Inequality under the federal tax code amounts to “a civil rights issue.” That’s what Dr. Dorothy A. Brown, a nationally renowned tax expert, told a Colorado audience on Monday in a discussion organized by Colorado’s Fund Our Future, a coalition of progressive groups including Colorado Fiscal Institute, the Center for Health Progress, and others.
“It’s clear,” Brown said, “that tax policy on everything from capital gains and homeownership to marriage and college debt exacerbates the racial wealth gap.”
Brown, a professor of law at Emory University and the author of The Whiteness of Wealth, joined local experts and advocates to discuss the ways in which the tax code exacerbates racial inequities – and how reforms can help fix it.
Among other recommendations, Brown urged the passage of the tax reforms included in the federal Build Back Better Act, which would raise taxes on the highest earners and the largest businesses, and extend the Expanded Child Tax Credit, which expired at the end of last year.
Brown’s findings about the federal tax code echo concerns surrounding Colorado’s own unique tax code, which is tightly circumscribed by the TABOR amendment to the state constitution. TABOR severely restricts the ability of the state to raise and spend revenue and has given rise to a tax code “plagued” by inequities, according to a 2020 report by the Bell Policy Center, a progressive research and advocacy organization in Colorado.
The report found that Colorado’s tax code is particularly regressive when compared to the nation as a whole and that the “regressivity of Colorado’s tax code builds upon and exacerbates long-standing racial inequality.”
The findings of a recent nonpartisan analysis by Colorado’s Legislative Council also support Brown’s framing of tax fairness as a civil rights issue. The analysis, issued March 1, found that lowering the state’s income tax rate could “increase existing economic disparities by socioeconomic status, race, and ethnicity,” in large part due to the TABOR refund mechanism.
While Brown and others encouraged lawmakers to address social and racial inequalities through tax reform, speakers also noted that Colorado faces a unique challenge in doing so: because TABOR is a constitutional amendment, certain of its provisions can be difficult to reform.
“In Colorado, because we have such restrictive tax laws, it can be difficult to make our tax code fair and equitable,” said Colorado Fiscal Institute Executive Director Kathy White.
Though the strictures imposed by TABOR will remain until that amendment is repealed, some tax reform is still possible in Colorado. “Even with those constraints, there are things we can do,” said White, encouraging lawmakers to pursue equity-focused tax reform measures that are achievable despite the constraints of TABOR.
A bill passed last year and supported by Democrats in the state Legislature is aimed at doing just that, by increasing the earned income tax credit, funding the child tax credit at the state level, and imposing a deductions cap on high-income individuals, amongst a host of other provisions aimed at making Colorado’s tax code more equitable.
Despite this progress being made on the local front, though, Brown and others involved in Monday’s discussion agree: federal action is necessary.
“Congress must do more to address this incredibly important issue,” said event moderator Bianka Emerson with Colorado Black Women for Political Action, saying that higher taxes on the wealthy and the extension of the Child Tax Credit would be “a great start.”