This op-ed was originally published by OtherWords
The 250th anniversary of the founding of the United States is a moment to celebrate the ideals that gave birth to this country. But the anniversary also presents an opportunity to ask a difficult question: What does it mean to honor a nation founded on equality when its tax code continues to reinforce inequality?
Tax laws are often viewed as a technical collection of rates, deductions, and credits. In reality, they are one of the most powerful tools through which the nation decides who gets economic opportunity. The tax code deserves closer scrutiny — not simply as a mechanism for raising revenue, but as a tool that has helped drive racial wealth disparities for generations.
The connection between tax policy and racial injustice goes back to the nation’s founding. The Constitution linked taxation and political representation through the Three-Fifths Compromise, embedding racial hierarchy into the country’s governing framework. Enslaved Black people generated enormous wealth for white slaveholders, fueling the country’s economic growth while receiving none of the economic benefits.
From the country’s founding to the end of the Civil War, property taxes on Black slaves were the largest source of revenue for some state governments. At the end of the Civil War, lawmakers presented Black people with an opportunity for a more equitable foundation through the passage of the 13th, 14th, and 15th amendments. Yet all too soon the promise of “40 acres and a mule” was abandoned, denying formerly enslaved Black Americans the assets necessary to build generational wealth.
American history shows that celebration and injustice can coexist. The 150th anniversary of our founding, in 1926, occurred during the cultural pinnacle of the Harlem renaissance, even as Jim Crow segregation remained firmly entrenched. Black people in the South, with much less income, kept paying just as much taxes as their white counterparts, sometimes more, and contributed substantially to white-only schools while Black schools declined.
The 20th century brought federal policies that expanded prosperity, but not equally. During the New Deal, landmark programs such as Social Security and federally backed mortgages, which were supported by tax revenue from Black households, expanded economic opportunity for millions. But many Black workers and families were excluded from accessing these programs.
As a result of these and other realities, white households hold more than five times the wealth of Black households today. Taxes generate revenue for public goods that help all communities, including Black communities. Yet the tax code does too little to close the racial wealth gap, and in many ways deepens it.
Two of the most significant federal tax laws in recent decades have moved the country in the wrong direction. The “Tax Cuts and Jobs Act” of 2017 and the “One Big, Beautiful Bill Act” of 2025 delivered disproportionate benefits to wealthy households — 80 percent of TCJA’s benefits went to white households in 2018 alone. Rather than narrowing the racial wealth gap, these laws risk entrenching it further.
The path to a more equitable tax code is neither radical nor unprecedented.
Congress could narrow the gap between tax rates on investment income and wages, as was done during President Reagan’s administration, so that wealth is not systematically taxed at lower rates than work. Lawmakers could revisit inherited wealth provisions — like the stepped-up basis rule — that allow large estates to pass between generations largely untouched. And policymakers could establish a renter credit that extends the tax code’s wealth-building benefits to the disproportionate share of Black households who rent rather than own.
These are not sweeping redistributions. They are corrections and modest steps toward a tax code that stops compounding the inequities of the past.
After 250 years, our leaders must show a commitment to completing the unfinished work of American democracy. The American tax code has spent its history widening the racial wealth gap, not closing it. But what was built can be rebuilt — and today, we the people must demand it.
