How Racism Shapes the Tax Code

In this episode, Budget and Policy Center Communications Specialist April Dickinson speaks with our friend Mike Mitchell, Director of Policy and Research at the Groundwork Collaborative, a national organization committed to advancing a vision for strong, broadly shared prosperity, and true opportunity for all.

Mike talks about the racist history of taxes in the United States, what inspires him in his work, and the vision that he has for his kiddo’s future.

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CREDITS:

Theme music by Revanth Akella

Logo by Eileen Jimenez

Introduction by Communications Specialist April Dickinson

 

GUEST BIO:

Mike Mitchell is the Director of Policy and Research at the Groundwork Collaborative. Previously, he was the Senior Director and Counselor, Equity and Inclusion with the Center on Budget and Policy Priorities, where he led the organization’s efforts to incorporate a greater equity and inclusion lens into its research and analysis. Before that he served as a Senior Policy Analyst with the Center’s State Fiscal Policy team, focusing on state higher education policy and state-level tax policy. Mike holds a B.A. in economics and political science from the University of Connecticut and an MPA from the Maxwell School at Syracuse University. In his spare time, Mike loves taking walks with his wife and daughter. You can follow him on Twitter at @MikeDMitchell2.

 

RESOURCES:

Groundwork Collaborative

Budget & Policy Center Brief: Washington's tax code is an untapped resource to advance racial justice

 

TEXTS:

American Taxation, American Slavery by Robin Einhorn

Reconstruction: America's Unfinished Revolution, 1863-1877 by Eric Foner

The Whiteness of Wealth by Dorothy A. Brown

Poem: Do not ask your children to strive for extraordinary lives by William Martin

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TRANSCRIPT:

[00:00:00] Mike Mitchell: I think for my kiddo, I just want to work really hard to build a future where even if she strives for just an ordinary life, all the things that she deserves just by existing – good schools, good health, a clean environment, freedom from racial oppression – all those things are just taken care of so that she can just have a chance at living an ordinary life and find the wonder and marvel just in that.

[00:00:29] April Dickinson: Welcome to WA Possible, a podcast about what is possible for economic justice in Washington State. This podcast is presented by the Washington State Budget & Policy Center, a research and policy organization working to advance progressive state budget and tax policies that promote racial equity and economic dignity.

At the Budget & Policy Center, we dream of a brighter future where everyone has a home to rest in, families can afford child and elder care, and people have enough money to buy the food and resources they need.

On WA Possible, we talk with partners, advocates and our staff who are helping make this vision a reality. We know that economic justice is possible here in Washington State because we are building toward it together.

I'm April Dickinson, communications specialist at the Budget & Policy Center, and I'm the host for this episode.  To ensure that policies developed in the future are equitable and achieve their goals for justice, it's helpful to understand the historical context and persistent racism already embedded in so many government systems. That's why we invited our friend Mike Mitchell to talk about racism in the tax code, something he has been studying for many years. That was him speaking at the top of the episode. Mike is the director of Policy and Research at the Groundwork Collaborative, a national organization committed to advancing a vision for strong, broadly shared prosperity, and true opportunity for all.

We are lucky to have known Mike for over ten years and to watch him continue to grow in his work. He was a state policy fellow with us at the Budget & Policy Center back in 2012 and 13 (you can still read some of his research on our website) In 2019, he spoke on this topic at our annual policy summit Budget Matters. And now in 2022, we got to connect with Mike again for our podcast. In this episode, Mike talks about the racist history of taxes in the United States, what inspires him in his work, and the vision that he has for his kiddo’s future.

Let's get to the interview.

[00:02:32] April: All right, Mike, thank you for joining me on WA Possible. I appreciate you making some time. Today, we're talking about the racial history of our tax system in the United States and in Washington. And you've really brought a lot of historical context to some of the conversations we've had in the past. You have been talking about the racist history of the tax code for quite some time, but a lot of our listeners might be like, really? The taxes are racist? What is that all about? So, if you wouldn't mind painting us a picture of what that really means, what that looks like, and how it's shown up in your work.

[00:03:06] Mike: Yeah, sure. So, I think the first thing that's really important for grounding people when you're talking about the tax code and structural racism is to take a step back and just get people thinking about what policy is, right. And for a lot of us, when we think about public policy and we think about housing policy or education, I think it's easy to see the ways in which individual policymakers’ or communities’ values get embedded in those policies. Right? The same is true for tax policy, too. For some reason, we think of it as dollars and cents. But it's the same mechanism of values and prejudice and stereotypes that inform how we create tax policy, just like we do others. So, if you can understand that, I think it becomes a little bit easier then to understand the ways in which racism, structural racism, white supremacy have formed or have helped to form and shape tax policy both at the federal and state level.

I think that's the first thing that I would really encourage listeners to try and understand and embrace. And then it's just exploring the history of tax policy and specifically for myself, state tax policy, where you can see the myriad of ways in which lawmakers – who, for a long, long period in this country, the population of lawmakers, was really restricted to being white men – looked to use tax policy to enforce the racial caste system that we've had in this country.

