An Opportunity to Make US Tax Policy More Equitable

Black taxpayers…paid higher taxes because the [Internal Revenue Code] favors certain behaviors that are often closed to Black people.For nearly 30 years, Beverly Moran—currently a senior fellow at the Roosevelt Institute and professor emerita at Vanderbilt University—has written about US tax policies and how they disparately impact Black Americans.

In the 1990s, Moran partnered with fellow law professor William Whitford to study the 1986 Internal Revenue Code (IRC) to determine if it taxed Black people more harshly than their White counterparts. Moran and Whitford compared tax returns for a wide variety of people who shared the same marital status, number of children, education, geographical locations, and other factors.

The study ultimately found that Black taxpayers, who looked nearly identical to their White counterparts in terms of these demographic factors, paid higher taxes because the IRC favors certain behaviors that are often closed to Black people.

More recently, Moran found that the 2017 Tax Cuts and Jobs Act (TCJA), signed into law by former President Trump in 2017 after receiving solely Republican support in Congress, exacerbated discrimination in tax policies. Moran’s 2024 report, When Tax Policy Discriminates: The TCJA’s Impact on Black Taxpayers, describes how the TCJA permanently cut corporate tax rates and changed how the United States taxes multinational corporations. It also temporarily cut personal and income estate taxes, which primarily benefited the wealthy.

“Black people were then (and are now) less likely to receive valuable employer-provided tax benefits such as the opportunity to save for retirement tax-free, up to $50,000 of tax-free life insurance, and reimbursement for employee business expenses,” Moran wrote.

Moran also noted that tax policies often favor homeowners, but historic discrimination like redlining often prevented Black people from owning their own homes to begin with.

“In 2018, 80 percent of all TCJA benefits went to white households.”

The Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, further highlighted this, finding that the TCJA’s home mortgage interest deduction (HMID) reinforces racial disparities.

“We estimate that after the passage of the 2017 Tax Cuts and Jobs Act (TCJA), the average tax benefit of the HMID was $199 across all White families (including those who did not claim it or file a tax return) in 2019. In contrast, the benefit was, on average, $88 for Black families and $66 for Hispanic families,” wrote researchers and staff at the Tax Policy Center.

While the HMID is one of many provisions of the TCJA that were intentionally written to expire at the end of 2025, Moran worries that the TCJA also includes numerous permanent provisions that could increase income disparities and worsen race and class injustice. Moran noted that the provisions of the TCJA primarily benefit white taxpayers, particularly those who are wealthy.

“In 2018, 80 percent of all TCJA benefits went to white households. On average, white households received more than twice as many tax cuts as Black households. Wealthy white households gained $52,400 per year from TCJA, while wealthy Black households received just $19,290,” she wrote.

For Moran—and others concerned about racial disparities in tax policies—the expiration of the TCJA at the end of 2025 presents an opportunity for policymakers to consider more deeply what a more equitable tax code could look like.

“This is an opportunity to think about doing something with the tax code in the same way folks were thinking about infrastructure…the same way folks were thinking about climate with the passage of some of the landmark legislation.”

In “Black Perspectives on Tax Reform,” a discussion held via Zoom and moderated by the Roosevelt Institute’s director of special initiatives, Elizabeth Pancotti, Moran was joined by Portia Allen-Kyle, the chief advisor for Color of Change, and Jessica Fulton, the vice president of policy at the Joint Center for Political and Economic Studies as they discussed the type of changes they would like to see implemented in the tax system.

During the discussion, the panelists lifted up the Black Women Best Framework, coined by economic analyst Janelle Jones in 2019. It is the idea that if government policies place Black women at the center rather than at the margins, everyone will benefit. For example, while policies like the expanded child tax credit certainly helped lift many Black children out of poverty, they also benefited children as a whole.

Although Congress recently voted not to expand the child tax credit at the federal level, states across the country have implemented similar policies on their own.

Each of the panelists reflected on ways they would amend the current tax code to make it more equitable. Allen-Kyle noted that she would “target benefits in ways that meet Black people where they are,” while Fulton said she is interested in the idea of a wealth tax—mainly for a better understanding of what wealth looks like in this country. For Moran, making the tax code truly progressive would mean removing capital gains benefits that provide advantages to investors instead of wage workers. All the panelists agreed that changing the tax code could have ripples for decades to come.

“This is an opportunity to think about doing something with the tax code in the same way folks were thinking about infrastructure,” Allen-Kyle noted, “the same way folks were thinking about climate with the passage of some of the landmark legislation.”