Racial Equity and the Tax System
Journalists shouldn’t shy away from reporting on the tax system. There are stories to be told.

5 takeaways:

Report on regulations. Regulations are critical to understanding how the tax system is being enforced, said Chye-Ching Huang, executive director of the Tax Law Center at NYU Law. Regulation determines what the tax law means and establishes what people can or can’t do on their tax returns. In any given year, hundreds of regulations are proposed or finalized and these can be as important as changes in the laws themselves, she added.

Pay attention to audits. They’re how people “experience what’s written in the law,” Huang said. Since 2010, the IRS’s funding has been “More disproportionately, the cuts have fallen on compliance activity, and that’s had really uneven impacts and practice,” explained Huang. Audit rates for big corporations have been sliced by nearly half, and the rates for high-income filers have been cut by over 40%, Huang said. For low-income filers, audits have declined “far less dramatically” because they’re cheaper for the IRS to perform. “The top 10 most audited counties are highly concentrated in rural counties and the deep South, where the populations are predominantly Black,” Huang said. “So it’s really a story of who’s benefiting from those resource cuts the most.”

Taxation both reflects and creates racial inequities. The tax system doesn’t directly or explicitly cause effects based on race, but it affects consumption, income, wealth and other types of economic factors that are themselves shaped by generations of discriminatory taxation policies and provisions, Huang said. If journalists want to look for trends in their community, they can check the Congressional Research Service listings. CRS collects tax expenditures and lists every provision that offers a tax break for a certain activity or industry, Huang said. It also it describes each tax break.

Some tax effects aren’t being spotlighted. Reporters can change this. Regulatory processes and litigation are underexamined, Huang said.A lot of the regulatory implementation of the 2017 Tax Law with hundreds of billions of taxes having differential impacts and particularly in the corporate space, was really not looked at in the way that it could be,” she explained. While the IRS does not keep racial data, journalists can investigate the effects of different tax breaks on white communities and communities of color. Stories could help demonstrate the need for the U.S. Department of the Treasury to track certain tax-related data systematically, Huang said.

Think beyond the federal government to find resources on taxation stories. Some policy resources to consider: Racial justice organizations, think tanks, congressional caucuses, tax advocacy networks, accountants, sociologists and historians. If you are seeking financial or tax information for a large, public company, visit sec.gov and look up the company’s 10-K filings. Paying attention to lobbying disclosures; learning who is lobbying on which tax issues may provide insights into a company’s interests, Huang said.

Speaker:

Chye-Ching Huang, Executive Director, Tax Law Center, NYU Law

This program was funded by Arnold Ventures. NPF is solely responsible for the content.

Chye-Ching Huang
Executive Director, Tax Law Center, NYU Law
Racial Equity and the Tax System
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