Think Big, Start Small: The Role of Tax in Activism, Progressive Federalism, and Reparations
*I wrote this paper for a class I took last spring. It was recent as of May/June 2020. You can find a version with footnotes here.*
Introduction
Both the 2016 and 2020 presidential elections demonstrate that the case for a progressive agenda has not yet been made at the national level. This is despite the reality of the COVID-19 pandemic, which has shown astronomical unemployment numbers, an uncertain economic future, and higher rates of death and illness among minorities, particularly Black American populations. Additionally, the protests across the country in the wake of George Floyd’s killing are a response to the deep inequalities Black Americans have faced for hundreds of years. These events are not new in terms of shining a light on the variety of factors that have created an unequal economy: the widening wealth gap, concentration of wealth among corporations, generational wealth, predatory lending, bank bailouts, lobbying by the wealthy, the gig economy, and decreased budgets for enforcement agencies such as the IRS, to just name a few.
The famous protest slogan, “no taxation without representation,” played a historic, integral role in the founding of the United States. This slogan should have more than just historic value. Presently, and for the last few decades, monied interests have the resources to plan and lobby around taxation. These monied interests and the agenda they support largely contributes to the disenfranchisement of the middle class, the poor, and minorities. When taxation reflects the priorities of the few and not the many, it is difficult to believe that true representation exists. Tax policy and enforcement must begin turning the tide and correcting wrongs. This is unlikely to happen at the national level, especially with extremely partisan politics reigning supreme. Grassroots, activist movements can, at the state and local levels, make whole, or as whole as possible, parties who have been wronged.
This paper will call for “no taxation without reparations.” This country has a largely unaddressed legacy of slavery, but this has potential to change with issue-based campaigns targeted at racial disparities. Taxing legalized marijuana is one such avenue of potential. While marijuana has yet to be legalized federally, it has been legalized in several states. Illinois has recently legalized marijuana and the City Council of Evanston, Illinois is the first to label marijuana tax revenue as reparations for the legacy of slavery. Using tax revenue for racial and economic justice can lead to a healthier economy with stronger job security and health outcomes for minority communities. A way to do this is to tax the cannabis industry, which is predominantly run by white Americans, and use the revenues to shape a business that helps employ, invest in, and repair communities of color that were punished for possessing and selling marijuana. As more states and cities take such measures, a national movement can grow under the umbrella of reparations.
This paper will provide 1) a history and case for reparations, 2) strategies that have proven ineffective and are likely to remain ineffective, 3) a discussion of progressive federalism, 4) approaches in state and local governments, with particular attention to Illinois and California, and 5) proposals for a progressive federalism approach to reparations through earmarking tax revenue.
History Beyond Precedents
The law works in the world of statutes and precedents, strict definitions and legislative history, monied special interests and clever arguments. Rarely does the law take account of history beyond precedents.
America’s history is integral to any conversation about racial justice and reparations. This country has not fully reckoned with the legacy of slavery and how Black Americans are impacted to this day by racism and discrimination that was sanctioned by the government and the courts. Robin Einhorn and David Waldstreicher have written about the historical nexus between taxation, slavery, and property rights. The Southern slave states played a pivotal role in shaping our Constitution so that property rights were strong, but both the federal government and tax power were weak. The Southern slave states were able to convince the Northern states that a weak government and constitutionally restrained tax power were in the interests of the “common man.” True majority rule, the supposed core ideal of democracy, was rejected, cemented by the three-fifths compromise and the requirement that all revenue-raising bills had to be raised in the House, not the Senate. Then, of course, there are explicit parts of the Constitution, such as with the “importation of such persons” or “tax or duty… on articles exported from any state,” that limited or banned taxes so that slavery could not be taxed out of existence.
Even parts of the Constitution that seem benign or even like common sense today, such as the “Full Faith and Credit” clause, which required states that did not recognize slavery to return runaway slaves to the slaveholding states that they ran from, have roots in slavery. As the centuries passed, such a framework was favorable to commercial and industrial elites, no matter their political or geographical allegiance. To this day, there are few, if any, meaningful legal avenues to regulate the concentration of wealth and power among relatively few elites. The Constitution was shaped by making slave states more secure, which has today resulted in much of the same in terms of wealth security, but with anyone who is part of the wealthy elite. As popular as the wealth tax may be with progressives, there are constitutional hurdles that were shaped by slavery.
