How the TCJA Failed Black Taxpayers

Undoing Racial Inequality in the Tax Code

We’ve known from the start that the 2017 Tax Cuts and Jobs Act (TCJA) would make a tax code that already disadvantages people of color even worse. In a new report, Roosevelt Senior Fellow Beverly Moran breaks down, provision by provision, how the TCJA has sidelined Black taxpayers and widened the racial wealth gap over the last 6.5 years—and how policymakers can course-correct.

As Moran explores in Bloomberg Tax, the Child Tax Credit demonstrates how, by advantaging wealthier families, “seemingly neutral policies have unequal impacts.” Only half of Black children qualify for the full credit, and Black children make up a quarter of those ineligible despite comprising only 14 percent of all children. 

A new tax system can eliminate these racial disparities, and the expiration of many TCJA provisions in 2025 offers policymakers a prime opportunity to think bigger.

“No one can claim that a return to the old tax rules is a step forward,” writes Moran. “Our tax system is as part of the problem of income and wealth disparities now as it was in the past, and it will continue to be part of that problem in the future unless, at the very least, we eliminate the capital gains preference and reform the corporate tax.”

Read Moran’s new report, and join the discussion at our webinar next Wednesday, June 26: 

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Supreme Court Upholds Foreign Income Tax

This week, the Supreme Court ruled 7-2 to uphold the constitutionality of the Mandatory Repatriation Tax—a tax on foreign income—in Moore v. United States. The decision is a welcome relief, averting a worst-case scenario in which the court placed new limits on the congressional authority to tax income. But the Court choosing to hear the case at all is a warning sign for potential future judicial overreach in tax policy.

Multinational firms would have reaped over $270 billion in profits had the Supreme Court struck down the Mandatory Repatriation Tax, as explained in a 2023 brief by Roosevelt and the Institute on Taxation and Economic Policy. Not only would this have jeopardized public revenue for social services, it would be a clear case of conflict of interest—Chief Justice Roberts and Justice Alito both hold stock in corporations that would have benefited from this giveaway. 

However, “while Moore was an important victory for countering corporate tax avoidance,” says Roosevelt’s Niko Lusiani, “the case does not bode well for judicial deference to democratic tax-making.” By granting cert, the Supreme Court essentially asserted “that it has the legal authority and the political legitimacy to override the will of the American people on tax matters,” says Lusiani.

“Democracy and the Constitution require that the American people—through their duly elected representatives—determine the future of tax policy,” Lusiani told Forbes, “even if that means changing the current structure and rules governing the Supreme Court to restore a semblance of balance of power.”

Read more analysis of the Moore decision from Lusiani. 

What We’re Talking About

Public pools, shorter workweeks, accessible parks & local sports.

Pointing to policies to combat the climate AND connection crises, @johannabozuwa asks & starts answering the❓: What infrastructure could transform culture while decarbonizing communities?https://t.co/VENvLRy1cg pic.twitter.com/OCWzfjomDL

— Roosevelt Institute (@rooseveltinst) June 18, 2024

What We’re Reading

Tragedy to Triumph at Mercedes? How the NLRB and the Biden Administration Might Still Make Things Right for Workers – coauthored by Roosevelt Fellow Diana Reddy – Power at Work 

The Deeply Flawed Crypto Bill Making Its Way through Congress – by Roosevelt Fellow Graham Steele – Washington Monthly 

White House Swears In First Class of American Climate Corps – NBC News