BURLINGTON, IA – AUGUST 07: Democratic presidential candidate and former US Vice President Joe … [+]
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Steven Dean, professor at Brooklyn Law School, recently stated in his article “A Plea to President Biden to Stop Perpetuating Racist Tax Policy” that the failure to address racist national and international tax policies, as well as the differences among the black-majority countries among countries blacklisted and tax havens like Ireland and Switzerland that would prevent the fulfillment of President Biden’s promises to rid our country of systemic racism.
Dorothy A. Brown, a law professor at Emory University, delved into the inner side of the tragedy Dean highlighted by examining how the effects of real estate redlining continues to degrade housing values in non-white communities.
In “The Value of Your Home Is Based on Racism” she explains that these neighborhoods “tend to have the highest market values” because they are desirable because “white families prefer to live in predominantly white neighborhoods with very few or no black neighbors Life”. for most Americans.
This makes it harder for blacks to take advantage of the $ 500,000 tax-free revaluations provided by the tax law when selling their homes.
Where you live determines not only your future expectations, but also how susceptible you are to IRS audits. The tax office, which seeks the honor of the courts on the basis of expertise, appears to be looking for people with no tax knowledge in order to increase its audit rates.
California’s suburbs from a drone’s perspective.
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Many of the most vetted places in the country are predominantly black communities. Kim M. Bloomquist, senior economist in the IRS Research Department for two decades, published a study in Tax Notes in March 2019 that concluded that 79 percent of the population in the top 10 most audited counties in 2017 did not know (almost all Blacks or African Americans) are sent to the US Census Bureau. ”
The benefits of land ownership have long been withheld from blacks. Since so many benefits are related to preferential tax treatment of capital gains on real estate, that fact has made it difficult for blacks to access, as Brown in her book The Whiteness of Wealth: How the Tax System Impoverishes Black Americans – And. explains how we can fix it.
The accumulation of investment income is more difficult for them after generations without property rights and knowledge. Brown explains that “Blacks enslaved as ‘property’ could not receive education and could not be paid for their work. Property couldn’t marry. Property could not own property. ”
Given this history, it is virtually impossible for black communities to catch up. Tax laws ensure that old money grows faster than new money. Asset transfers receive tax-free increases and exemptions. It takes money to make money.
US law advises that capital is superior to labor and that working as an employee is stupid. Even payroll taxes are completely eliminated at $ 142,800.
Thus, about a third of federal revenue is collected only on workers, excluding many wealthier taxpayers.
The racial disparities in business ownership, such as only 1.3% of total American sales that black businesses can claim, limit the availability of related tax benefits such as preferential interest on capital gains and the 20% pass-through allowance under Section 199A.
IRS Commissioner Charles Rettig said his agency would work with Congress to investigate how tax laws further aggravate racial disparities.
Internal Revenue Service Commissioner Charles P. Rettig testifies before the Finance Senate … [+]
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But how committed is Biden to acting on the IRS’s findings? Tax enforcement practices in the Treasury Department and its agencies are deeply rooted in decades of policy and regulation that penalize communities that have been prevented from owning property or accessing the appreciation of their assets.
Unsurprisingly, the IRS audits communities with fewer resources, as tax laws clearly favor those with more.
As the executive leader, Biden can work with the Treasury Department to make important progress on its pledges to rid our nation of systemic racism by considering the efforts of Dean and Brown, the roots of the suppression of blacks’ financial success in that nation to tackle.
Improving laws and enforcement policies, particularly through thoughtful and targeted efforts to close the tax gap, could go a long way in combating systemic racism.
As for the legislative proposals now being debated on the hill, we need to see if Biden can build enough support in Congress to keep geography, race and resources from preventing the IRS from focusing on those who are the least benefit from tax laws.