And it is not just slavery. The failures of Reconstruction and the rule of Jim Crow encouraged practices such as redlining or exclusion of Black Americans from the GI Bill, diminishing the chances of accumulating generational wealth. The 1921 Tulsa Race Massacre is an especially horrific example of the deprivation of opportunities for generational wealth. 35 square blocks of “Black Wall Street”, a section of Tulsa known for prosperous Black businesses and a flourishing Black community, were burned down and destroyed with anywhere from 36 or 300 people dead, over 800 people injured, about 9,000 people homeless, 1,256 homes burned, and 215 homes looted. Of the 193 claims that were filed between June 1921 and June 1922, about $1.5 million in damages, without adjusting for inflation, were sought and disallowed. Lives, livelihoods, and businesses were lost. Survivors were never made whole.
Decades later, the Oklahoma Commission, which was formed in 1997 and had studied the severe losses that resulted from the massacres, made five recommendations in the spirit of recognition and reparations. These recommendations were as follows: “(1) Direct payment of reparations to survivors of the Tulsa Race Riot, (2) Direct payment of reparations to descendants of the survivors of the Tulsa Race Riot, (3) A scholarship fund available to students affected by the Tulsa Race Riot, (4) Establishment of an economic development en ter prise zone in the historic area of the Greenwood District, (5) A memorial for the reburial of any human remains found in the search for unmarked graves of riot victims.” The state and city only acknowledged the event, apologized, made some minor investments to community economic development, and gave medals to survivors who were still alive in 2001. Even if the U.S. District Court in Alexander v. State of Oklahoma believed that the statute of limitations had run out by 2004, survivors of the Tulsa Race Massacres were deprived of their property, never made whole, and unable to pass their former wealth onto their descendants. The Supreme Court denied a petition for review, which made Congress the next battleground. When Charles Ogletree, a Harvard Law School who was lead counsel on the Alexander legal team, testified at a 2007 hearing before the Committee on the Judiciary’s Subcommittee on the Constitution, Civil Rights, and Civil Liberties, the committee took no action. The late Congressman John Conyers Jr. repeatedly tried to continue the battle by introducing bills to address the Tulsa Race Massacres. Every effort was unsuccessful. After long excluding any mention from Oklahoma classrooms, 2020 is the year state leaders finally introduced an extensive curriculum around the 1921 Massacres.
In the present day, boutique marijuana shops now profit from a substance that puts many Black Americans behind bars and branded them as felons, creating a barrier to employment in the outside world. This unequal treatment, like the larger mass incarceration issue, is a descendant of slavery. This unequal treatment also shares a common theme with the previously mentioned examples: exclusion.
History shapes the present day. The present day does not exist separately from past events. The Civil Rights Movement of the 1960s did not solve racism. This country is not colorblind. Putting aside rare exceptions, the circumstances most people live in are a result of the families, the ancestral line, and the ZIP code that they were born into. Compare the following images of life expectancy in the U.S. and Black population, respectively:
Figure 1: Map of life expectancy at birth in the US. Red areas indicate shortest life expectancies.
Figure 2: Map of Black population in US. Purple areas indicate more Black Americans.
This history will bleed into the present day unless properly identified, studied, and addressed.
H.R. 40, the Commission to Study Reparation Proposals for Black Americans Act, was first introduced by the late Congressman John Conyers Jr. in 1989. The bill has not made it to the House floor despite being introduced at every session of Congress for decades. H.R. 40 is emblematic of every uncomfortable conversation about race, and more broadly diversity and inclusion. One of the goals of H.R. 40 is to “recommend appropriate ways to educate the American public of the Commission’s findings.” Despite its importance, the conversation to at least study and better understand our country’s history and the legacy of slavery is casually ignored every time it is introduced. This study would be an extremely important and necessary step forward because there are existing institutions, public and private, including higher education and corporations, that have directly benefited from the legacy of slavery. It is willfully ignorant to pretend that those who exist today are disconnected from past actors, especially when a significant population today benefits from the structures built by earlier generations.
