Tax season is here. For the working-class Americans who qualify for refunds and benefits such as the Child Tax Credit, it’s likely a season to catch up on some bills, like rent and utilities. Maybe for a month or so, some families will be able to stock up on some extra groceries or household items.
For Black and Latino taxpayers though, another tax year has passed and the racial wealth gap and structural racism in tax policies haven’t gone anywhere.
This month, Colorado’s Fund Our Future Coalition — which includes Colorado Black Women for Political Action, Colorado Statewide Parent Coalition, NAACP and Colorado Fiscal Institute — hosted a webinar titled “How to Fix Racism in Our Tax Code. Keynote speaker Dr. Dorothy Brown is the author of The Whiteness of Wealth: How the Tax System Impoverishes Black Americans — and How We Can Fix It.
Taking the Child Tax Credit as an example of the racism embedded in the tax code, Brown points out that during a congressional debate in 1997, when the credit was initially adopted, then-Speaker of the House Newt Gingrich said that giving “an additional tax credit to low income taxpayers who pay no taxes, is welfare plain and simple.” Brown says, “politicians across the board understand that by describing a governmental program as welfare, they are racing the beneficiaries as Black while creating opposition to the program among white Americans — welfare has become a dog whistle for race.” Under the American Rescue Plan, Brown explains, the Child Tax Credit was expanded to include 65 million American children — about 90 percent of the nation’s kids. And those who benefited the most were the lowest-earning families. A study from the Center on Budget and Policy Priorities found continuing the expanded credit could lift 4.1 million of those kids out of poverty and cut the overall poverty rate by about 40 percent.
It’s hard to argue with such dramatic benefits; painting the Child Tax Credit as something that benefits Black kids, though, meant it was narrowly adopted in the first place. Another example: Tax subsidies for marriage benefit white Americans more so than Black Americans, since the former group is more likely to marry.
On his first day in office, President Joe Biden announced an Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government. This mandate states, “entrenched disparities in our laws and public policies, and in our public and private institutions, have often denied that equal opportunity to individuals and communities.” The purpose is to “face converging economic, health, and climate crises that have exposed and exacerbated inequities, while a historic movement for justice has highlighted the unbearable human costs of systemic racism.”
Of course those inequities were all made exponentially worse by COVID.
Biden’s executive order gave the head of each federal agency 200 days from Jan. 20, 2021, to conduct a review and provide a report to the Assistant to the President for Domestic Policy. This report was to “[reflect] findings that unearthed barriers to underserved communities accessing, taking advantage of, or ways that advanced equity within federal programs and opportunities.” Year two, and crickets. The IRS has yet to release data on how current tax policies affect inequality based on race and ethnicity.
Recent events, like the public murder of George Floyd, made racial justice a popular cause, but now actually fixing systemic racism no longer seems a priority for decision-makers. The full fallout to our economy from COVID has yet to be realized but, as in everything else, BIPOC folks will be the worst hit, including those who showed up on the frontlines even during a pandemic.
Tax policy has to be a priority in any plan to build back better. It’s time to hold Congress accountable to Biden’s executive order.