IRS Commissioner Charles Rettig vowed to work with Congress to explore how the federal tax system contributes to the racial wealth gap. There are at least two ways this can happen: tax policies enacted by Congress and IRS enforcement of these policies.
Inequality and the Economy
ITEP analyzes the overall fairness of the current tax system and proposals to change it. We help lawmakers and the public decide what tax policies will create the kind of economy Americans want and examine how public policy perpetuates economic inequality. See ITEP’s most recent analysis of the total tax system Who Pays Taxes in America in 2024 and ITEP’s explainer on the need for progressive tax revenue.
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blog July 10, 2020 Adequately Funding the IRS Would Be One Small Step Toward Racial Equity in the Tax Code
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blog May 28, 2020 Trump Administration Stops Pretending to Care About the Economy with Its Capital Gains Tax Proposal
Proponents of capital gains tax breaks have always offered a weak argument that they encourage investment and thereby grow the economy. But the Trump administration is now floating a temporary capital gains tax break, which is supported by no argument at all. It would only reward investments made in the past while doing nothing to encourage new investment.
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blog May 8, 2020 Which Workers Wouldn’t Be Helped by a Payroll Tax Cut?
New data released today estimates 20.5 million jobs were lost in the month of April alone. Workers not currently receiving paychecks would be left out of any benefits provided by a payroll tax cut.
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blog March 24, 2020 COVID-19 and the Case for Race-Forward Economic Policy Prescriptions
Unconscious bias runs deep. Legislative proposals to assuage the exploding economic crisis are advancing and changing quickly, but initial GOP proposals are consistent with the nation’s long history of ostensibly race-neutral policies that are discriminatory in their outcomes.
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blog March 10, 2020 Taxes in a Time of Coronavirus
Some problems can only be solved when public officials have the resources to act. Today’s public health crisis is that kind of problem. Unfortunately, the Trump administration’s deep tax cuts leave our health infrastructure knee-capped, just when we need it most.
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blog March 2, 2020 The Latest Wildly Misleading Argument Against Taxing the Rich
Anti-tax activists’ convoluted claims that the rich pay too much in taxes broke new ground with an op-ed published last week in the Wall Street Journal. Penned by former Texas Sen. Phil Gramm and John Early, a former official of the Bureau of Labor Statistics, the piece is particularly misleading. The so-called evidence in support of their argument against raising taxes on the rich fails to correctly calculate effective tax rates.
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blog February 12, 2020 2021 Trump Budget Continues 40-Year Trickle-Down Economic Agenda
The 2017 Tax Cuts and Jobs Act may as well have been called the Promise for Austerity Later Act.
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blog January 14, 2020 White House Council of Economic Advisers Crows about Lowest-Income Americans Being Infinitesimally “Wealthier”
When the White House Council of Economic Advisors last week tweeted that the poorest 50 percent of Americans’ wealth is growing 3 times faster than the wealth of the top 1 percent, we were skeptical. As it turns out, the CEA’s tweet is a reminder that the poorest 50 percent wealth grew twice as fast during Barack Obama’s second term than it has under Trump, but to this day remains far below its pre-recession share and significantly less than what it was 30 years ago.
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blog January 13, 2020 Time to Throw Cucumbers
A basic understanding and idea of fairness is a trait we share with intelligent primates, which is precisely why more than two years ago as Congress was debating the Tax Cuts and Jobs Act, the American public disapproved of the tax bill.
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blog October 15, 2019 Emmanuel Saez and Gabriel Zucman’s New Book Reminds Us that Tax Injustice Is a Choice
Cue Emmanuel Saez and Gabriel Zucman. In their new book, The Triumph of Injustice, the economists, who already jolted the world with their shocking data on exploding income inequality and wealth inequality, tell us to stop acting like we are paralyzed when it comes to tax policy. There are answers and solutions. And in about 200 surprisingly readable pages, they provide them.
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blog October 2, 2019 How a Federal Wealth Tax Can Help the Economy
A New York Times article explained that proponents of a federal wealth tax hope to address exploding inequality but then went on to list the fears of billionaires and economic policymakers, finding that “the idea of redistributing wealth by targeting billionaires is stirring fierce debates at the highest ranks of academia and business, with opponents arguing it would cripple economic growth, sap the motivation of entrepreneurs who aspire to be multimillionaires and set off a search for loopholes.” A wealth tax will not damage our economy and instead would likely improve it. Here’s why.
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blog September 27, 2019 The Nation’s Income Inequality Challenge Explained in Charts
Income inequality has reached its highest level since the U.S. Census Bureau began tracking the measure more than 50 years ago, according to recent data. While recent Census data show modest increases in median household income and average hourly wages—numbers anti-tax politicians and pundits have used to deny rising inequality—a deeper look at some of the latest numbers reveals a decades-long trend of widening economic inequality.
