This Thanksgiving, Let’s Build a Bigger Table

The Pitch: Economic Update for November 24, 2021

(The Pitch is a weekly economics newsletter written by Zach Silk. Sign up for free on Substack to receive a new issue in your inbox every Thursday.)

I’ve been thinking a lot about the Pitchfork Economics interview with tax expert Dorothy A. Brown from a couple weeks ago. Brown recently authored a book about how the tax code impoverishes Black Americans and preserves white wealth. I’d encourage you to listen to the episode when you have a chance — and read Brown’s book, The Whiteness of Wealth, to learn more.

Brown explains that the tax code’s racist outcomes weren’t the product of a person deciding, “I’m going to make Black families pay a higher share of their income in taxes than white families in order to preserve white wealth.” Instead, the truth is much more banal: Basically, ordinary white families took action to change the tax code so that it advantaged the ways that they accrued and saved wealth, and anytime you intentionally change the rules to advantage a particular group, you are also creating disadvantages for others.

In the episode, Brown says that the joint tax return for married couples benefits white couples at the expense of Black and other nonwhite couples, because it prefers the kind of wealth that white people possess — namely, homeownership and marriages in which one spouse is the sole economic provider. And the joint tax return exists because a wealthy white couple from Seattle named Henry and Charlotte Seaborn protested the existing tax code in the late 1920s by intentionally filing an illegal tax return and then taking their case all the way to the Supreme Court.

As a result of the Seaborns’ activism to benefit themselves and people like them, Brown says, “we have a tax policy that is intentionally designed to benefit rich, white Americans.” The law wasn’t created to harm Black Americans, she explains, but “we know when the joint return came into existence in 1948, there was a higher percentage of Black married couples with wives working outside the home.” So the creation of benefits which favor white taxpayers “necessitates a discriminatory impact on the part of Black taxpayers,” Brown concludes.

This is one of the thousands of systemic ways in which white prosperity has been prioritized over the prosperity of Black families, or Latino families, or Native American families. These are systems that failed to correct, or even acknowledge, the shortcomings of America’s past, so they only exacerbated the historical damage.

It has always been difficult to point out systemic economic injustice, because complex economic systems like the tax code are all around us all the time — it’s like trying to ask a fish to describe water. But the pandemic has made it easier to see the systems that surround us all on a day-to-day basis. It’s made us aware of the supply chain and just-in-time distribution, to use a recent example. We’ve learned how connected we all are through the contact tracing and public health messaging that has demonstrated how one weak link can result in a coronavirus outbreak that infects hundreds and then thousands of people in a community, and more.

So the system that is our economy has all the same baked-in biases as all the other systems around us. It’s why the Black unemployment rate is persistently so much bigger than white unemployment. It’s why Black homeownership has declined over the last 20 years. It’s why Latino families work more than white families but hold less than 1/6th the wealth of white families. More people are now aware of these systems, thanks to the hard work of people like Dorothy A. Brown, and people are beginning to think of ways to fix these broken systems.

We’re fond of saying here at Civic Ventures that an economy is a choice. While trickle-downers love to attribute the most cut-throat economic results of capitalism to the cruel wisdom of an all-seeing, all-knowing “free market,” the truth is that an economy is a construct made by humans, and humans can change that construct. Massive income inequality isn’t a predestined economic outcome of capitalism — plenty of other prosperous countries enjoy less income inequality than we do.

It’s the work of our generation to rewrite these systems in such a way that finally removes those old biases and reestablishes the American Dream so that it works for everyone, no matter what their race, religion, or gender identity may be. And the great news is that an economy isn’t a zero-sum game. By focusing our economy on improving outcomes for Black women, for instance, we would actually improve outcomes for poor white Americans, too. A more equitable economy for Black Americans is a more equitable economy for all.

Here in Washington state, our lawmakers took a huge step toward fixing the state’s most-regressive-in-the-nation tax code by establishing a modest tax on the extraordinary capital gains profits of a small number of wealthy Washingtonians. By finally taxing six-figure profits from the sale of stocks and bonds, our leaders recognized that the way extremely wealthy (and mostly white) Washingtonians earn their wealth is not the same as the vast majority of their neighbors. By addressing that inequality in the tax code, and by investing the funds raised from that tax in educating the next generation of Washington students, many of whom are nonwhite, our leaders are pointing the way to a more equitable future for all of Washington state. They understand that prosperity is best when it’s shared, and there’s a seat at the American table for everyone.

With that in mind, we here at Civic Ventures all wish you the best for Thanksgiving. I hope you spend the holiday at a big table packed with the people you love most. We’ll see you next week.

Zach