Proposals: modify tax codes to fight economic inequalities

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By David Pendered

The search for tools to address economic injustices led two Atlanta-based researchers to propose changes to federal and state tax changes.

Dorothy Brown

“The racial wealth gap will never be closed without meaningful tax reform,” Dorothy Brown, law professor and author at Emory University, said at the start of her remarks during a webinar hosted by the president of the Atlanta Fed, Raphael Bostic.

“[T]ax policy decisions at the state level have played a unique role in helping to enrich white Georgians and corporate interests, while imposing an unequal burden on black Georgians and people of color, ”writes Danny Kanso, analyst Fiscal and Fiscal Policy Principal at the Georgia Budget and Policy Institute. in the introduction to its new report.

The two reports are independent of each other and have been published separately.

Brown spoke on October 20 as the featured panelist for the ninth edition of the Federal Reserve’s series, “Racism and the Economy.” Kanso presented his report on October 8 at the GBPI Fall Policy Forum.

Brown said his recommendations for reform are detailed in his recently published book, “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans and How We Can Fix It”. Penguin Random House Publishing released the book on March 23.

Danny kanso

One proposal is a refundable wealth tax credit. The proposed program would be based on household wealth, not income – thus providing a disproportionate share of aid to black households, which are widely documented to have far fewer financial assets than white households.

Brown gave a brief description of the proposal.

“A refundable wealth tax credit is different from the labor income tax credit in that it is measured by household wealth, while the labor income tax credit is based on the income, ”Brown said. “While the income tax credit is extremely complicated, a wealth tax credit would be extremely easy to implement.

Kanso cited Georgia’s sales tax as one of his recommended changes to promote tax fairness, which he discusses in “Reimagining Revenue: How Georgia’s Tax Code Contributes to Racial and Economic Inequality”.

Sales taxes, such as those on meals prepared at a Brookhaven restaurant, have a disproportionate impact on low-income households, according to GBPI. (Photo by David Pendered)

The inequalities stem in part from the state’s decision not to impose sales taxes on services. Whites tend to consume more services than blacks, such as legal, medical, and accounting services. The sales tax on goods also affects blacks and whites, but is not fair because it takes a greater proportion of household income from black households than from white households.

Georgians in the poorest 20 percent of household income pay 6.8 percent of their total income in sales tax. In the richest 20% of households, sales taxes represent 1% of their total income, Kanso reports.

Kanso observed that the state is forecasting a sales tax recovery of $ 6.6 billion in the fiscal year ending June 30, 2022. An estimated $ 8.9 billion in potential recovery from the sales tax are exempt due to the lack of sales tax on most services.

Bostic noted the relevance of history and the role of institutions in the current economic situation that disadvantages some and benefits others. In his concluding remarks, Bostic noted:

  • “Institutions matter and details of institutions matter. As we reflect on how we move forward, we’ll need to go into specifics. Small things can make a big difference.


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