Tax Policy Could Have Ended Slavery
A 2016 study from the Institute of Policy Studies showed if average black family wealth continues to grow at the same pace it has over the past three decades, it would take black families 228 years to amass the same amount of wealth that white families have today. That’s just 17 years shorter than the 245-year span of slavery in this country.
One of the reasons the racial wealth gap prevails is because American tax law benefits those who are already wealthy, and does little to assist the social mobility of African-Americans. This function of the tax law is not new.
During slavery, it was no secret that taxes had the power to destroy the institution of slavery, and bring down the southern economy. Slaveholders always had economic anxiety about who decided how to impose taxes because the priority of southern slaveholders was slavery. In an essay titled Tax Aversion and the Legacy of Slavery, Robin L. Einhorn, author of American Taxation, American Slavery, describes the way in which anxiety over taxes impacted the south:
Slaveholders worried that nonslaveholders would try to abolish the institution of slavery by imposing prohibitive taxes on slaves. Thus, at the Virginia convention that debated the ratification of the U.S. Constitution in 1788, Patrick Henry worried about a federal slave tax hefty enough to “compel the Southern States to liberate their negroes.
Ten years later, another Virginian (John Taylor of Caroline) expressed the same fear: that Congress could “effect a general emancipation, by imposing upon the property thus intended to be secured [the slaves intended to be freed], an excise or duty so exorbitant as to deprive it of its value.
Tax policy could have ended slavery, but of course, that did not happen. Tax policy, in fact, continues to perpetuate the racial and wealth divide in America. But, it doesn’t have to. We can write the kind of tax policy that would narrow that divide right now if we had the political will.
In an interview, Adam Smith, author of Essays on the Relationship Between Tax Law and Racial Economic Justice: Black Tax, said, “Because African American and Latinos rely more on ordinary income than the wealthy, reducing or eliminating the tax code’s preferential treatment for capital gains income could narrow the racial wealth divide.”
Trump’s Terrible “New Deal” for Black Americans
In 2016 Donald Trump offered African-Americans a “New Deal” that would supposedly benefit black Americans. He said, “my plan to lower the business tax from 35 percent to 15 percent will bring thousands of new companies onto our shores. It also includes a massive middle-class tax cut, tax-free childcare savings accounts, and childcare tax deductions and credits.” Trump’s current tax proposal accomplishes none of this for African-Americans. In fact, it cuts benefits from Medicaid, Obamacare subsidies, and social programs.
According to Newsweek, the new tax plan penalizes lower-class underinsured Americans by ending the medical expense deduction which allows Americans to deduct qualified medical expenses that exceed 10% of their income for the year. The GOP also looks to undermine Obamacare’s expansion of Medicaid and subsidized coverage, which lowered the uninsured rate of non-elderly African Americans from nearly 19 percent to just under 12 percent by eliminating those benefits.
The poverty rate in America has dropped to 12.7 percent in 2016, but poverty for black Americans is 22 percent. Many people living in poverty rely on social programs to survive. In short, the wealth divide would grow significantly under Trump’s tax plan.
Trump’s tax plan perpetuates the history of valuing property-owning wealthy white Americans. Only 17 percent of businesses are minority owned and from 2000 to 2015, black homeownership rate dropped to roughly 41% while the homeownership rate among white Americans is about 71%, however, business owners, and homeowners stand to gain under the new proposals.
A 2017 study from the Institute of Policy Studies indicates that between 1983 and 2013, the wealth of median Black and Latino households decreased by 75% (from $6,800 to $1,700) and 50% (from $4,000 to $2,000), respectively, while median white household wealth rose by 14% (from $102,200 to $116,800).
African Americans Face a Bleak Future
The declining wealth of black households offers a bleak picture of the future. If the racial wealth divide is left unaddressed, median Black household wealth is on a path to hit zero by 2053 while median white household wealth would climb to $137,000 by 2053.
None of this is by accident. Make no mistake about it: the goal of the tax plan is to marginalize black Americans and protect white supremacy through tax law. It’s time we summoned the will to fight for racial equality through changes in our tax policy.