Trump’s tax-cut scam will only deepen racism and inequality
The six-month anniversary of the Tax Cut and Jobs Act passed last week with little fanfare. Despite Republicans’ dishonest spin, most Americans recognize that President Trump’s crowning legislative achievement was a plutocratic heist that will do nothing to help working people. Greedy corporations have used their windfalls to reward chief executives and stockholders, while workers’ wages have actually declined. Barely a third of Americans now support the law.
Yet the racial implications of Trump’s tax scam have been radically underreported and remain poorly understood. While fair tax reform could reduce the impact of structural racism in the economy, the law that Republicans passed in December will make it much worse.
That’s the conclusion of an important new report from economists Darrick Hamilton and Michael Linden of the Roosevelt Institute (where I serve on the board). As the institute has documented, the U.S. economy is shaped by informal rules that create disparities that harm people of color in virtually every part of society. Many of these “hidden rules of race” can be found in the federal 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,” they write. “The sum total effect of the Trump tax law is likely to further increase the economic disparities, particularly with regards to wealth, between white Americans and communities of color.”
Start with the obvious fact that it disproportionately benefits corporations and the rich. This will clearly lead to greater economic inequality in general, but it will also exacerbate the racial wealth gap, because the wealthiest Americans are overwhelmingly white. As the Roosevelt report notes, median net worth among white households is about 1,200 percent larger than it is among their black counterparts. Any tax policy skewed toward the wealthy, then, is also racially skewed against people of color.
Furthermore, while the richest Americans reap the benefits of the law, many workers at the bottom of the income ladder, where people of color are overrepresented, will actually see an overall tax increase over time. That means the law effectively raids black and brown Americans’ paychecks to fatten the investment accounts of the largely white financial elite.