The tax law six months out: a ‘frontal assault on communities of color’


June 22, 2018

Friday, June 22 marked the six-month anniversary of President Trump signing the GOP tax bill into law.
Some of the more unsavory aspects of the bill have been well-reported: for example, the fact that it will add $1.9 trillion to the nation’s deficit over the next decade, and the fact that instead of using the savings to hire more workers, or increase their wages, corporations have announced nearly $500 billion in stock buy-backs – lining the pockets of the wealthiest Americans and increasing income disparity in our country.

But there is another unsavory byproduct of the new tax law that has not received as much attention: its harmful impact on lower-income Americans and, in particular, communities of color.

That’s the finding of Hidden Rules of Race Are Embedded in the New Tax Law, an issue brief recently released by the Roosevelt Institute. This brief found that the tax law will be harmful to communities of color by perpetuating long-standing racial disparities in both wealth and income and by undermining the funding sources for the public sector, which employs a higher percentage of African American workers than other sectors.

The paper, by Roosevelt Fellows Darrick Hamilton and Michael Linden, also explains how the reduction of the state and local tax deduction (commonly known as SALT) will pressure states and localities to rely more on fees and fines as a source of income, which the authors say amounts to a regressive tax and “will inevitably” extend the reach of the criminal justice system.

“The new tax law is a giant leap in the wrong direction,” Hamilton said. “Especially coming after nearly a decade of aggressive austerity, and following four decades in which all of the economic gains from productivity increases have gone to the elite, a tax code that continues to subsidize a persistent and pernicious racial wealth gap amounts to a front assault on communities of color. It is as though this overhaul were designed to hone in on the worst dynamics of our economy for black and brown families and make them even worse. Any policymaker that is serious about the economic uplift of communities of color will fight to repeal this tax law and enact something far more progressive.”

The ways the new tax code discriminates against people of color are subtle and, as the paper’s title suggests, hidden. For example: a single African American mom wants her 8th-grade daughter to play on her school’s basketball team. But because of budget cuts, the daughter’s school no longer employs a doctor. So the family has to look elsewhere for the required physical – and has to cover the attendant cost. Or, again due to budget cuts, city bus service is curtailed, which makes it difficult for the daughter to find transportation home after basketball practice.

Another fear of some: towns and cities will step up enforcement of traffic offenses and will issue more tickets as a means of raising needed revenue. Sound far-fetched? Remember that a number of studies – including this one – show that police officers pull over, ticket, search, and even arrest black drivers at a higher proportional rate than white drivers. If towns and cities do contrive to make up budget shortfalls through enhanced traffic enforcement, you can see who will suffer the most.

“Our economy was already rigged for the wealthy and powerful, and the new tax law has poured fuel on that fire,” said Linden, the report’s co-author. “We know that most Americans will be disadvantaged by the tax law, but communities of color will really bear the brunt. The tax code has the potential to be a constructive and powerful force to bring about a stronger, more inclusive economy. Sadly, the majority in Congress decided to use that tool instead to entrench those at the top while erecting new barriers to opportunity in specific communities. It is critical that we all understand the hidden ways in which public policies, like this new tax law, work to enhance existing inequities and protect a broken economy.”

At a recent forum held to discuss the report and its implications, Rep. Pramila Jayapal (D-WA) called the GOP tax law “a three-step dance.”

Step one, she said, was the massive transfer of wealth. Step two was exploding the deficit. And step three was cutting Medicaid, Medicare, and Social Security in order to address the deficit that the tax bill created in the first place.

“That has been their plan all along and we have seen it come along very clearly,” she said.