5 takeaways:
➀ Systemic racism permeates the tax code, home ownership system and rules that govern wealth-building in America. That’s the assessment of Dorothy Brown, author of “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans–and How We Can Fix It.” White homeowners generally live in homogenous white neighborhoods, Black homeowners overwhelmingly live in all-Black or racially diverse neighborhoods, and home appreciation is tied to the race of the neighbors, explained Brown, an Emory University law professor. “If you have too many Black neighbors, the value of the property in that neighborhood decreases,” she said. “And the research actually quantifies it: When more than 10% of your neighbors are Black, you lose about 16% of your home value. And as the percentage of Black neighbors increases, the percentage of home value you lose also increases.” Black Americans are also hit harder than white ones by the federal “marriage tax,” which favors families in which one spouse earns most of the income while the other stays home or earns little. Black families tend to have both spouses working, she said.
➁ Journalists have not been attuned to racial disparities in the way wealth is accumulated, inherited and taxed. “Business and tax reporters are not good on race,” Brown said. “They’ve never had to be, and they don’t have a skillset and they don’t have the humility, quite honestly, to get better at it. So a lot of the wealth conversation is done in class terms.” While 78% of Blacks are not poor, Blacks are a disproportionate share of the poor population, and the system for accumulating wealth — through real estate appreciation, capital gains and so on — favors whites, she said. “The reality is we have white Jeff Bezoses because the system for building wealth in America has always been white,” she said. “… White Americans at the beginning had wealth based on the value of enslaved black people, so we’ve always had it.”
➂ The IRS does not keep statistics on race, but U.S. Census and real estate data can be used to report on inequities. Sociologists have also done detailed studies of housing patterns that can be mined to complement incomplete data sets. Nationwide, Black Americans are more likely to pay higher taxes than white Americans on property of the same value, she said. The Employee Benefit Research Institute offers data on retirement and other benefits, including which workers tend not to get them, Brown said. Brown also used U.S. Department of Education statistics on college loans. County assessors’ offices can be a good source for property tax data.
➃ Property value and appraisal disparities make for good stories when paired with interviews about homeowners’ lives. “It’s something that reporters could really sink their teeth into because taxes can be dull,” Brown said. Her book uses Atlanta families to illustrate the broader trends. “Showing how the tax law operates in a person’s life resonates and people get it,” she said. “Just talking about this tax-free gain doesn’t.” An Indiana story about a Black homeowner whose home was appraised at a remarkably low rate – until she removed family photos and other racial identifiers and asked a white friend to pretend he owned the home – drew national attention. The appraised value of the home jumped by $100,000. “That story could be written anywhere,” Brown said.
➄ Racial inequities are baked into the real estate market and then magnified by tax policy that favors appreciation of property over wage income. Whether a homeowner is white or Black, homes in racially diverse neighborhood do not appreciate as fast as in all-white neighborhoods — but property appreciation is how most families build wealth and pass it on to their children. “I’m not pushing integration,” Brown said. “I’m pushing for the fact that we all should be able to live where we want to live and not have to pay a financial price. … We have to figure out a way that the rate of return in a Black neighborhood is the same as the rate of return in a white neighborhood. But until that happens, I want Black homeowners to be able to live where they want to live.”
Speaker: Dorothy Brown, Asa Griggs Candler Professor of Law Emory University School of Law; Author, “The Whiteness of Wealth: How the Tax System Impoverishes Black Americans — and How We Can Fix It”
This program was funded by the Evelyn Y. Davis Foundation. NPF is solely responsible for the content.
