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Thirty states and the District of Columbia (D.C.) allow a broad category of tax subsidies known as itemized deductions, used to reduce taxpayers’ taxable income. Itemized deductions are regressive, offering the largest benefits to higher-income taxpayers and little or no benefits to low and middle-income families. Additionally, Black and Hispanic families tend to receive smaller tax cuts from itemized deductions than white families. This report outlines options state lawmakers can take to address these problems, including outright repeal, applying broad-based phase-outs or caps, and limiting specific deductions such as for mortgage interest on second homes or for charitable gifts constituting a small percentage of income.
President Joe Biden’s COVID-19 relief package, the American Rescue Plan, includes a significant expansion of the Child Tax Credit (CTC). The proposal provides a $125 billion boost in funding for the program, which would double the size of the existing federal credit for households with children. This infographic explains the benefits of this expansion and their potential impact on different racial and income groups.
Flat or graduated personal income taxes drive income inequality and racial wealth gaps. This brief compares Illinois’s flat income tax structure to the proposed Fair Tax amendment through a retrospective analysis. It shows that Illinois’s historic flat income tax in lieu of a graduated rate tax (used by most states) results in a tax subsidy for the wealthiest Illinoisans that compounds income inequality and racial wealth gaps.
Racial justice, economic justice, climate justice, and health justice all require tax justice. The United States does not raise enough tax revenue to fund the basic needs of its people or environment, leading to income inequality, racial wealth gaps, and negative health and climate outcomes. To address this issue, this report proposes several solutions at the federal, state, and local level: the government should enact progressive personal income taxes, eliminate revenue-raising through fines and fees, eliminate tax giveaways, subsidies, and deductions, update sales tax bases to reflect where money is spent today, and more.
The United States needs to address growing inequality and raise more revenue to fund critical public investment. One way to accomplish both goals is to enact legislation that raises taxes for high-income or high-wealth households. This infographic includes figures that demonstrate the following four points: the U.S needs to address inequality, the U.S needs more revenue, the U.S tax system is not solving these problems now, and the public supports using progressive taxes to solve these problems.
Examining tax laws only in the context of class is a “colorblind” approach to tax and economic policy that ignores how tax policies affect communities based on race. Historical instances of explicitly racist tax policies, such as the slave tax, continue to impact state and local tax systems. Additionally, housing, education, and criminal justice policies have contributed to white wealth accumulation and depressed the abilities of communities of color to acquire wealth on the same scale. Dismantling policies that unfairly perpetuate white economic advantage requires understanding forces that created such advantages and how they remain ingrained through current policies. Acknowledging the racially differential impacts of tax policies is necessary in building equitable and sustainable tax systems.
Generally, southern states levy taxes in a way that worsens racial and economic equity. Most southern states raise less revenue than states in other regions, leading to underinvestment in people and places. This lack of revenue contributes to staggering levels of poverty, particularly for Black and Hispanic families. Southern states also generally have lower corporate and personal income taxes for high-income households, which are disproportionately white. Additionally, southern lawmakers have been slow to adopt refundable tax credits, which are strong poverty-reducing tools. This report provides a series of solutions, such as employing a progressive tax system and reforming property taxes, to create more equitable tax codes in the South.
A federal wealth tax on the richest 0.1 percent of Americans is a viable approach for Congress to raise revenue and address rising inequality. This report outlines reasons why the United States needs a federal wealth tax to achieve these goals, as opposed to federal tax policies that continue to almost exclusively tax income. Additionally, this report also identifies and refutes the two most common arguments against a federal wealth tax: claims that wealth is too difficult to measure precisely, and claims that a federal wealth tax would be unconstitutional.
For decades, companies in a range of economic sectors have manipulated the tax system to avoid paying taxes on billions of dollars in U.S. profits. The major tax cut recently enacted by Congress will likely allow for this tax avoidance to continue. This report examines 15 corporations’ federal income tax disclosures for the 2017 tax year, the last year before the recently enacted tax law took effect, to shed light on the widespread nature of corporate tax avoidance and the necessity of corporate tax reform.
Progressive taxation requires the rich to pay a higher share of their income in taxes than poor people. This infographic shows that America’s tax system is only moderately progressive through a series of charts depicting the share of total taxes paid across income groups and tax rates before and after the 2017 Tax Cuts and Jobs Act (TCJA). There are many opportunities federal, state, and local governments can take in order to make it significantly more progressive, including repealing provisions of TCJA or addressing problems in the federal tax code that predated TCJA.