A Black Professor Has Long Said What the IRS Now Admits: The Tax System Is Biased

The Internal Revenue Service is increasingly acknowledging the presence of racial bias in the nation’s tax system — along with the years of work by pioneering researchers who’ve spent years highlighting the issue.

In a letter sent last week to the Senate Finance Committee, the agency said Black taxpayers are far more likely to be audited than non-Black ones, exposing them to tax penalties. And in January, the Treasury Department revealed that a swath of tax breaks disproportionately benefit white people, leaving many Black people with hefty tax bills and little money left over.

“We are deeply concerned by these findings and committed to doing the work to understand and address any disparate impact of the actions we take,” IRS commissioner Daniel Werfel wrote in a letter to Oregon Sen. Ron Wyden, the chairman of the Senate Finance Committee.

Brown, a professor of tax law at Georgetown University, said it’s “very gratifying” to see the influence of her research on the ways the tax system has a bias against Black Americans.Courtesy of Dorothy Brown

Werfel’s letter cited a study on race and tax audits from Stanford University that attributed the disproportionate auditing of Black taxpayers partly to audit selection algorithms that target specific discrepancies rather than total underreporting. The study prompted a sharp rebuke of the system from Wyden and a vow from the IRS to use its $80 billion Inflation Reduction Act funding to make the tax system more equitable.

But as the Stanford scholars noted, in a nod to “seminal” research that helped inspire their work, Dorothy Brown, a Black tax law professor at Georgetown University, has been debunking the myth of a race-neutral tax system for years.

Her 2021 book, “The Whiteness of Wealth,” explores the ways U.S. tax policy impoverishes Black people and widens the racial wealth gap in multiple ways, including disparities in tax breaks and exclusion from some benefits.

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NBC News spoke with Brown about the conclusions of her research and policies to address it.

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NBC News: What do you consider some of the biggest aspects of taxation that target Black people or make us particularly vulnerable?

Dorothy Brown: The way you get to pay fewer taxes is to have income from stock or gifts and inheritance. And we know that, given the racial wealth gap, gifts and inheritances are going to disproportionately benefit white Americans. So to the extent that Black Americans get most of our income from wages that are taxed at the highest rates and not income from stocks, Black people are left behind.

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NBC News: In your book you wrote, “Taxpayers bring their racial identities to their tax returns.” What did you mean by that and why are those racial identities important in the tax system?

Dorothy Brown: The first thing is we bring our address. We live in a racially segregated society so where I live has a lot to do with my race. Where I work and get a W-2 has a lot to do with my race — occupational segregation. There are certain jobs that are disproportionately white and there are jobs that are disproportionately Black and the jobs that tend to be disproportionately white tend to come with tax-free benefits like retirement accounts and health insurance. And there are other jobs that are disproportionately Black that do not come with those tax-free benefits. So being Black in the world translates into our tax returns in a way that makes it more likely for Black Americans to pay higher taxes than their peers. We’re bringing our racial identities onto our tax returns because our tax laws operate differently based upon a taxpayer’s race.

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