Most Blacks Won’t Benefit From Tax Reform Gain


DIVERSE1In conjunction with the Martin Luther King holiday celebrated earlier this week, United for a Fair Economy a non-profit organization that works to promote a more broadly shared prosperity, released a new study entitled State of the Dream 2011: Austerity for Whom? Analyzing the policy positions of the new House majority and their implications on communities of color, the “State of the Dream” report is the 8th of its type from the organization. 

Original conclusions in “State of the Dream 2011” seemingly point toward beneficiaries of the top-end tax cuts included in the December tax deal. In fact, the report states that Whites are three times more likely than Blacks and 4.6 times more likely than Latinos to have incomes of $250,000 or more, and thus receive a disproportionate benefit from the extension of the Bush tax cuts for top-tier earners.  Capital gains income shows similar disparities as documented in the report.  Further, the official unemployment rate is 15.8 percent among Blacks and 13 percent among Latinos; Blacks earn only 57 cents for each dollar of White family income, Latinos earn 59 cents; and Blacks have only 10 cents of net wealth while Latinos have 12 cents to every dollar of net wealth that Whites have. 

“The deficits that these tax cuts help create are being used to justify a host of austerity measures that will harm Americans of all races, but will hit Blacks and Latinos the hardest,” explains Brian Miller, Executive Director of United for a Fair Economy and co-author of the report. “With 42 percent of Blacks and 37 percent of Latinos lacking the funds to meet minimal household expenses for even three months should they become unemployed, cutting public assistance programs will have devastating impacts on Black and Latino workers.”

However political commentator and radio host Lenny McAllister cautions against a view that might be considered too narrow.  “The tax cuts strategy and rhetoric must be aimed towards attacking the unemployment rate in America first and foremost, not attacking sides of the political aisle in some political debate. The right focus with this issue – and making sure that politicians do not forget the emphasis of the tax compromise last month – is the way to close these wealth gaps and other disparities between people of color in America and others. It all boils back to jobs.”  He further adds,  “The growth of the Black middle class during the 1980s under President Reagan’s leadership in turning around the economy serve as an example to contravene the notion that cutting taxes for job-creators and mid-to-high end consumers works against those at the lower end of the economic totem pole. If conservatives within current leadership exhibit the social courage and political will to target the tax cuts and lessen regulatory practices appropriately to areas in need, we will be able to reclaim much of the lost talent we are shamefully bypassing in our urban areas.”

Yet beyond loss of talent; the report documents potential loss of safety net programs, such as Social Security, to Blacks and Latinos.  “On the front line of the budget cuts are the state and federal workers that police our streets, educate our children, and inspect our food supplies,” adds Miller. “Severe cuts to our public sector work force will erode our nation’s ability to meet the needs of all Americans regardless of race. At the same time, the brunt of those layoffs will be felt by African-Americans who are disproportionately employed in public sector jobs for a host of historic reasons.” Blacks are 30 percent more likely to work in public sector jobs than the general work force and 70 percent more likely to work for the federal government.

But McAllister sees these statistics as those far from being a death knell.  “Although this is not a point in time where any American should be forced to lose his or her job, it is also a point in time where anyone tied directly to local, state, and federal government structures that are drowning in debt is in jeopardy of becoming the next victim of the Great Recession. This is why it is so important for people of color in the United States to focus on vitality endeavors that provide more avenues towards prosperity without the imbalance reliance on money from Washington or state capitals. This is the optimal time for attention towards better educational opportunities (be them charter schools or voucher programs) to be given. This is the time for creative workers to become industry inventors and small business owners, if possible. This is the time for Black capital and successful minority business owners to creatively expand their brand to incorporate more Americans into the private sector. Thus, we must inevitably be innovative to negotiate these tough times and come out ahead, just as we always have as a collective people during challenging social times.”

While various viewpoints may prevail, one thing is certain:  the current-day economic challenges call for United States citizens of color to become more vigilant and creative than perhaps we have been called to do so in the past few decades.

Follow Lauren on Twitter@mediaempress