Tax policy plays a role in the fight for economic and racial justice. The type of tax and how it is structured matters. A new report issued by the Institute for Taxation and Economic Policy (ITEP), Taxes and Racial Equity , explains how historical and contemporary policy choices have resulted in tax codes that maintain or worsen racial and economic inequities. The report provides policy solutions to advance racial and economic justice.
Nationally, white households are more likely than other race or ethnic groups to be among each states’ top earners. While 69 percent of households nationwide are white, they comprise 79 percent of top earners (defined as the top 20 percent of earners, or those earning over $114,000 in 2019). In most states the balance of the households, which are disproportionately people of color, pay a higher percentage of their income in taxes than do top earners. But it doesn’t necessarily have to be that way. As the report shows, a state’s tax structure can be designed to use a mix of taxes so that taxpayers at all income levels pay nearly the same percentage of their income in taxes. Read more