OP-ED: Why Communities of Color Need the Estate Tax

October 20, 2010

By Ajamu Dillahunt & Brian Miller
Originally published in The Black Commentator, Oct. 20, 2010

Some may wonder what the federal estate tax has to do with the struggles of African-Americans and other people of color. By curbing the transfer of unlimited wealth from generation to generation, a strong estate tax is an important tool in closing the racial wealth divide and ensuring every generation, regardless of race and family background, has a fair chance at creating a decent life for themselves.

Communities of color have fought hard and made positive strides in closing the income gap, but we still have a long way to go. African-Americans now earn 62 cents for every dollar of white income. Latinos earn 68 cents. Amidst the Great Recession, the unemployment rate for African-Americans continues to hold above 15% compared to an unemployment rate of under 9% for whites. Poverty rates also vary widely.

Dismal as these numbers are, the disparities of real net wealth are even more shocking. African-Americans have only 10 cents of net wealth for every dollar of white net wealth. Latinos have 12 cents. The gap widens at the top where whites are 34 times as likely than African-Americans to have enough wealth – $3.5 million or more – to pay the federal estate tax under 2009 law. While the vast majority of whites have nowhere near enough wealth to pay the estate tax, those that do are part of a very white club.

It’s fairly clear why wealth disparities are so much greater than disparities of income. Unlike income, wealth transfers from generation to generation. As a result, when we look at wealth disparities, we’re not only looking at the injustices and inequalities of today, but we’re also looking at the injustices and inequalities of previous generations carried forward with interest.

Boarded House and Mansion

Photo h/t  Incognita Nom de Plume & wallyg via Flickr

Much of the wealth held in white communities is wealth that was accumulated over several generations, including periods of time when African-Americans were still owned as slaves, segregated under Jim Crow laws, redlined into poor neighborhoods, or otherwise denied the opportunities that whites have. Though many of these unjust structures and policies are gone, the economic inequalities they helped create are carried forward through the power of inheritance.

In struggles against oppression around the globe, people have long recognized that political liberation is only a part of the struggle. Political liberation must be accompanied by economic liberation and the correcting of past injustices. In nations across the Global South, land redistribution and nationalization were used in the years following colonial rule. When the Civil War came to an end here in America, there was a promise of 40 acres and a mule – a promise that was, of course, not kept. Many advocates continue the struggle for African American Reparations.

African-Americans are not the only communities of color suffering. Native Americans have had their land taken from them, their populations decimated, and worse. Latinos and new immigrants are driven across borders by the structural adjustment policies of the World Bank, that have enriched global corporations while creating massive poverty across Latin America and other developing nations.

Before the end of the year, Congress will be voting on whether or not to make the federal estate tax permanent, and if so, how strong it will be. A strong estate tax is essential to closing the persistent racial wealth divide. It is the only thing curbing the transfer of yesterday’s inequality to the next generation.

While a strong estate tax helps to curb the extreme wealth at the top, we must also fight to ensure that federal funds are used in a way that lifts up struggling communities, especially communities of color. Federal job creation programs should be targeted to communities hardest hit by the Great Recession. Adequate funding must be made available for foreclosure prevention programs and assistance. These are essential ingredients of a public policy program that will enable communities of color, along with working class white allies, to acquire and keep wealth.

Let us not miss the opportunity before us. Congress is coming back into session soon, and near the top of their agenda is action on the expiring Bush tax cuts and the estate tax. We should ensure that the Bush tax cuts for the wealthy are ended and that we have the strongest estate tax we can get going forward. The time to act is now.

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Ajamu Dillahunt is a board member of United for a Fair Economy (UFE) and an organizer with the North Carolina Justice Center. Brian Miller is executive director of UFE. Dillahunt and Miller are co-authors of UFE’s State of the Dream 2010 report entitled, “Drained – Jobless and Foreclosed in Communities of Color.”

 

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