Inequality and the Economy

Moore v. United States, already a cause for concern for tax lawyers, could create more barriers for racial equity advocates working to reverse the economic plight of many households of color.

As one of the most prosperous countries in human history, we have enough resources for our collective needs. By better taxing corporations and the wealthiest, we can generate revenue to improve family security, strengthen our communities, and reduce the debt too.

The "Fair Tax" bill would impose a 30 percent federal sales tax on everything we buy – groceries, cars, homes, health care - and lead to a giant tax shift from the well-off to everyone else.

Billionaires can afford to pay a larger share of their income in taxes than teachers, nurses and firefighters. But our tax code often allows them to pay less, as demonstrated by the latest expose from reporters at ProPublica using IRS data.    According to their calculations, Betsy DeVos, the Education Secretary under former President Donald Trump, […]

President Biden should elevate his tax and revenue proposals which remain essential if we are to pay for environmental restoration, health priorities and peacekeeping, the front-burner items that may dominate the speech.

Currently, millennials of color are worse off than their parents when it comes to wealth expectations. So, if one of the goals of federal policymakers is to reduce racial income and wealth disparities, the proposals outlined are a good start. Tax reforms included in the budget package making its way through Congress would help by boosting incomes and making raising children more affordable—two things that would help millennials of color thrive in today’s economy.

The Census has changed the way it asks questions in the past and can choose to do so again in the future. As the Biden administration makes data a central part of its plan to achieve greater racial equity, it has an opportunity to implement research-backed changes that will improve our understanding of race and ethnicity in the United States, and in turn, our ability to draw meaningful conclusions about how our tax laws impact tax filers of different races.

Congress has a historic opportunity to fix the way the preferential treatment of investment income widens the racial wealth gap and to strive toward a racially equitable tax code.

The racial wealth and income gaps are the results of centuries of government policies favoring the accumulation of wealth among white communities while marginalizing communities of color. Policy solutions that are race-forward, meaning they remedy past and ongoing racial inequities, can also address broader social inequities.

To pave the way for a more racially equitable future, states must move away from poorly designed, regressive policies that solidify the vast inequalities that exist today.

Members of Congress frequently claim they want to make it easier for working people to scrape together enough savings to have some financial security in retirement. But lawmakers’ preferred method to (ostensibly) achieve this goal is through tax breaks that have allowed the tech mogul Peter Thiel to avoid taxes on $5 billion. This is just one of the eye-popping revelations in the latest expose from ProPublica.

As the Biden administration maps out the next steps in America’s response to the coronavirus pandemic—through what is now being called the American Families Plan—it should make sure a proposed expansion of the Child Tax Credit (CTC) includes undocumented children who have largely been left out of federal relief packages this past year. Prior to 2017 Tax Cut and Jobs Act, all children regardless of their immigration status received the credit as long as their parents met the income eligibility requirements. This change essentially excluded around 1 million children and their families.

A previous ITEP analysis showed the lopsided distribution of SALT cap repeal by income level. The vast majority of families would not benefit financially from repeal and most of the tax cuts would flow to families with incomes above $200,000. This report builds on that work by using a mix of tax return and survey data within our microsimulation tax model to estimate the distribution of SALT cap repeal across race and ethnicity. It shows that repealing the SALT cap would be the latest in a long string of inequitable policies that have conspired to create the vast racial income…

In this paper, we describe a tax policy idea that would simplify the proposals President Biden presented during his campaign to raise personal income taxes for those with annual incomes greater than $400,000. Our proposal would replace the cap on state and local tax (SALT) deductions with a broader limit on tax breaks for the rich that would raise more revenue than the personal income tax hikes that Biden proposed during his campaign. Our proposal would also achieve Biden’s goals of setting the top rate at 39.6 percent and raising taxes only on those with income exceeding $400,000.

When communities thrive, so do corporations. But when profitable corporations build their empires by exploiting the tax code, it is workers, the environment and our communities—not CEOs or shareholders—that are harmed. Amazon posted its highest U.S. profit ever for 2020, an unprecedented year defined by a pandemic. Yet the company sheltered more than half its profits from corporate taxes—legally. While the company may be one of the most recognizable tax avoiders, it's not an outlier.

With the onslaught of news about billionaire wealth soaring while low- and moderate-income families have trouble making ends meet, a federal wealth tax makes good economic and fiscal sense—and the public supports it. One poll found that 64 percent of respondents favor the idea, including a majority of Republicans.

While the moneyed elite were dangling shiny objects, scapegoating Black and brown people, denigrating immigrants, and financing studies to convince us that poor people are the problem, they were concurrently securing policies that cut taxes primarily for the rich and profitable corporations, deregulated industry, weakened unions and attacked voting rights. This and more allowed the rich to amass even more wealth and power.

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.

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.

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.

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.

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.

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.

The 2017 Tax Cuts and Jobs Act may as well have been called the Promise for Austerity Later Act.

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.