On Taxes, Race Matters

December 23, 2010

Ninety-seven percent of Americans got the muddy end of the stick in the lopsided tax bill President Obama signed into law in December. Of that 97 percent, people of color will suffer the most.

When it comes to tax policy, the national conversation typically fails to account for race as a factor. So, although the progressive tax movement suffered a setback in the Obama-GOP tax deal, the debate offered reason for hope in the coming two-year battle over the estate tax and top-tier Bush tax cuts.

The Congressional Black Caucus stepped up to express its overwhelming distaste for the tax deal. In doing so, those legislators have signaled their awareness of the connection between tax breaks for the super-rich and the economic backsliding of African American communities. CBC member Rep. Jesse Jackson, Jr. likened President Obama's tax plan to Reaganomics:

"I'm worried that the deal President Obama cut with Republicans sets us up for a Reagan-style set of bad choices…That was President Reagan's strategy: a 'starve the beast' plan of lowered taxes and increased military spending that would force Congress to make deep cuts in programs for the most vulnerable."

The CBC wasn't alone in their outrage. A group of Black church leaders, representing 50,000 congregations, loudly denounced the tax deal. Reverend W. Franklyn Richardson, chairman of the Conference of National Black Churches, wrote:

"Based on our prophetic responsibility to speak to those in power on behalf of the poor, underserved, and vulnerable, we find it utterly shameful that those who insisted that the deficit be reduced, now celebrate billions of dollars being added to the deficit as tax cuts for the wealthy."

Latinos are also among those to feel the scald of poor tax policy. Oscar Chacón, Executive Director of the National Alliance of Latin American and Carribean Communities (NALACC), explains the insecurities Latinos, like African Americans, face in the Obama-GOP tax deal:

"The continuation of the Bush tax cuts for the richest 2% in this time of crisis is an utterly irresponsible act. With the incoming Congress, it is foreseeable that the significant increase in federal debt generated by this "compromise" will be used as a leading argument to enact cutbacks in key social programs that will inevitably have a disproportional negative impact on Latino and Latin American immigrant communities in the U.S."

In the short-term, a worrisome finding in the Obama-GOP tax plan is that the poorest Americans would experience a slight tax increase due to the replacement of the President's "Make Work Pay" tax credit with a temporary 2 percent cut to the payroll tax. Workers of color are strongly represented in the lowest tax brackets, and would therefore carry a disproportionate amount of the weight of that tax hike.

The payroll tax cut itself is like whiskey in a Red Bull can. Measures that cut holes in safety net programs–as this cut threatens to do with Social Security–are dangerous for the working class and people of color, who are more likely to rely on those programs than white Americans. If the payroll tax cut now is used as a reason to cut benefits later, the overall economic impact will be more contractionary than stimulative.

In determining which way is forward, we must constantly consider the type of society in which we want to live. At the most basic level, many of us want the same things, regardless of race or ethnicity: meaningful work that adequately provides basic needs for ourselves and our families, time and the means for recreation and others with which to enjoy it.

We first have to realize that when our communities as a whole do well, we as individuals are more likely to do well. Then it's up to us to create the circumstances that make that possible by fighting for policies that provide opportunity to the most vulnerable populations.

It starts with you and I. We get informed, we take action and we pay it forward to as many others as possible.

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