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The federal tax code does not explicitly benefit one race over another. Yet historical racism and continuing racial prejudice and discrimination have helped to shape factors that determine households’ tax liability, such as their income, wealth, and consumption.
Racial barriers to economic opportunity have played a substantial role in determining today’s income and wealth distribution, in which households of color are overrepresented at the bottom of the scale while white households are heavily overrepresented at the top.
In a new paper, we highlight how racism has helped shape the tax code’s historical development in ways that continue to influence tax policy today, as in the current debate over a wealth tax and direct taxation.
As we explain, the tax-cut law enacted in 2017 widens income and racial disparities.
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