H.R.40 was not the first bill of its kind. It was modeled after PL 96–317, which established the commission that led to the passage of H.R. 442 in 1988 — providing reparations for Japanese-American internment camps. H.R. 442 succeeded in procuring an apology and $20,000 in reparations for approximately 60,000 former Japanese-American internees. Again, H.R. 40, which was first introduced in 1989, is simply a call to assemble a commission to study the issue of reparations for Black Americans. And, again, H.R. 40 has not even made it to the House floor over the last three decades. The late Professor Derrick Bell, a revered professor and civil rights activist, speculated that the Japanese-American case for reparations came out the way it did because it was happening at the same time as pro-Japan trade policies during the Reagan Administration. By this analysis, the same political incentive has not existed and does not exist for African American reparations. A similar result would require that the countries on West Africa’s coastline hold a similar economic stature as Japan in the 1980s. The comparison of Japanese-American and African-American reparation efforts shows that not all people are treated equally in this country. An honest understanding of such inequalities is vital. The case for reparations has been made again and again. It is finally time to begin making reparations a reality, and not through Congress or the courts. The failure of H.R. 40 and the litigation related to the Tulsa Race Massacre shows that these avenues are currently a waste of time.
Ineffective Strategies
Alexander v. State of Oklahoma demonstrates how ineffective the courts are when it comes to reparations. H.R. 40, a call to simply study reparations, shows that Congress has not and likely will not make much progress with reparations either. When considering how powerful special interest groups are able to play a role in getting the laws they want, such as with the estate tax and the TCJA, it is easy to see why reparations has not been as successful. Groups calling for reparations do not have as much financial or political clout as special interest groups that have resources to pay for effective lobbying firms. Unfortunately, a recommendation for reparations by a United Nations panel does not translate into the necessary clout.
Additionally, politics has been extremely partisan in recent years. The 2017 TCJA, for example, was passed without support from Democrats. This allowed for more ambiguous parts of the TCJA to be left up to special interest groups heavily participating in notice and comment rulemaking processes, when there was not a significant group to counter those arguments. The TCJA was highly favorable to extremely wealthy groups. Considering the current climate and who benefits most from it, it is highly unlikely that any meaningful conversation about reparations will happen soon.
What is Progressive Federalism?
Progressive, according to one proponent, means “progress towards the goals of liberty, equality, democracy, prosperity, and justice.” The term “federalism” may breed distrust among progressives, especially when thought of in the context of the Civil Rights era or the passage of the Fourteenth Amendment or the Voting Rights Act. In those cases, the national government brought progress when the states resisted, relying on the autonomy that was granted to them in the Tenth Amendment. Progressives fighting for racial justice have come to trust the national government to act against racism, but that is not a realistic expectation in today’s extremely partisan climate. Progressives should instead look to their state and local governments. After all, federalism empowers state and local governments to act as “laboratories” and “try novel social and economic experiments without risk to the rest of the country.” Federalism can allow progressives to fight for novel solutions geared towards racial and economic justice. If any “experiments” are successful, they can provide a model to other parts of the country. Federalism very well could be the gateway to progressive reforms on the national scale.
Progressives today, similar to progressives a century ago, are trying to fight against concentrated power in order to redistribute that power through various reforms. It has become increasingly difficult to fight the private sector, which has been consolidated into a handful of powerful corporations and special interests, with a public regulatory regime, especially when enforcement arms of the national government have been weakened by those same special interests. The IRS, for example, has experienced major budget cuts in recent years, with a 7% budget decrease from 2010 to 2014 and an 11% reduction in personnel (approximately 10,000 IRS staff). This is not a money-saving measure considering that every dollar of IRS enforcement recovers about $200 in unpaid taxes. When the wealthy and corporations are less likely to be audited due to limited enforcement ability, revenue is lost. This happens because special interest groups lobby Congress to appropriate fewer funds to enforcement agencies, such as the IRS, resulting in the agencies being quietly defunded. If a law is not in favor of concentrated power, concentrated power disarms the enforcement agency. This example shows the weakness of Congress, with members considering their revolving-door opportunities and reelection donations, and enforcement agencies under the executive branch.
