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How tax laws disadvantage Black Americans but subsidize white Americans

Tax returns are calculated based on income, but a new book highlights how the tax code disproportionately impacts people of color. Dorothy Brown, professor at Emory University School of Law and author of “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans and How We Can Fix It” joins Hari Sreenivasan to discuss.

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  • Hari Sreenivasan:

    Tomorrow is the deadline for filing federal income taxes. And while the tax code determines who pays and how much based on income, a new book is highlighting how it also disproportionately impacts people of color.

    I recently spoke with Dorothy Brown, professor at Emory University School of Law and author of: "The Whiteness of Wealth: How the Tax System Impoverishes Black Americans and How We Can Fix It."

    Miss Brown, as we head into tax filing day, you wrote an entire book based on all the things that you uncovered when you started to go through your parents' taxes and how really the system is designed unequally. How did it start?

  • Dorothy A. Brown:

    Well, it starts with a tax system that we wouldn't even know there's this racially disparate impact because the IRS doesn't collect and publish statistics by race. So I became a detective of sorts and looked for research, looked for other disciplines to basically show how tax law subsidizes white Americans while disadvantaging black Americans when we engage in the same activities.

  • Hari Sreenivasan:

    For example, marriage. How is it different by race?

  • Dorothy A. Brown:

    White Americans are more likely to have one single wage earner with the other spouse staying at home. Black Americans are more likely to have two equal wage earners contributing roughly the same amount. Tax law gives the single wage earning household a tax cut. But the other household, with two full time workers contributing equal amounts, they don't get a tax cut. And for decades they paid higher taxes. Called the marriage penalty.

  • Hari Sreenivasan:

    One of the largest sources of wealth in America has been the ability to own real estate and profit from it. But you say that that breaks down differently when it comes to Black Americans and white Americans.

  • Dorothy A. Brown:

    The majority of white Americans own homes. The majority of Black Americans are renters. We don't allow a tax break to rent, but we allow a tax break for homeownership. White Americans own homes in predominantly white neighborhoods. Black Americans own homes in racially diverse or all Black neighborhoods. Most homeownership appreciation is in the all white neighborhood. We have a tax break for appreciation on our homes. If we sell our homes for a loss, no tax break. And what the research shows is Black homeowners are more likely to sell their home for a nondeductible loss.

  • Hari Sreenivasan:

    Somebody is going to look at this and say, you know what? These are just market forces. Right? But you're saying that property taxes are also so connected to how school districts are funded.

  • Dorothy A. Brown:

    Black and brown neighborhoods may have high tax rates, but because the value of the property is so low, they're not able to spend as much money on K-12. But the real problem is the federal government is subsidizing this racist market. They disadvantage us when we buy homes through tax policy.

  • Hari Sreenivasan:

    What kinds of policies should we be thinking about to try to level the playing field?

  • Dorothy A. Brown:

    We should think about a system that is a lot fairer and a lot simpler, which is all income is taxed the same income from stock, it's taxed the same as income from wages. And we should get rid of these deductions and loopholes that disproportionately benefit white Americans.

  • Hari Sreenivasan:

    Is there any kind of bipartisan consensus on any sorts of policy prescriptions as you start looking at the ways that people are kind of harmed by unequal taxation?

  • Dorothy A. Brown:

    You know, the question of bipartisanship in 2021 is a bigger conversation than we can have here. But I will go back to the Simpson-Bowles, which was a bipartisan tax report that basically my proposal builds on that. Simpson-Bowles said, let's get rid of these deductions and loopholes. We can lower tax rates. So in a world where there was real bipartisanship, my ideas would resonate across party lines. But we're not there anymore.

  • Hari Sreenivasan:

    Dorothy Brown, professor of law at Emory University, and the title of the book is called "The Whiteness of Wealth How the Tax System Impoverishes Black Americans and How We Can Fix It." Thanks so much.

  • Dorothy A. Brown:

    Thank you.

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