American tax system has structural biases that favor whites over blacks

Professor of Law .Professor of Sociology, Voice: (615) 322-6760, Fax: (615) 322-6631, Email: beverly.moran@vanderbilt.edu Office: Room 241 Research Interest(s) Tax law, Education: LL.M. New York University, J.D. University of Pennsylvania, A.B. Vassar College. Beverly Moran is a leading tax scholar whose recent scholarship includes a path-breaking analysis of the disparate impact of the federal tax code on blacks and an innovative new text on the taxation of charities and other exempt organizations. She has won a number of teaching awards and grants, including a Fulbright award and a grant from the Ford Foundation, and has been a visiting professor at the University of Colorado, the University of Asmara in Eritrea, and the University of Giessen in Germany. Professor Moran's interests also include law and development, interdisciplinary scholarship and comparative law.

We expect different taxpayers to pay different taxes but we don't expect our taxes to differ based on race. Yet, because legislators try to use taxes to improve our lives without much of a clue of the lives we lead, their good intentions create a black/white tax difference that repeats itself over many scenarios. So, how does it happen that the white bus driver who greets us in the morning pays a different tax than the black bus driver who greets us each night? It has to do with the different ways that blacks and whites live in America. Consider: Blacks are less likely to marry than whites. When blacks do marry, they are more likely to have both husband and wife work. But, when white spouses both work, they out-earn their black counterparts. Finally, blacks are more likely to die before or shortly after retirement age than whites. All these facts add up to blacks receiving less from Social Security than similarly situated whites. Social Security pays separate homemaker benefits to non-working spouses equal to 50 percent of the working spouse's benefit — even though only one person pays into Social Security. Thus, single worker families get an extra benefit at no additional cost. Two working spouses each earning the Social Security maximum will receive up to 25 percent more than the homemaker couple but will pay proportionally more for that benefit as well. The working couple with a spouse earning less than the Social Security maximum is even worse off because they pay for a benefit that they could have received for free if one spouse had stayed home. Worst off is the taxpayer who dies before receiving any benefits. Home ownership has a number of well known income tax benefits. The long history of private and government action excluding blacks from the housing market translates into all of these benefits being less accessible to blacks than to whites of the same income, marital status, education and other significant factors.

A long history of slavery and government wealth transfers to whites has led to a black/white wealth gap much larger than the black/white income gap. Exclusion for wealth appreciation in all assets until sale, exclusions for pension earnings, the limited and disappearing gift and estate tax, all benefit whites more than blacks because whites hold so much more wealth than blacks. Even on the state and local levels, taxes that appear completely race-neutral have race effects such as underfunding education in minority school districts.

It is not surprising that seemingly neutral laws have hidden race impacts when statutes are constructed based on vague ideas that are essentially inaccurate for everyone and are particularly off the mark for and to the detriment of black families. As we continue the presidential election season, we should consider instituting a race expenditure budget along the lines of the tax expenditure budget produced each year in order to track the cost of deductions, exclusions and other tax benefits.

If legislators had better information about the race impact of their tax decisions, America would have a fairer tax code.

Beverly Moran is professor of law and of sociology at Vanderbilt University.

From, VUCast: Vanderbilt University's News Network This op-ed originally ran in The Tennessean Media contact: Jennifer Johnson, (615) 322-NEWS jennifer.johnston@vanderbilt.edu