Are Tax Codes Race-Neutral? The Tax Foundation of Black Families in the Context of Race Disparity in the Internal Revenue Code
There is no requirement to identify your race when filling out your federal income tax return. The US tax code doesn’t have specific racial group provisions. Yet just because the tax code is considered race blind does not mean it’s race neutral.
On average, a Black married couple is more likely to have children than their white counterparts, researchers have found. According to the Tax Foundation, taxpayers with children face larger penalties. White people have more income disparity than Black people and their incomes are likely to be the same. Both of those factors contribute to the likelihood of more “marriage penalties.”
The research has provided empirical evidence about the work done by legal scholars in raising the possibility of racial disparity in the tax code.
The TPC Study of racial inequality in the U.S. Taxpayer’s Choice (TPC): Penalties and Implications
Penalties are more likely when there are two people in a couple. When two spouses make the same amount of money, they are higher. Penalties are also more likely when a couple has children.
“Taken together, Black couples in this income group paid, on average, a net penalty of $358. White couples in this income group received, on average, a net bonus of $61,” the report noted.
The TPC study comes after the US Treasury released details on how to impute race and ethnicity on to tax data — an effort made in response to an executive order from President Joe Biden directing government agencies to better measure and advance racial equity.
One option might be to let married couples file as unmarried individuals, they said — although that would “make the tax code less progressive and open new opportunities for tax avoidance.”
There is still a lot to learn about the impact tax policies have on racial equity and how different races can be healed. We may be in the second baseman. There is so much work to be done.”
The report, released this month, is part of a growing body of research into whether institutions and policies reinforce preexisting racial disparities, Gale said.
“There’s a broader question about whether institutions and rules and customs that are blind with respect to race are actually neutral with respect to race, or if they reinforce preexisting disparities.”
A study found that black taxpayers are audited at a higher rate by the IRS compared to other demographic groups.
The Role of Race in Taxes and the Social Welfare of the Low-Income Population, as Revealed by H.S. Zamolodchikov
The first step in making change is “establishing a new set of facts, a new narrative about this. The old story was that taxes and race have nothing to do with each other.
“I think a race-in-tax analysis is a way towards everybody understanding that there’s a really small group of people who benefit and the rest of us are being disadvantaged in a variety of different ways,” she said.