“We’ve got a lot more progress to go” on fixing racial disparities caused by the tax system
“We’ve got a lot more progress to go” on fixing racial disparities caused by the tax system
When Dorothy Brown got her master’s degree in tax law, she started doing her parents’ tax returns for them. Her income was similar to what the two of them earned together, and she was surprised at how much they, as a married couple, were paying the Internal Revenue Service.
“The IRS does not collect or publish statistics by race,” Brown told “Marketplace” host Kai Ryssdal during a 2021 interview. “So we will never know if the tax law has a disparate impact based on race if we wait for the IRS because they don’t give us the data. So I became a detective of sorts, and I would read anything I can get my hands on that would be a good proxy for taxable income.”
Her 2021 book, “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans — And How We Can Fix It,” documents her research on the topic of race and taxes.
Last month, Ryssdal followed up with Brown for the first time since the book’s release. Since then, the law professor has moved from Emory University to Georgetown University, and she was appointed to the Treasury Advisory Committee on Racial Equity, which came out of President Joe Biden’s 2021 executive order. The following is an edited transcript of their conversation.
Kai Ryssdal: Your book came out, you know, twoish-something years ago. It is, to get the plug in here, “The Whiteness of Wealth — How the Tax System Impoverishes Black Americans and How We Can Fix It.” Here’s my question: Have we made strides in fixing it since your book came out? I mean, it did kind of bring this topic of race and taxes into the mainstream.
Dorothy Brown: I think it did. I think we’ve made some progress, and I think we’ve got a lot more progress to go. But one of the things I’ve been gratified with seeing is how my research has encouraged other academics to do research in, for example, the tax enforcement area. So my book talks about that, how the tax law is applied to everyday Americans. But I don’t really look at how the IRS decides to audit people. And other people have done that. Actually, a study at Stanford did that and showed that Black taxpayers who file for the earned income tax credit are three to five times more likely to be audited than non-Black taxpayers. So that’s an extension of my research that gets me excited. Not that Black taxpayers are more likely to be audited, but that we know about it. And we can work on fixing it.
Ryssdal: I want to get to the enforcement part and that study and the data behind it in a second. But I do want to, just at the top here because I think it’s a significant thing for you, talk about your side hustle at the Treasury Department.
Brown: Yeah, so surprising to me. They asked me to apply to be on the 25-member body, which is the Treasury Advisory Committee on Racial Equity. And I applied and I was appointed. It’s a two-year appointment, we’re just finishing up our first year. And we have made recommendations to the Treasury secretary on racial equity matters that Treasury should be focused on. And I think Treasury has not really had a racial equity lens in that institution, and I think Treasury is used to doing what Treasury wants to do. So it’s been slow going in terms of making recommendations but not really seeing either follow through or significant progress made.
Ryssdal: I’ll get to the slow-going thing in a second, the bureaucracy that I’m sure you’re dealing with now for the first time, but let me ask you this. You are now, after years, decades of researching and writing and studying about tax policy and race, you’re now in the room where it happens. And I guess what’s it like in that room?
Brown: You know, it’s fascinating to be in the room where it happens. It’s fascinating to have people other than me talking about race and tax. It’s like, “Oh, finally.” So you know, that’s the good news. But what you realize is, all the goodwill that I bring to the table and others bring to the table doesn’t necessarily result in policy changes or policy reform. So being in the room where it happens is step one. But for things to happen, they have to happen when I’m not in the room because I’m not the Treasury secretary, right? So we have to, you know, think about those people in those rooms that are pretty insular and are away from the public eye.
Ryssdal: So give me a couple of for instances on those things that you think have to happen to get us to racial equity in the domestic economy, which is the charge of this committee.
Brown: Right. So one of the things that has to happen is the Treasury has to decide that racial equity is going to be a central focus in whatever they do. So every spring, they put out the Greenbook, and the Greenbook is a publication that basically puts forth the president’s agenda. One of our first recommendations was for the Greenbook to have a racial equity lens and that various proposals should be discussed in the context of the racial demographics of who this is going to affect. And we have not seen much progress at all. And I don’t see that coming out of Treasury. Or at least I haven’t seen the willingness for this to come out of Treasury.