There is a seemingly-insurmountable level of corruption in the national government to break past the resources of the wealthy and powerful. Because progressives have not been able to maintain momentum at the national level, progressives need to thoughtfully organize at the state and local level. Fostering grassroots activism and policy proposals around issue-based campaigns may turn the national tide on those issues. States and cities have managed to develop climate change strategies and the Affordable Care Act allows states to experiment. The drawback with the federalist approach is one that was already outlined; some cities and states will not work towards justice and equality. With the ACA, 10 Republican-led states have asked for waivers to add work requirements; in Arkansas, the first state to implement the waiver, 20,000 people were forced off of the plan. Alternatively, several states have been considering experimenting with single-payer programs under the ACA’s “state innovation waiver.” With the progressive federalist approach, a progressive can hope that their state or locality has a successful experiment that will garner attention outside of their state.
The War on Marijuana, Disparities, and Evanston’s Plan for Reparations
A 2013 ACLU report found that, nationally, Black Americans are 3.73 times more likely to be arrested for marijuana possession than whites. In Illinois, then reported to have the fourth-highest arrest rate for Black Americans, had Black residents being 7.56 times more likely to be arrested than whites. The racial disparities only increased between 2000 and 2010, despite Black Americans and whites using marijuana at similar rates. The ACLU estimated that, in 2010, $3.6 billion nationally went towards marijuana possession enforcement, with Illinois spending more than $200 million on enforcement and $20 million on housing individuals in local jails and county correctional facilities. Additionally, Illinois had the fourth-highest per capita fiscal expenditures for enforcing marijuana possession. In Illinois, Black residents make up 15% of the population, but account for 58% of the marijuana possession arrests. Cook County, Illinois made the most marijuana possession arrests in 2010 of all the states with over 33,000, or 91 per day.
The Illinois state legislature legalized recreational marijuana in June 2019 and the Evanston City Council in Illinois followed up in November 2019 with a proposal of a 3% tax on legalized marijuana. The funding will generally be used to preserve Black residency and focus on those impacted by marijuana arrests. Measures of success may include increased household income, increased revenue for Black-owned businesses, and improved infrastructure for historically Black and redlined neighborhoods. Between $500,000 and $750,000 in revenue is expected each year, which would be earmarked for reparations, with an upper limit of $10 million over the next 10 years. Statewide, $11 million worth of recreational marijuana was sold within the first week of January, with $3.1 million being sold just on January 1, 2020, the first day that recreational marijuana became legal in the state. At this rate, and assuming some level of online orders have been possible during the COVID-19 pandemic, the goals should be reached well before 10 years have elapsed.
According to the office of Alderwoman Robin Rue Simmons, who led this campaign, 71% of those arrested for marijuana in Evanston are Black, which is troubling because only 16% of Evanston’s population is Black. The community has declined from 25% in the 1990s due to factors such as lack of affordable housing and predatory lending. Alderwoman Simmons is certain that payments will be direct and not in the form of loans. She wants to be able to assist homeowners, those in need of professional development and investment, and anyone else regardless of education, homeownership, or income level.
Brookline, Massachusetts recently passed a similar measure by establishing an “Economic-Equity Advancement Fund,” which will be funded by revenue from legalized recreational marijuana. The purpose of the fund is to assist minorities, including those at the Brookline Housing Authority and those in the business community.
Illinois joined 10 other states, the District of Columbia, U.S. territories of Guam, and the Northern Marianas Islands in legalizing marijuana. But Illinois is the first state where legalization resulted from a legislative process instead of a direct ballot initiative. The legislative route allowed Illinois lawmakers to consider the racial and economic justice implications, especially in light of the severe racial disparities discussed earlier. Like Boston, Oakland, and Portland, the state law includes a program for “Social Equity Applicants” so that communities historically impacted most severely would also have the opportunity to profit from the newly legalized industry. Evanston’s efforts were also supported by the National African American Reparations Commission (NAARC), an organization that has been dedicated to the cause of reparations since 1987.
