PolicyRacial Equity

America’s tax system must work for everyone

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Photo by Rajiv Perera on Unsplash

“Taxation without representation is tyranny” is a famous quote delivered in 1761 by James Otis, a Massachusetts political activist in the early days of the American Revolution. Otis’ disillusionment with the tax system was not only rooted in feeling unheard and unseen by leaders in a far-off land, but in unequal treatment. This inequity impacted the lives of those in his community and took away their freedom.

Today, for families and communities experiencing persistent poverty and economic hardship, living on the margins of power, and whose voices are not heard in debates over the inequities in the tax code, the feelings of disillusionment and oppression are profound. 

Tax systems have important consequences for racial equity and ensuring all Americans have access to shared prosperity through investments in quality education, health, child care, economic security and affordable housing. Historically, though, the tax system in this country has not worked for everyone, particularly communities of color.  In fact, our tax system has been an instrument of racism and discrimination. 

Many significant and foundational tax policies can be traced back to the Jim Crow era, according to research conducted by the Tax Policy Center. As a consequence, federal, state and local tax systems have long favored White Americans, effectively reinforcing and creating a significant racial wealth gap where the median White household has at least ten times the wealth of the median Black household. In communities throughout the country, taxes have also been used to restrict the rights and access of children and families to quality public programs, services and even voting. 

As noted by tax policy research organizations, such as the Institute for Taxation and Economic Policy and Center on Budget and Policy Priorities, our tax system needs reform to level the playing field, provide adequate revenues for programs that support thriving communities and target relief for families in need. Programs like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are two such initiatives that have a proven track record of success. Through temporary enhancements to these programs enacted through the American Rescue Plan Act (ARPA), millions of children and low-income workers were pulled out of deep poverty. 

Despite the success of these reforms and the opportunities found in other anti-racist tax policy changes, Congress has yet to act – even as individuals and families continue to struggle to recover from the pandemic. Communities have been calling on lawmakers to learn the lessons of our history and listen to their appeals to perform the needed and revolutionary act of writing a new, more equitable chapter for our country’s future.

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