Dear John,

The rich get richer, the poor get poorer, and the tax code guarantees the status quo will continue to benefit the richest Americans. Meanwhile, the racial wealth gap built into our tax system gets wider and deeper.

When all income is included, billionaires pay an average income tax of just 8.2% -- far less than the 22% paid by many middle-income families.

The wealth gap between the net worth of Black families and white families exists at every level of income and education, with white families holding 13 times as much wealth. This is the difference between the Black family average net worth of $11,000 and the white family average of $141,900.

Adding to the injustice, Black families are audited by the IRS 3-5 times more often than non-Black families. This is partly because audits of families with smaller incomes are simpler and require less time and effort on the part of the auditors.

So while lower-income families struggle to make ends meet, the ultra-wealthy see ever-higher returns on their investments, enabling them to stockpile their wealth at the expense of everyone else. Billions in potential tax revenues are pocketed by those with the biggest pockets, perpetuating racial inequities in the distribution of wealth and income.

Tell the House and Senate: It’s time to combat the racial wealth gap, and make our tax code more equitable for everyone.

A new report by Americans for Tax Fairness and Color of Change highlights some changes that could be made to the tax code that would help reduce the racial wealth gap:

1. Tax investment income at the same rates as work income. As President Biden has said, “Reward work, not wealth.”

2. Assess wealthy families’ capital gains annually, instead of only when and if an investment is sold. This will capture value that has, until now, been hidden.

3. Allow a tax credit or larger standard deduction for charitable contributions by families under a certain income threshold.

4. Increase deductions such as mortgage interest, college savings, and retirement to benefit those with lower-value homes and smaller savings.

5. Let the pass-through deduction expire, that currently benefits hedge funds and big business, to free up resources for small businesses and entrepreneurs.

6. Pass the Billionaire Minimum Income Tax to ensure the ultra-wealthy pay taxes on their wealth gains every year.

Taken together, these reforms could yield as much as $500 billion in the next ten years to be invested in the common good, including affordable housing, health care, education, and small business opportunities.

Our thriving economy shouldn’t thrive only for the top 1%. The wealthiest of us benefit enormously from our economic system that has enabled the building of wealth over generations. It’s time for the top 1% to pay in their fair share, returning more of the benefits to the workers and helping to address the historic racial wealth gap that has been built over generations.

Tell Congress: We need a more equitable tax system. Enact these changes to combat the racial wealth gap and assure that the benefits of a thriving economy are enjoyed by all Americans, not just the wealthiest.

Thank you for all you do!

Robert Reich
Inequality Media Civic Action