Paul L. Caron

Saturday, February 8, 2020

Racial Disparities In The Tax Code

Tax Policy Center, Racial Disparities and the Income Tax System:

The Internal Revenue Service does not ask for a tax filer’s race or ethnicity on tax forms, but that does not mean the tax system affects people of different races in the same way.

Overall, federal income taxes are progressive: people with higher incomes pay a larger share of their income in taxes than those with lower incomes, and this can help close racial income gaps.

But some tax policies can also exacerbate income and wealth inequalities stemming from long-standing discrimination in areas such as housing, education, and employment.

Using the individual income tax Form 1040 as a guide, we explore how the federal income tax code interacts with existing racial inequities.

Washington Post op-ed:  Tax Code Isn’t Neutral on Race, Researchers Find, by Michelle Singletary:

Follow the lines of the IRS Form 1040, and a picture emerges of an America divided economically by race and ethnicity.

Although high-income Americans pay a larger share of their income in taxes, they nonetheless have a significant financial advantage over African Americans, Hispanics and low-income families, according to a newly released analysis by the nonpartisan Tax Policy Center.

Researchers for the center took a line-by-line look at the 1040 form for individuals in an effort to answer this question: Is the tax code neutral on race?

It’s not.

There’s definitely a bias that exacerbates income and wealth inequalities, says Kim Rueben, Sol Price fellow at the Tax Policy Center

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