Ryssdal: So look, I don’t know if you could get President [Joe] Biden on the phone. Maybe, I don’t know. But you could definitely get Secretary [Janet] Yellen on the phone. And I guess my question is, what would you tell her about the work you’re trying to do in this committee?
Brown: Well, Secretary Yellen attends our meetings. Secretary Yellen is briefed on what it is we do, and honestly, I don’t see Secretary Yellen embracing this as something that’s important and a priority. So she’s in the room. She hears the recommendations, she hears them from us, you know, in real time, and then she gets a briefing book afterwards. I don’t get the sense that the secretary has told all of the staff that this is a priority.
Ryssdal: What do you make of that?
Brown: I make of it that this, to some extent, is a check-the-box exercise. It’s been frustrating and disappointing that there’s all of this work, there are 25 of us, we all have day jobs, we have other things to do. And we have President Biden’s racial equity executive order that basically said, data across the board should be publicly available on racial demographic grounds. And Treasury is one of the worst in terms of not doing that, right? When we think about race and tax, we think about the IRS that, for I don’t know how long, has said, “Oh, we can’t possibly be disadvantaging people by race because we don’t collect race on the tax return.” And then we have this study that says, you may not collect race on the tax return, but somehow you have managed to target Black earned income tax credit claimants, like, with a heat-seeking missile of overauditing.
Ryssdal: So let me let me stop you there because it’s important to what we’re talking about. The IRS audits earned income tax credit filers more than others, and earned income tax credit filers are disproportionately Black or people of color, right? And that’s how they wind up targeting Black Americans.
Brown: Actually, no. What the study showed is they compared all EITC filers. They looked at all earned income tax credit filers, and they were able to show that Black earned income tax credit filers were three to five times more likely to be audited than non-Black.
Ryssdal: That’s even worse than I described.
Brown: Yes! Yes, Kai. It’s worse.
Ryssdal: So you and I have been talking for six years now. We had you on in 2017. And we had you on during George Floyd and we had you on when your book came out. But the point is, we don’t really know each other. If we pass each other on the street, we wouldn’t know to say hello. But I get the sense that you are a woman who is first of all, obviously driven and obsessed with this as your field of study, which is why you’ve had the success you’ve had. But you are positive and relentless. And I guess, my question is, what does it do to you that you now have the ear of the highest people in government, and it does not seem to be working?
Brown: What it does to me, because you actually do know me, Kai, because “relentless” is the word I would use to describe me. So what it means is, being in the room where it happens isn’t enough. That there are levers outside of the building that need to be pressed so that, for example, the White House understands that Treasury didn’t seem to get the memo, at least in my opinion, right? And what I’m seeing is the racial equity work is not getting prioritized.
Ryssdal: It always amuses me when I prep to chat with you that, and I think you said this in our first conversation, you got into tax policy and tax law because you wanted to get away from race.
Brown: Yes. And I’ve never been more wrong. Yes, yes. Because I deal with racism on the regular. I grew up in the South Bronx, I’m a Black woman academic, I deal with racism all the time. So it’s like, well, you know, when I wanted to be a lawyer, let me deal with something that has nothing to do with race. And I picked tax law. And, you know, I’m glad I did because now I can see that race has everything to do with tax. And I think I was uniquely suited to go down the rabbit hole of race and tax. And when I look at who else has done it, it hasn’t been done, really. So I think as a Black woman going into tax law, I was in a unique position when I read this article that just asked the question, well, how do you know if there’s a race and tax problem if you don’t look, right? I could imagine other tax scholars reading that line and just, like, saying: Nothing there. Let me keep moving. So I think it was important that I went into tax law because taxes are everywhere, as I tell my students, and to understand the levers of power, you need to understand tax law. And I think it’s important to bring this racial equity lens to tax law and to have someone like me who just isn’t going to give up. So, you know, my appointment on the advisory committee ends next year, and my work will continue when I’m no longer on that committee.
We reached out to Treasury for comment and received a list of their equity priorities and initiatives. A spokesperson pointed us to these efforts:
- Creation of the first counselor for racial equity and first Equity Hub
- Treasury Department investments in Black communities
- Treasury Department investments in Latino communities and the government’s implementation of small business programs to help Latino-owned businesses grow
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