California: Ideas for how Marijuana Tax Revenue can Support Reparations
Before this huge step from Evanston, several states had already legalized marijuana. California legalized marijuana in January 2018. Los Angeles, possibly the largest market for recreational cannabis, has a cool, chic, and breezy vibe with an abundance of start-up money (one start-up, Eaze, had $52 million in venture capital raised by April 2018). But there is a stark racial justice problem. Many state regulations, as well as the 2018 United States Farm Bill, ban people with drug-related felony convictions from working in the industry. The War on Drugs was started in the 1960s in large part to target Black communities, and, as a result, many of those affected by the ban are Black. The legalized industry, as a result, is owned and run by white people, leaving Black and Latinx communities excluded. Adam Vine, founder of Cage Free Cannabis, says that “legalization is just theft” if no efforts at reparations are made for those impacted by the War on Drugs. Cage Free Cannabis pushes for criminal record expungement, job fairs, voter registration, health care, and social equity programs. The War on Drugs and mass incarceration are direct descendants of slavery. Exclusion of Black people from the marijuana industry with no thought to reparations would just be continuing the same racist tradition as redlining, predatory lending, and exclusion from the G.I. Bill or the New Deal. Consider the following quote about the War on Drugs by John Ehrlichman, former domestic advisor to President Richard Nixon:
“You want to know what this was really all about? The Nixon campaign in 1968, and the Nixon White House after that, had two enemies: the antiwar left and Black people. You understand what I’m saying? We knew we couldn’t make it illegal to be either against the war or Black, but by getting the public to associate the hippies with marijuana and Blacks with heroin, and then criminalizing both heavily, we could disrupt those communities. We could arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news. Did we know we were lying about the drugs? Of course we did.”
Additionally, legalization has outpaced expungement efforts, further excluding those who were branded criminals for using or possessing before legalization. For example, while California allowed for conviction reductions or expungements with legalization, these processes were not automatic and required the individual to work through a challenging petition on their own. Even in some other states that have legalized marijuana, such as Nevada, Colorado, and Alaska, business licenses are restricted for those who have been convicted of drug-related felonies. And even though hemp was removed from Schedule I of the Controlled Substances Act, those with drug-related felonies are banned from producing hemp for a decade after their conviction. The hemp-derived CBD market is projected to make as much as $10 billion in 2020, $15 billion in 2021, and $20 billion in 2022. That is an entire market that those impacted by the War on Drugs are excluded from. Due to such restrictive measures, of 389 cannabis businesses in 2017, only about 4% had a Black person with an ownership stake — not necessarily even a controlling stake. Vincent M. Southerland, Executive Director of the Center on Race, Inequality, and the Law at New York University School of Law said the following:
“There’s a feeling or a sentiment that I, industry person, didn’t do anything wrong. ‘I didn’t create these laws, I didn’t put anybody in jail, I’m just profiting off of everything now.’ I think that same sentiment is what you hear when people talk about, ‘I didn’t build this segregated community, I didn’t build all these segregated schools, I’m just — my kids are getting a better education because of them now because they’re in these wealthy school districts.’”
It is worth pondering why the felon ban in the 2018 Farm Bill was seen as a necessary compromise to have hemp included in the Farm Bill. It is unclear if those currently profiting from hemp have committed to using some of the profits for reparations. Perhaps the hemp industry players did not feel a responsibility to repair before profiting. At the very least, there should have been some type of promise on behalf of those who profit from the lucrative industry to invest in and support those who were excluded.
This is relevant because there are companies out in California that are trying to invest and repair, between holding expungement clinics, marketing classes, and prioritizing hiring of ex-offenders. Los Angeles and other cities across California have committed themselves to social equity programs that aim to decrease disparities by providing equitable ownership and employment opportunities to those disproportionately impacted by marijuana prohibition. An “incubator” partner can be matched to an eligible applicant; the partner then provides business assistance, free rent, payment of the $12,000 licensing fee, or other capital. The city of Los Angeles even has a Department of Cannabis Regulation.
Notably, in 2019 alone, it is estimated that California took in approximately $635 million in state and local cannabis revenue, with $538.10 million remitted to the state, and another $100 million to local. These estimates also seem to indicate that approximately $500 million was raised in 2018, which means California may potentially exceed the 2016 goal of $1 billion in annual tax revenues if it stays on this track. It is possible to explain this partially by the rise of conscious consumerism: a 2014 Nielsen poll found that 55% of online shoppers would pay more for products they believe to have a positive social impact. It seems, however, that the revenue is used for public health, environmental, and public safety, and is not earmarked specifically for reparations. Similarly, Colorado marijuana tax revenue seems to primarily be used for public education, as well as a variety of state programs and services. As of April 2020, Colorado has raised approximately $1.3 billion in revenue.
