Paul L. Caron

Friday, January 21, 2022

Maynard: Biden’s Gambit: Advancing Racial Equity While Relying On A Race-Neutral Tax Code

Goldburn P. Maynard Jr. (Indiana University, Kelley School of Business; Google Scholar), Biden’s Gambit: Advancing Racial Equity While Relying on a Race-Neutral Tax Code, 131 Yale L.J. Forum 656 (2022):

Yale Law Journal (2020)The American Rescue Plan Act was both a major infusion of economic aid to low-income and middle-class Americans and an opportunity for the Biden Administration to keep its promise to promote racial equity. This Essay analyzes ARPA’s major provisions to determine their potential impact on racial equity. It argues that the Biden Administration should do more to tackle racial wealth inequality and the structural issues in the tax code that allow those at the top of the income distribution to benefit disproportionately from tax subsidies. It also underscores the larger challenge of achieving racial equity in the face of courts, particularly conservative judges, that treat race-based policies designed to counteract racial inequities as discriminatory.

ARPA and the response by courts have shown us that high hurdles remain to achieving RE. This is not only a matter of one election or even getting the executive and legislative branches to pass laws. Today, many courts equate efforts to promote RE with efforts to promote racial segregation. The odds of having all three branches in perfect alignment are slim. ARPA also illustrates weaknesses in our current understanding of the Constitution as limiting the government’s ability to redress historic wrongs. The status quo limitations are so strong that it is hard to imagine any large pro-equality advancements in the foreseeable future.

At our current pace, achieving RE will be a centuries-long project. This is discouraging, but highlights the importance of continuing the fight for wealth taxation and other levies on capital. It also underscores the smallness of the tax system when tackling a problem as embedded as RE. There are many decisions, regulations, and laws that have embedded racism structurally and systematically. The tax system serves as an efficient compensator of harm, but this is not always what the victims of harm want. Instead of after-the-fact compensation for discrimination, victims of inequities often prefer to have the discrimination eliminated. That is the purpose of RE. The tax system can play an important role in promoting RE, even if it is not the leading one.

And yet, there is hope. The Biden Administration is engaging in equity efforts that do not raise constitutional issues. The Administration’s commitment to ending private prisons and eliminating discrimination in federal housing is ongoing. States, cities, and localities still have substantial abilities to distribute aid equitably under ARPA for several years. While it will take more work to accomplish, there is more momentum than ever for important RE work like ending sentencing disparities that hurt Black and Hispanic people, paying reparations for victims of slavery and segregation, and ending housing discrimination. This still leaves us with hope as none of these problems are inherent or inevitable. We can still turn them around.

Scholarship, Tax, Tax Scholarship | Permalink