As Americans enter tax season — which the federal government has delayed for the second year in a row because of the ongoing economic impact of the pandemic — The 19th spoke to Emory University law professor Dorothy Brown, author of the new book, “The Whiteness of Wealth.” In the book, Brown argues that the U.S. tax code is rigged against Black Americans in myriad ways, from marriage to homeownership to student loan debt. Her research has attracted the attention of President Joe Biden’s administration, which has pledged to prioritize addressing systemic racial inequality across society. 

Below, in a conversation with The 19th’s editor at large, Errin Haines, Brown outlines the scope of the problem and her suggestions for overhauling the tax code as part of the solution to leveling the playing field.

This interview has been edited for length and clarity.

Errin Haines: Dr. Brown, you wrote in the book, “The precarious position of so many Black families becomes especially visible during moments of crisis.” How did that show up for Black families in the pandemic?

Dorothy Brown: We saw that there was a difference in who could stay at home and work at home, and who lost jobs and who had to go out and be essential workers but weren’t treated as essential workers. We saw that we Black people don’t have a reservoir of wealth. We’re the small business owners shut out of the loan programs disproportionately. We saw the banks having their favorite White customers move to the front of the line. We saw, in the pandemic, the disparity not just in death and sickness and hospitalization, but in who could access the government benefits.

At every turn, this pandemic has shown up in this racial divide we have in America, and all of it is hurting our pocketbook, which was already deficient before the pandemic.

We have a looming tax deadline. This is the tax season after the pandemic. What are you worried about for Black families in this tax season when we know how the pandemic affected us economically?

The stimulus payments won’t result in an increase in your taxes because it’s not considered income, but unemployment insurance could be taxed if it’s higher than $10,200 — and double that for married couples. It’s possible that that money could cost them. It’s possible that the money that they got … perhaps should not have been given and they might have to give it back. So there is a possibility that they may wind up owing taxes. I worry about that. 

What I worry about more is people who should have been getting the payments, but didn’t because let’s say they didn’t file a tax return. And people don’t necessarily file taxes if they don’t owe anything, right? There’s no law against not filing a tax return if you didn’t owe. So if you don’t file a tax return, then you’re not in the system or able to get money that you need and are eligible for. 

Your parents’ marriage and their tax returns were the catalyst for your research and for this book, but you also talk about other groups of Black folks that you learned about who are being harmed by the tax code. 

One area that jumps out to me is homeownership. When Black people own homes, we don’t get the wealth building benefit that White homeowners do because we tend to live in different neighborhoods and housing doesn’t appreciate as much in racially diverse, all-Black neighborhoods — where most Black homeowners live — the way it does in all-White neighborhoods. 

I can sell my house and, if I’m single, get a quarter million dollars of gain, tax-free. If I’m married, half a million dollars. Where is significant appreciation at home? It’s in the all-White neighborhoods that very few Black Americans live in. So the tax subsidies enable more White Americans to keep that money, whereas Black Americans are less likely to make a gain. And [Black people are] more likely to sell our home for a loss. And losses on home sales are not deductible. So tax policy advantage is how White people do homeownership, living in all-White neighborhoods, getting a lot of appreciation. 

[Then there’s] college. So 60 percent of Black students who enroll in college do not graduate; they leave with debt that they’re not going to get a better-paying job to pay off because they didn’t get the degree. And the tax code provides a very limited subsidy to student debt, up to $2,500 of interest can be deducted. So let’s say two Black college grads get married. They still are limited to only $2,500. So as a single person, I have a $2,500 limit and as a married person have a $2,500 limit. And you know two Black college grads are going to have a lot of debt.

What you see is the typical Black student debt is like $52,000. And I think it’s $20,000 or $30,000 for the typical White student. When I did the math, the White students could deduct all the interest because it was less than $2,500. But not true for the Black students. They couldn’t take all of their interest deduction because it was higher than $2,500 in the U.S. So even the $2,500 advantages White graduates with debt. 

Then you go to jobs. The best jobs come with health insurance. That’s tax free. And retirement accounts. It’s tax free. One of the things that pandemic showed is that there’s occupational segregation, there are certain jobs that heavily employ Black Americans and certain jobs that heavily employ White Americans. 

The jobs that employ White Americans tend to come with a retirement account. Even when Black Americans get a good paying job with a retirement account, they are less likely to participate. Why is that? Research shows us Black college graduates are more likely to send money home, right? Black Americans and White Americans making the same $100,000 salary — because let’s suspend disbelief and say they’re actually making the same amount — the Black person will be making less [because] a certain percentage of that [is] going to family members. And Black employees are more likely to withdraw money from their retirement account at significant tax penalty to help a family member or relative, a parent. 

You bring up all of these things that we know were institutional and systemic. We’ve got an administration that is saying that they’re going to prioritize racial equity. Your book, your research has gotten the attention of the Biden administration. Tell me about that.

I got an email from a special assistant who works for the administration, and I think it was because I’ve been consistent in complaining about the people at the Treasury Department who are over the IRS statistics. The people they have at Treasury have zero experience dealing with raising debt. So I don’t see how the Biden administration has the people necessary to get the job done. 

I’ve been vocal about this in every interview I give. I applaud the president signing the executive order, but I’m doubtful that he has the personnel in place at Treasury to get it done. 

So what’s happening now that you’ve now gotten their attention?

We had a very pleasant conversation. The response was, “I hear your concern,” and honestly, they didn’t push back. 

Do you feel encouraged that, now that they are aware of the things that you have raised, this administration will respond?

Not really, because I watched what happened with the corporate tax haven discussion this week. 

You had three recommendations at the end of this book that the federal government could do to address the inequity in the tax code. Talk about those and whether you are hopeful that this administration will take up any of those recommendations.

First, we need the IRS publishing statistics by race. Biden signed an executive order putting together a working data group for disaggregating data by race across the government, including the Treasury Department. I think if there are enough people pushing from the outside, it could happen, but it’s not a foregone conclusion.

Second is no exceptions except the living allowance. Reform would look like, all income is taxed the same and different stock is taxed the same as different labor, no preferential rate. And the only deduction for individuals would be a living allowance pegged to geography and what you need in your area.

And then the third thing: the wealth tax credit. My ideal is a reparations tax credit to compensate Black taxpayers for paying higher taxes over decades, but the Supreme Court won’t find that constitutional.

So you hear a lot of talk about taxing the wealthy. I’m coming at it from a low wealth perspective. My wealth tax credit would apply to any individual in a household with below-median wealth, and they would get  a credit that would then be used to offset their taxes. And if the credit was higher than their taxes, they get a refund. If not, they would at least lower the bill that they owed. And that would be eligible disproportionately for Black American because of the racial wealth gap. We would also be applicable for White Americans, Latinx, Asian Americans, Indigenous Americans — it would be applicable to every American who had below median wealth.

We talked about what the government can do, but you also write about what individuals can do. What is the single-most important thing a Black woman could do to outsmart this tax code in the meantime?

Find a really good stockbroker and invest in the market. I wouldn’t even say buy a house.

And what is the single most important thing that a White woman could do to address the tax code disparity?

The single best thing White allies can do is to advocate for fair tax reform, so that Black people are not paying higher taxes.