Giving Compass' Take:
- Tracy Gordon and Aravind Boddupalli explain that because the IRS does not collect data on race, it is difficult to identify - and therefore address - racial disparities caused by tax laws.
- How can your funding decisions help to advance racial equity?
- Read about fighting institutional racism with data.
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On his first day in office, President Biden signed an executive order acknowledging the toll of structural racism in the United States and initiating a data-driven approach to advancing racial equity. As part of this approach, a high-level Equitable Data Working Group will work to improve federal data available “to measure equity and capture the diversity of the American people.”
Critical to the membership and success of this working group is the US Treasury Department’s assistant secretary for tax policy. Although the Internal Revenue Service (IRS) does not ask about a tax filer’s race and ethnicity, tax laws still create different outcomes depending on a person’s race and ethnicity because of existing inequities in housing, wealth, education, and employment.
There is much we don’t know about how progressive federal income tax rates interact with various credits, deductions, and exemptions that distribute more than a trillion dollars in tax benefits annually. Though credits geared toward families with low to moderate incomes, such as the earned income tax credit, likely reduce racial disparities, other provisions, such as the home mortgage interest deduction, may increase them because of housing discrimination and unequal access to credit.
Like the rest of our Urban Institute colleagues, the Urban-Brookings Tax Policy Center (TPC) is focused on using rigorous data tools and analysis strategies to dismantle structural racism. TPC is refining its tools and methods to equip lawmakers with a better understanding of how race and ethnicity interact with the federal tax code so they can create more equitable policies in the future.
Read the full article about tax policy and race by Tracy Gordon and Aravind Boddupalli at Urban Institute.