Race and Tax Law

Abstract

This chapter examines how federal income tax policy impacts Americans differently depending on their race. Whites and Blacks are differentially eligible for tax breaks and differentially situated to exploit loopholes created by a majority White Congress that enacts tax legislation with the experiences of White taxpayers in mind. The chapter focuses on three tax policy issues: the criteria that identify which income is subject to taxation and which is not, the types of taxable income that are eligible for the preferential (low) tax rate, and the types of expenses that are deductible. The analysis reveals that even though the tax provisions relating to these three issues are formally race-neutral, they systematically benefit White but not Black taxpayers. The chapter then provides the example of tax subsidies for home ownership to show how seemingly race-neutral provisions operate to advantage White taxpayers and disadvantage Black taxpayers.