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blog September 10, 2019 How Tax Policy Can Help Mitigate Poverty, Address Income Inequality
Analysts at the Institute on Taxation and Economic Policy have produced multiple recent briefs and reports that provide insight on how current and proposed tax policies affect family economic security and income inequality.
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blog August 28, 2019 Updated Estimates from ITEP: Trump Tax Law Still Benefits the Rich No Matter How You Look at It
President Trump’s allies in Congress continue to defend their 2017 tax law in misleading ways. Just last week, Republicans on the House Ways and Means Committee stated that most “of the tax overhaul went into the pockets of working families and Main Street businesses who need it most, not Wall Street.” ITEP’s most recent analysis estimates that in 2020 the richest 5 percent of taxpayers will receive $145 billion in tax cuts, or half the law’s benefits to U.S. taxpayers.
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blog August 2, 2019 Opportunity Zones Have Nothing to Do with Reparations, Except …
Among other things, this blog highlights how federal, state and local policies systematically work to reinforce the racial wealth gap by, for example, using the tax code to redistribute the nation’s wealth to billionaire developers and keeping low-income people of color in a perpetual cycle of debt through fines and fees to fund local governments. Opportunity zones and the top-heavy 2017 tax law are emblematic of a long history of policymaking that advantages wealthy white families.
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blog May 17, 2019 Bootstraps Remain an Ineffective Tool for Combatting Poverty
Policymakers and the public widely agree that economic inequality is the social policy problem of our age. It threatens the livelihoods of millions of children and adults, and it even threatens our democracy. Although some say Americans could fix it themselves by simply rolling up their sleeves, as a sub-headline in a March U.S. News and World Report column implied, the reality is different.
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report April 12, 2019 The Case For Progressive Revenue Policies
Income inequality is a national challenge. And inadequate federal revenue is a challenge that the nation will eventually have to reckon with. This chart book makes a strong case for why federal lawmakers should seriously consider progressive revenue-raising options.
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blog January 30, 2019 Why We Should Talk about Progressive Taxes Despite Billionaires’ Objections
It was the tone-deaf remark heard ‘round the world. Last week on CNBC’s Squawk Box, Commerce Secretary Wilbur Ross suggested that furloughed government employees who hadn’t been paid in a… -
blog September 12, 2018 Observations from Census Data on Poverty and Income
Today’s poverty and income data show that income continues to concentrate at the top; in fact, the top 20 percent continue to capture 51.5 percent of income. Meanwhile, average income for the poorest 20 percent of households is less today than it was 18 years ago.
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blog August 15, 2018 1964: Unconditional War on Poverty; 2018: Unconditional War on the Poor
During his first State of the Union address in January 1964, Lyndon Baines Johnson declared a War on Poverty in response to a national poverty rate of more than 19… -
blog June 27, 2018 Rigging the System and Poor Shaming (Rightly) Are Incompatible Political Strategies
The absurdity of blaming poor and moderate-income people for their circumstances is close to running its course as an effective political tool, particularly as some elected officials more boldly assert… -
blog February 20, 2018 Why We’re Not Eternally Grateful for $1,000 Crumbs
Two narratives that intentionally obscure who benefits from the tax law are emerging. One focuses on the personal income tax cuts that will result in an increase in net take-home pay for many employees once their employers adjust withholding. Anecdotes abound of working people getting a $100 or more increase, after taxes, per paycheck, but the reality is that most workers will receive a lot less than that. Meanwhile, the wealthiest 1 percent of households will receive an average annual tax break of $55,000, an amount that nearly eclipses the nation’s median household income.
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blog December 4, 2017 They Can’t Help Themselves: GOP Leaders Reveal True Intent Behind Tax Overhaul
The hand-written scrawls in the margins of the hastily written 500-page Senate tax bill had barely dried when lawmakers began to reveal the true motivation behind their rush to fundamentally overhaul the nation’s tax code.
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blog November 14, 2017 The Bottom 40 Percent Has Grown Poorer, So Why Are Tax Cut Plans Focused on the Rich and Corporations?
The bottom line is that the rich and corporations are doing fine. We don’t need legislative solutions that fix non-existent problems. Only in a world of alternative facts does the top 0.2 percent of estates need to be exempt from the estate tax, for example.
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blog September 14, 2017 Census Data Reveal Modest Gains for Working People; GOP Tax Overhaul Could Reverse These Gains
On the surface, census poverty and income data released Tuesday reveal the nation’s economic conditions are improving for working families. The federal poverty rate declined for the second consecutive year…