Labels and Narratives
Reparations may not seem all that different from “social equity” programs, especially when, in practice, both may be achieved in similar ways. “Social equity” may be a more palatable label than “reparations,” but it is necessary to understand the weight of what the revenue will be used for. Social equity can be seen as having a somewhat broad and vague mission. Reparations have a very specific mission. Being able to say that tax revenue will be used for reparations also helps taxpayers understand where their tax dollars are going.
Labeling is important. For example, the estate tax could have been labeled an “inheritance tax” or a “windfall tax” instead of a “death tax,” but the label of “death tax” was crucial to the successful and carefully-crafted conservative narrative against the estate tax. Calling a tax a “reparations tax” comes with a very strong history. Authors such as Ta-Nehisi Coates and Ibram X. Kendi have made the case for reparations; they have already provided the powerful and historically accurate narrative necessary to convincingly fight for reparations. The late Boris Bittker, a Yale Law School professor who specialized in tax law and authored a book titled The Case for Black Reparations, also wrote about the need for reparations, despite legal avenues largely being closed off. There are several convincing narratives and “cases” that have already been made.
Proposals for Reparations Through Marijuana Taxes
First and foremost, people who have been impacted by marijuana arrests should be hired and receive investments. Providing jobs that have both potential for promotion and benefits, such as health insurance, provide more stability than the black market would. The legalized marijuana industry must ensure that Black Americans who are hired are not left in dead-end lower wage jobs without benefits. The marijuana industry must make a serious effort towards inclusion, considering the history of exclusion that Black Americans have experienced due to the War on Drugs. Besides hiring, taxes should go towards supporting small businesses by Black Americans who want to make it in the industry. For example, taxes can go towards waiving licensing fees for Black Americans who wish to start a small business in the marijuana industry.
Marijuana Taxes as Blueprint
Marijuana taxes may provide a useful blueprint as other industries are identified specifically for reparations taxes. There are surely activists and people directly affected who have identified other industries that have been built on the oppression and exploitation of Black Americans. As these industries, corporations, and institutions are identified, state and local governments should investigate how these entities can finally compensate for damages that have never been fully paid. Ideally, a national network will 1) identify the various local fights against racial disparities in the name of racial and economic justice and 2) develop unified, cohesive messaging for reparations. With the estate tax or even the STOP ERA movement in mind, conservatives have waged and won wars based on the appearance of grassroots organizing, narrative building, unified messaging, and, of course, resources. Even if progressives do not have as much in resources, progressives can work on the other three factors.
Remembering that current conditions are a result of the history that has led to them, reparations taxes can easily be tied to any industry that profits from the oppression and exploitation Black Americans. For example, Black Americans are known to have worse health outcomes than whites for a myriad of reasons. Particularly relevant now, Black Americans are among the hardest hit by the COVID-19 pandemic due to structural inequality built by the legacy of slavery. In recent years, there have been major lobbying efforts by the pharmaceutical and dialysis industries, to the tune of about $110 million and $111 million respectively, to defeat propositions in California that were geared towards lower costs for patients and lower profits for the companies. The companies won with their money and purchased control over the public narrative. According to the National Kidney Foundation, Black Americans make up over 35% of dialysis patients, despite only representing 13.2% of the overall U.S. population. But it does not seem that any arguments related to racial disparity were made in support of the proposition.
With the previous example in mind, state and local governments should study potential taxes on health insurance companies and for-profit healthcare providers as there continue to be vast racial disparities in health outcomes. Alternatively, health insurance companies and for-profit healthcare providers can claim deductions for not having such disparities and showing that they are meaningfully working towards equity. There is, of course, the debate of whether to punish or incentivize. The argument to incentivize would be to not alienate cooperation with reparations. The argument to punish is that these companies have long been profit-driven and exploitative. The core of compensating for damages, or making one party whole after another profited from ill-gotten gains, requires a punitive approach. A punitive approach can reinforce that wrongs were committed and similar wrongs should not be committed again. Companies and healthcare providers should be left with the choice of either paying the tax or demonstrating that they are making meaningful strides towards equity.
Approaching a reparations tax policy with this framework may help gain support nationally for universal health care, the opposition to which can also find roots in racism and slavery’s legacy. The United States, after all, is the only high-income country without universal healthcare. In 2002, American taxes amounted to 26% of GDP, compared to high-tax countries such as Sweden (50%) and Denmark (49%). This was well below the average for the 30 OECD member countries (36%). Taxes were only lower in Japan, Korea, and Mexico. This means taxes were higher in countries such as Canada, Britain, and Germany to Poland, Turkey, and Greece. This is odd, to say the least, considering that the United States has been the world’s largest economy since 1871. The United States also exceeds these countries when looking at GDP per capita. It is difficult to reconcile these numbers without considering extreme wealth inequality and the legacy of slavery.
