What Pro Publica Missed about Taxing Rich White Men
On June 8, 2021 Pro Publica published a piece about the taxes paid — or rather not paid — by the richest men in America. All the people discussed were men — and all of them white, yet no mention of race (or gender) was to be found in the story. Policies supporting wealth building in America have always been designed by rich white men for their benefit. Never is that more true than when it comes to tax policy as I show in my book, The Whiteness of Wealth: How The Tax System Impoverishes Black Americans — And How We Can Fix It. Rich white men fight for tax loopholes that they then benefit from.
One of the primary reasons so many rich white men pay so little in taxes is because of the preferential treatment (lower tax rates) applicable to income from stock when compared to income from labor. In Chapter 5 of my book, I describe how we got the low preferential rate on stocks in 1921 because of a rich white man named Frederick F. Brewster. The Brewster family was so wealthy, that they were second in wealth only to the Rockefellers. Well Frederick decided he didn’t want to pay taxes on the gain he received from selling his investment property. He went to court and lost, but Congress bailed him out that same year by creating a low tax rate for stock sales that remains to this day. That is one of the reasons why Bezos, Buffet, and the others pay such low tax rates — because much of their income comes from stock and other investment income and not from their labor. But by ignoring the very strong relationship between wealth and systemic racism in America (after all white wealth used to include the value of enslaved black people), Pro Publica reinforces a harmful narrative that tax policy is simply a class and not a race issue. In other words, the thinking goes that if black Americans were not disproportionately poor, more of them would be like Bezos. When in reality even wealthy black Americans do not have the stock portfolio their white peers have. The American system of wealth building is rooted in white supremacy and therefore designed to produce a white Bezos and not a black Bezos. That there are some black billionaires does not mean the system is working — but that due to some extraordinary success, a few black Americans managed to overcome a system designed for white wealth building. That is not to say that all white Americans have wealth, however the median household wealth of a white high school dropout is greater than that of a black college graduate.
The American system of wealth building includes a tax system shaped by rich white men and inevitably results in other rich white men keeping more of their wealth because they legally pay little to no taxes. Paying taxes it seems is what the rest of us do. Pro Publica is following a colorblind path that most business and tax reporters unfortunately take. Those reporters consistently ignore the significant explanatory power that systemic racism can have in helping their readers understand why the winners tend to be rich white men. They should do better — but until they do, I’m going to keep calling it out. Who’s with me?
