Officially, the U.S. tax code is race-blind, but a recent report by the Urban-Brookings Tax Policy Center reveals that Black married couples pay more in taxes than white married couples. The report reveals that Black couples were more likely to face marriage penalties and less likely to receive marriage bonuses than their white counterparts.
When a couple files for taxes, they can face either a “marriage bonus” or “marriage penalty.” A household’s tax bill decreases with a “marriage bonus” when a couple files jointly and their incomes are disparate enough. A “marriage penalty” occurs when two people with similar incomes marry and file jointly, resulting in an increase in the tax bill.
Researchers found that penalties were larger and more prevalent for Black couples than white couples, with 59% of Black couples facing penalties compared to 51% of white couples for households with an adjusted gross income between $50,000 and $100,000. On the other hand, when Black couples do receive a marriage bonus, it is significantly smaller than what white couples receive.
The report is part of a growing body of research into whether institutions and policies reinforce preexisting racial disparities. The U.S. tax system is a prime example of this. Although the tax code is considered race-blind, it still imposes differential burdens on Black and white households due to several factors.
Black married couples are more likely to have children than their white counterparts, and taxpayers with children generally tend to face larger penalties. Additionally, a Black couple’s income is likely to be similar to each other, whereas a white couple has more income disparity. Both of these factors contribute to the likelihood of more “marriage penalties.”
The report builds off of earlier work done by legal scholar Dorothy Brown, who hypothesized that tax penalties are more frequent and larger for Black couples than white couples. Brown called the Tax Policy Center’s report “an important step forward.”
This research helps inform policymakers of the existence of an inherently unequal fiscal system. According to William Gale, one of the report’s authors, the first step in making change is “establishing a new set of facts, a new narrative about this.”
However, making the system more equitable will not be easy. “We’re really early in the process,” Gale said. “There’s a long way to go before we understand the full implications.”
Inequities in the tax system don’t only impact the Black community. As Brown points out, “There’s a certain, elite group of high-income, disproportionately white Americans that benefit, and then the rest of us do not.”
It’s time to address the inequality of taxes and create a more equitable system for all Americans.
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