The lack of universal healthcare does make more sense when considering the exclusive nature of any racially-motivated policy that locked Black Americans out of opportunities for better outcomes, whether it was being excluded from New Deal labor reforms, the G.I. Bill, or neighborhoods. It also makes more sense when considering that the United States has one of the highest income inequalities among OECD countries (fourth highest among OECD countries in 2015; United States had 0.40 Gini coefficient compared to OECD country average 0.32 Gini coefficient) and the highest according to the Allianz Wealth Inequality Indicator in both 2018 and 2019. The OECD recommends that one way to deal with inequality is to have policy that ensures that wealthy individuals and multinational corporations are paying their fair share in a tax-and-transfer system that allows for efficient redistribution. Another way to deal with wealth inequality is to move away from the rise of non-standard jobs, such as temporary or part-time work, and move towards investing in more career opportunities.
Between 1983 to 2016, the median Black family’s wealth dropped by more than half to about $3,600. If the trajectory continues, this number will drop down to $600 by 2050 and $0 by 2082. The median white family, by contrast, will go from $147,000 of wealth in 2016 to $174,000 of wealth. Wealth and health outcomes are inextricably tied without universal health care; when a family has zero or negative wealth due to debt, health care bills leave families vulnerable to medical bankruptcy. Health crises, such as the COVID-19 pandemic, can compound into extreme economic crises, particularly for Black families who are already at more risk for the personal crisis of losing family members. Universal health care would be a long term answer to allowing people to seek preventative medical help without worrying about the costs, which would hopefully lead to less pre-existing health conditions, a factor that makes COVID-19 even more dangerous.
Another set of industries to go after with a reparations tax would be the real estate industry and the banks, both complicit in redlining and predatory lending. Redlining and predatory lending have resulted in the inability to have generational wealth in the Black American community on a larger scale. Both have also led to Black Americans, relative to their White counterparts, being left in neighborhoods with less resources and more environmental hazards. State and local governments should identify offenders in these arenas for tax.
Transparency of budgets of companies, especially larger corporations and institutions, is key in public discourse. When building narratives, state and local governments should expose what companies spend their budget on. For example, citizens should be informed that a company is spending $111 million on lobbying instead of hiring more employees, lowering costs for patients, and establishing more dialysis centers. Citizens should also be informed about how much the board and higher level executives are making. As the estate tax fight demonstrated, these numbers should not be floating on their own. These numbers have to be rooted in a story, including a unified case for reparations and stories of individuals who are impacted. As long as grassroots activism is playing a role in these efforts, the individual stories of impacted parties should naturally come forward.
H.R. 40 aims to study reparations and educate Americans about the findings. State and local reparations taxes should partially be used to build education initiatives. Similar to how the Tulsa Race Massacre is finally being introduced in Oklahoma school curriculums, cities and states should develop curriculums that shine a light on the lesser known impact slavery had on local, state, and national growth. For instance, the role of slave states in shaping the Constitution and our tax system should be a part of that education. Antitax sentiment, and tax planning with the goal of evasion, should be understood in terms of its connection to slavery. Antitax sentiment is jokingly talked about as being very American, but, frankly, this country needs to reevaluate what it means to be “American” in the present day. Conversations are necessary to reevaluate what motivates this country’s tax and budget policy and why these motivations exist. The Pledge of Allegiance mentions justice for all, but how can there be racial and economic justice when revenue is not being raised to make justice a reality?
Conclusion
There is strong potential for the success of progressive issues around tax policy at the state and local level. A progressive federalist approach that is organized around a unified narrative can change the landscape of politics nationally. Reparations at the state and local level can ultimately help achieve racial and economic justice, possibly even allowing the racial wealth gap to begin to close. Reparations is not strictly a solution for the past when the past so clearly affects the present. Today’s inequality would not exist if not for slavery and all the racially-motivated, exclusionary policies that followed. Reparations is very much an issue of the present, and it will continue to be an issue in this country’s future until it is appropriately addressed.
