Authors Meg Wiehe Emanuel Nieves, Jeremie Greer, David Newville



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SUMMARY

Last year, Congress had a tremendous opportunity with the Tax Cuts and Jobs Act (TCJA) to help low-income and middle-class families—particularly those of color—build the wealth needed to secure their share of the American Dream. Unfortunately, by spending the majority of the $1.9 trillion within this law to provide large tax breaks for the wealthy and multi-billion-dollar corporations, Congress chose to actively invest in policies that exacerbate economic inequality rather than mitigate it.

Even worse, in designing and enacting the 2017 tax law, Congress not only choose to grow the economic gap between rich and everyone else, but also between White households and households of color, thus further perpetuating a long history of systemic racism that undergirds government policies and American society at large.

A newly released report by Prosperity Now and the Institute on Taxation and Economic Policy, Race, Wealth and Taxes: How the Tax Cuts and Jobs Act Supercharges the Racial Wealth Divide, finds that the TCJA not only adds unnecessary fuel to the growing problem of overall economic inequality, but also supercharges an already massive racial wealth divide to an alarming extent.

Using ITEP’s microsimulation model, which generates tax estimates for a sample of representative taxpayer records, this study provides the first quantitative analysis to examine the racial implications of the TCJA, and how these tax cuts reward existing White wealth at the expense of the economic security of households of color, poor households, and a stalling middle class.

Key findings from Race, Wealth and Taxes include: