Early in my legal education, tax law beckoned me with a career opportunity that promised objectivity. I liked its reliance on hard numbers, and my law professors said green was the only color in the field that mattered.
This came as a relief after years growing up in the South Bronx where I experienced ongoing racism. I’d had enough. I longed for a career path that wasn’t defined by the daily burden of racism. After graduation, I practiced tax law and then became an investment banker.
I also started filing taxes for my parents. My Mom was a nurse, my Dad a plumber, and I noticed something surprising about their returns. They were paying only a little less in taxes than I was, although I was a single woman earning a higher salary than the two of them combined. I thought someday I’d investigate this more closely.
Eventually, I moved to an academic setting and thrived as a tax law professor. But soon enough, my intellectual pursuits shattered any hope I had of getting away from racial inequity. That awakening began when I read an article by my mentor, who challenged Black law professors to call out race in their own specialty areas. I respected this man and though its relevance to my field still seemed opaque, I decided to take a closer look at the tax code.
At first, my colleagues thought I was chasing an illusion. “Tax law has nothing to do with race,” they insisted. “Dorothy, your work is irrelevant.” Their certainty might have discouraged me—except every time I dug into another tax provision, I found a racially disparate impact. I realized my peers were wrong.
The Truth about the Tax Code
One of the first things I examined was the tax consequences of marriage, and that’s when I understood my parents’ situation. When two partners have roughly equal incomes and file a joint return, they may be pushed into a higher tax bracket than a single person earning the same total salary. This is known as the marriage penalty, and it is more likely to affect Black couples than White ones. The Tax Policy Center does a nice job explaining how total family income, the relative income of both spouses, and the number of dependents can all contribute to the disparity.
Housing is yet another area where the tax code reinforces inequality. The ability to deduct mortgage interest from income favors those who borrow more money against higher-value homes, which tend to be White families. They are also most likely to see their home values rise significantly over time. As a result, White families are more likely to benefit from the $500,000 tax exclusion available to married couples when they sell. In Black and mixed-race neighborhoods, homes often gain value more slowly, if at all, and in some neighborhoods they actually lose value—but there is no deduction for selling a home at a loss. The tax-free status of an inherited home likewise means that most families pay nothing to pass on what is generally their most valuable asset, so wealth moves from generation to generation without cost to the heirs.