The Tax Code Is Not Set Up for Black Americans to Succeed
A Tax Day protest on Wall Street on April 17, 2012. (Wikimedia Commons)

Editor’s note: The tax code—largely written by and for a small number of powerful, wealthy white men—works against women, people of color, immigrants, LGBTQ people, and families with low income.

The following is an excerpt from The Whiteness of Wealth: How the Tax System Impoverishes Black Americans—and How We Can Fix It (March 2021) by Dorothy A. Brown, law professor and tax policy expert. In it, Brown provides a groundbreaking exposé of racism in the American taxation system.

When you ask conservative scholars how to reduce the wealth gap, they typically argue: If only Black Americans acted more like white Americans, they argue, the gap would shrink. Black Americans should go to college, get a good job, work hard, get married, buy a home—and then we would have pretty much everything our white peers have. So let’s see how it would play out if every Black American could truly replicate white behavior (assuming, of course, that all of us would want to).

Do Black Americans want the marriage bonus? Great—let the husband work in the paid labor market, and let the wife stay at home. They will get a tax cut.

Do Black Americans want tax-free gains on their home sales? Then they should buy in the homogeneous white neighborhoods with high home values.

Do they want colleges’ tax-free endowments to work in their favor? They should send their children to excellent K–12 schools so they can earn admission to highly selective colleges that use their tax exemptions to provide resources for their students.

Do they want tax-free benefits like health insurance and a retirement account or an investment portfolio? Get a good job, and find a friendly stockbroker.

This advice presumes that the white way of doing things is either the only way to do them—or the best way. But as we’ve seen, following it is simply impossible: Most Black Americans can’t “act white” and receive the same rewards as a white person, even if they wanted to. What conservatives miss is the benefit comes from being white, not simply acting white.

Black Americans cannot do marriage like white Americans. Why? Because neither Black husbands nor Black wives have the same job opportunities and earning potential as their white peers, making it harder for them to support a stay-at-home spouse. (We also can’t presume that Black Americans want to do marriage like white Americans—my research showed that even in high-income households, where presumably Black wives could be stay-at-home spouses, they instead contribute significant amounts to household income. It’s possible that the precarious position of black men in the labor market is part of their motivation—but it could also be that Black Americans prefer a more egalitarian marriage, financially and otherwise.)

Black homeowners cannot do homeownership like white Americans. Why? History shows us that if all Black homeowners bought homes in all-white neighborhoods, white flight would result, driving values down. This pattern isn’t just a relic from the past either: A 2019 Newsday investigation of realtor practices on Long Island found that white homebuyers were warned of crime in racially diverse neighborhoods, while Black homebuyers were encouraged to buy in the same neighborhoods. Also, Black homeowners in virtually all-white neighborhoods cannot stop police or their neighbors—or even their children’s teachers—from racially profiling them.

Black Americans can’t replicate the white experience in college, or in the labor market, or even in the stock market. Ultimately, only a select few Black Americans can “act white” and get white rewards. It takes more work and requires racism triage at every turn.

The way the conservative policy prescription is designed means that only a few Black Americans will succeed. This won’t reduce the overall racial wealth gap, but it will help a select few Black Americans build wealth—and then, perhaps, allow conservatives to blame all the other black Americans who haven’t managed to do the same on an uneven playing field.

Still, such Black exceptionalism is seductive: It leads white Americans (and even some Black Americans) to think if one made it, then all can. The failure lies not in the system but in the individual.

A recent study shows just how wrong this narrative is.

It concluded that if Blacks had the same levels “of income, business ownership, stock ownership, and home ownership and other characteristics as whites, the wealth gap would be cut in half. However, the mean racial wealth gap would still be more than $155,000.” The authors correctly describe their results as demonstrating how “cultural and behavioral factors explain less of the racial wealth gap than structural and ownership opportunity variables.” But where they missed the mark was in their ahistorical approach.

“It has never been the case in America that we have had a race-neutral structural and policy infrastructure in which Blacks have been permitted to translate their income into wealth at the same rates as whites,” says Darrick Hamilton, Henry Cohen professor of economics and urban policy and director of the Institute for the Study of Race, Stratification and Political Economy at The New School. “Nor has it ever been the case that income itself was structurally generated in a similar fashion for Blacks as it has been for whites in America.”

Put another way: Hard work alone will never enable Black Americans to get the benefits that our white peers receive. We might be able to mimic white behavior—getting married and filing jointly, buying homes, trying to get our children into the best colleges—but we do not become white and benefit from the decades, or in some cases centuries, of opportunity that white Americans have enjoyed.

Hear more on tax code’s structural sexism and racism on the recent episode of the Ms. podcast ‘On the Issues with Michele Goodwin’: The Whiteness of Taxation: Wealth, Race and D.C. Statehood (with Brown; Maura Quint,-founder and executive director of Tax March, an organization that fights for an economy that works for everyone; and Demi Stratmon, lead organizer with 51 for 51, a grassroots coalition to make D.C. the 51st state with 51 votes in the Senate).

Listen here:

Head to “The Whiteness of Wealth” episode landing page—with background reading, a full transcript of the episode and more:

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Dorothy A. Brown is a law professor known for her work on the racial implications of federal tax policy. Brown is Asa Griggs Candler professor of law at Emory University and the author of The Whiteness of Wealth: How the Tax System Impoverishes Black Americans—and How We Can Fix It.