Disparities continue to exist in the U.S. tax system that unfairly benefits whites over blacks, according to Beverly Moran, professor of law and professor of sociology at Vanderbilt University.
“We expect different tax payers to pay different taxes but we don’t expect our taxes to differ based on race,” Moran said. “Yet, because legislators try to use taxes to improve our lives without much of a clue of the lives we led, their good intentions create a black/white tax difference that repeats itself over many scenarios.”
Moran, a leading tax scholar, said lawmakers often make changes in tax law without consideration for the economic and social situations of families of different races.
For example, blacks are less likely to marry than whites, and when they do marry, it is more likely they will both work. But the Social Security system is set up to reward households with one high-earning spouse. Social Security pays separate homemaker benefits to non-working spouses equal to 50 percent of the working spouse’s benefit, so those families receive an extra benefit at no additional cost, Moran said.
Black families more commonly have two working spouses, and if each earns the Social Security maximum, they will receive up to 25 percent more benefits than the homemaker couple, but they pay more for the benefit, she said. Adding to the imbalance is the fact that when both spouses work in a white family, they are likely to out-earn their black counterparts.
Blacks also are more likely to die shortly before or right after retirement, so they are more likely not to benefit from a system they have paid into their whole lives, she said.
Whites also are more likely than blacks to own homes, making the benefits of home ownership less accessible to black than whites of similar income, marital status and education, Moran said.
“A long history of slavery and government wealth transfers to whites has lead to a black/white wealth gap much larger than the black/white income gap,” Moran said. “Exclusion for wealth appreciation in all assets until sale, exclusions for pension earnings, the limited and disappearing gift and estate tax, all benefit whites more than blacks because whites hold so much more wealth than blacks. Even on the state and local level, taxes that appear completely race neutral have race effects such as underfunding education in minority school districts.”
Because of these and other disparities, Moran urges lawmakers to enact legislation that would more closely track the cost to families of deductions, exclusions and other tax benefits. She said that better information would lead to improvements in the tax code that might result in fairer regulation for all.
“It is not surprising that seemingly neutral laws have hidden race impacts when statutes are constructed based on vague ideas that are essentially inaccurate for everyone and are particularly off the mark for and to the detriment of black families,” Moran said. “As we continue the presidential election season, we should consider instituting a race expenditure budget along the lines of the tax expenditure budget produced each year in order to track the cost of deductions, exclusions and other tax benefits. If legislators had better information about the race impact of their tax decisions, America would have a fairer tax code.”
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Media Contact: Jennifer Johnston, (615) 322-NEWS
Jennifer.johnston@vanderbilt.edu