Of those eligible, 50 percent of whites, 42 percent of Asian-Americans, 41 percent of African-Americans, and only 25 percent of Hispanic-Americans participated. So far, Brown has found that whites were most likely to be eligible to participate in pension plans, then African-Americans, Asian-Americans, and Hispanic-Americans, respectively. Younger workers may not participate because they are more likely to leave a job before they become eligible (five years at Enron). She said racial dynamics could come factor in since, for example, part-time employees won't necessarily be eligible to participate in pension plans, and they may be disproportionately minorities. In preparation for a lecture on race, taxes, and Enron, Brown researched Enron pensions as an example of corporate-sponsored pension plans - who was eligible for a pension, who chose to participate, and how much employees actually collected. "It's a huge - percentage-wise - penalty, because of how the earned-income credit operates," she said, drawing a plateau in the air to show visually how it falls across income levels. "At the low-income level, $10,000 and less, I found most households … were in single wage-earner households." She noted that if you are a single parent making $10,000 and have two children, you get a $2,000 earned-income tax credit, but if you then marry someone making $10,000, the credit is virtually eliminated. But "uncovering the disparity isn't that easy."īrown is also exploring how the earned-income tax credit may affect American households of different races and incomes. Many tax-law academics don't see race as an issue, she said, but even former Supreme Court Justice Harry Blackmun "recognized that there might be a racially disparate impact" from laws that appear neutral on the surface. Black women are much less likely to be married than white women as well, Brown said, so "are tax costs facilitating the lower marriage rates in blacks?" "Black husbands and black spouses are most likely to earn roughly comparable amounts," she said. In the $80,000-$90,000 range, the number of African-American households penalized jumps to 49 percent, while 27 percent of white households are affected. In the $50,000-$60,000 bracket, 26 percent of whites are affected by the penalty, while 43 percent of African-Americans are. Census data and found that bonus households are most likely white and penalty households are most likely to be black at virtually all income levels. For the couple receiving the marriage bonus with an income of $50,000, "that $50,000 is going to be taxed at a rate where some of that income is effectively shifted to the other spouse."īrown studied U.S.
Commission on Civil Rights report noting the differences in the proportion of dual-income houses by race.īrown described both the marriage bonus and penalty effects of the federal income-tax structure: if a married couple includes one spouse earning an income and another who stays at home, they receive a tax break, but married individuals who both work are taxed more than if they weren't married. "Now you see many more couples where you need both individuals working to pay the bills."īrown, a critical race theorist visiting from Washington and Lee University's School of Law, said she was inspired to study the issue by a colleague's call for black scholars to look at how taxes might impact African-Americans differently, and a U.S. When joint federal tax returns began in 1948, 80 percent of husbands worked and had a stay-at-home wife, thus the law benefited most of the population - although married black women likely worked more than white women then as well. "You need targeted marriage penalty relief for dual-income couples," Brown argued. The discrepancy may result in part because African-American employees don't earn wages equal to whites, which may encourage black women to work in support of the family income.
Although tax laws are written to be neutral, they can have varying impacts on households of different races, Brown explained at a luncheon sponsored by Women of Color Feb. © 2023 Cleveland Browns.Law professor Dorothy Brown is teaching the short course Critical Race Theory at the Law School this semester.įederal tax laws that hurt dual-income married couples disproportionately hurt African-American households, said visiting law professor Dorothy Brown, noting that married black women account for 40 percent of their household's income, while married white women's income accounts for only 29 percent.
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