Decompiling Oppression #71
Sam McVeety
This week, we're going to talk about taxes(!), specifically around home ownership and wealth accumulation. While this entry might have been better timed for April, the racialized dynamics in this space showed up in a number of different ways recently, and it seemed appropriate to try to bring them together. In my personal life, this last Saturday was the second annual Walk the Block celebration from Wa Na Wari, an event that highlights the importance of art and community in the face of gentrification and displacement.
More broadly, the racial asymmetries of taxation and real estate were highlighted both in Dorothy Brown's The Whiteness of Wealth and Jenny Schuetz's Fixer Upper, two books with complementary focuses on wealth accumulation and housing, respectively. While today's entry focuses on data coded along Black and white racial categories, there are important stories and nuances across many different identities. The specific point of overlap that I want to highlight is around the mortgage interest tax deduction, which creates financial incentives to buy a home (with a mortgage, since the cost of interest is mitigated by the deduction). At face, this seems like a reasonable thing for a government to incentivize, but as we'll see, there are troubling side effects that emerge.
Before going further, I probably shouldn't assume that everyone reading this has filed income taxes (and in the United States, at that), so a quick primer may be in order. Roughly: you fill out your taxes based on taxable income, which defaults to your full income. Various deductions reduce that taxable income, which then you pay a tax rate on. So while deductions aren't "free money" in terms of one-to-one reductions in the taxes you pay (those are tax credits), they nonetheless increase the amount of money you keep, based on your tax rate.
So, how does this show up in a racialized way? Because the housing market is racially skewed across geography, credit, lending, appraisal, and more. (Notably, a recent loan application asked me for "number of years of education".) Officially, anyone is able to access this tax deduction (making it appear race-neutral), but in practice, that access is anything but equal, as Dorothy Brown writes:
There has never been a point in American history where black homeownership rates have approached those of whites. Current homeownership rates show almost 73% of whites and 42% of blacks are homeowners. The black-white disparity cannot be explained by simply a class-based analysis. ... black-white disparity may, however, be explained by examining historical trends, the race-based appreciation gap in neighborhoods, and economic trends building wealth.
The article goes into much more detail on these overlapping factors, but for our purposes, this high-level view should be enough to make the point that programs like the mortgage deduction aren't race-neutral in their effects (to say nothing of what ownership on stolen land means for Indigenous people). This matters, especially when such programs aren't just maintaining the relative positions of the status quo, but are in fact exacerbating existing inequalities. If we are stuck with anticlassification (race/colorblind) programs like these for the time being (and cannot pursue explicitly race-conscious interventions), we should at least be looking at programs that have equitable outcomes, such as the ACA or proposed baby bonds programs.
As I was writing this week's entry, I found myself worrying that it would be boring or overly technical, and yet, that ends up kind of being the point. The topic might seem banal, and so, in fact, are many facets of structural disadvantage and oppression. I think that we're taught to think of discrimination as something spectacular and visibly reprehensible, when in fact there are systems and dynamics that are just as harmful, that hide themselves in the cloak of neutrality and the mundane. I think it's also helpful to have examples of structural racism that are inarguably contemporary, particularly given the troubling persistence of "racism was in the past" lines of argument. Only by recognizing that, in many ways, we're still making it worse, can we start to make it better.
Here are this week's invitations:
Personal: What advantages or disadvantages have you experienced through tax systems?
Communal: How can we collectively promote a more equitable distribution of wealth?
Solidarity: Support Progress Alliance and their work with All In for Washington to clean up our upside-down tax code and fight for economic justice.
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