The federal tax code is one of the most powerful tools of economic policymaking, housing critical rules that govern our economy. As such, it is also home to a set of hidden racial rules that, through intention or neglect, provide opportunities to some communities and create barriers for others.
The Tax Cuts and Jobs Act, also known as the Trump tax law, was a substantial rewrite of the tax code. Far from addressing, fixing, or improving the hidden rules of the tax code that disadvantage people of color, the new law strengthened some of these rules and even added new ones.
In an issue brief, Roosevelt Fellows Darrick Hamilton and Michael Linden explain the four major ways that the new tax law will harm people of color: by exacerbating disparities in both income and wealth; through expected increases in local fines and fees; and from an enormous revenue loss that will undermine the public sector—and millions of black workers along with it.
Before the Trump tax law, there were myriad ways that federal tax policy could have been improved to remove the hidden and not-so-hidden barriers to economic opportunity and security for people of color embedded in the tax code. Unfortunately, the new law will deliver bigger benefits and more advantages to wealthy white households relative to households of color, while simultaneously strengthening existing racial barriers to a truly inclusive economy. Only with progressive tax policy can the hidden rules of race that shape the federal tax code, the U.S. economy, and society at large begin to be undone.