And you can see that in primarily in the South, we see it originating, but then you can see the ways in which those policies actually migrate across the country. So if we're talking about supermajority requirements, which you're no stranger to in Washington state -

[00:05:08] April: Yeah, those are fun.

 

[00:05:09] Mike: Oh, very fun. Very fun. But these supermajority requirements were originally constructed in a lot of places in the South to be a firewall to prevent tax increases that would have would have gone to supporting this coalition of poor Black and poor white southerners in their attempts to rebuild the South after the Civil War.

But these supermajority requirements really restrict that ability for that population to do that and protect wealthy, property-owning whites in the South. You can see that in property tax limits. You can see that in some of the first modern sales taxes where you have these ideas around people who are just kind of leeching off the system, who aren't paying any taxes either through property taxes, but you can use the sales tax to get at it.

And of course, the rhetoric and the policy is largely targeted at Black folks. So, I think if you can entertain that idea that these systems, these policies are shaped by these preconceived notions and these prejudices, these stereotypes, then really we're just walking through history and understanding the ways in which prejudice and white supremacy informs tax policy.

[00:06:32] April: And you mentioned that values are part of the foundations of that, but I think sometimes it's also helpful to remember who was in power then and whose power and wealth was being protected. Right. Like, our communities are a lot more diverse now, but they're still not diverse enough. There's not enough representation in those institutions of power.

[00:06:56] Mike: You know, I will say there were these years, especially directly right after the Civil War, where there was an effort of reconstruction. And if you read Eric Foner’s book on this, there's this really interesting section, where he talks about this era where you have this alliance between Black lawmakers and poor whites. And they created a coalition where they are actually trying to rebuild the South in a way that does include people who have historically not really been thought of, outside of kind of white, property landowners. Right. So there's this rare, very brief, rare moment where states are really investing in education, where public health takes a leap forward.

There are programs to feed the poor that are popping up all over the South. And it's this really interesting question of what could have happened if that momentum had persisted? What would the South look like today? is a really interesting question. But unfortunately that era ends really quickly, in part because, to fund all of those very ambitious social programs, you have to raise taxes.

And when you raise taxes, that got a lot of these, wealthy white folks angry. And then the violence starts and you have what they call the redeemers who use terrorism, essentially white terrorism, to end this reconstruction period, retake power. And then, as I was just saying, put in place all of those restrictions and firewalls that prevent any chance of any real reconstruction taking place again.

And then you're totally right. I mean, once the redemption era is fully taking hold, you're talking about legislatures that are entirely white or predominantly white and are really illegitimate in the sense that, they're using everything they can from white supremacy terrorism to all these state constitutional amendments that disenfranchise Black folks, again. That creates the foundation for the under-resourced Southern fiscal policy structure that unfortunately has persisted largely to this day.

[00:09:46] April: So, as we talk about to this day, what does the landscape look like now?

 

[00:09:52] Mike: Yeah. So, I kind of alluded to it a little bit. I think one of the things that has changed is that, we think of the South – and I think it's easy for people who don't live in the South to think of the South – as this discrete space where policy may have been informed by racist intent.

And we can see the disparities there. But, other regions really haven't gone down that path. But that's actually not the case. And there's a really great book called American Taxation, American Slavery by Robin Einhorn. And she does a great job of demonstrating the ways in which actually a lot of those policy ideas that may have originated in the South or in the Midwest migrate.

And so you can see in a lot of states that weren't even around during that era, have adopted some of these things are foundational to their own tax policy structures or fiscal policy structures. And that has created a lot of the same challenges for those states in addressing some of the disparities that they see, racial disparities in particular. It's prevented them from addressing those things in the same way that prevents them from being addressed in the South. So, I would say if we're talking about something that's different, I think we can talk about the landscape for where these challenges persist.

I think maybe in a positive way, and I'm more than happy to talk about this, I think we are starting to see solutions that look to address or fundamentally overturn some of those things, that's exciting.

But I think, unfortunately, we're still dealing with broadly – specifically in Washington state – we're still dealing with pretty significant disparities along lines of race in terms of income, employment, general socioeconomic prospects that are fundamentally issues of policy. So, there's a lot of work to do.

 

[00:11:59] April: I think another thing that, as someone who is not in the policy field – I'm in communications – so, I don't always get super deep into some of these details. It took reading Whiteness of Wealth by Dorothy Brown to really understand the difference between taxing income and taxing wealth. And it's one of those things where I'm like, that seems like something that should be so obvious, but she painted that picture so clearly in that book.

Can you talk a little bit about that, too? Because I think when we invite people to look at some resources around this topic, there might be some conversations around the difference between income and wealth. And if we also don't take a minute to step back and think about – while maybe BIPOC populations’ income levels might be raising that their ability to accumulate wealth and provide generational wealth has been stymied from the beginning and has not really improved.

So yeah, do you feel comfortable taking a minute just to kind of illustrate that difference?

[00:13:08] Mike: Yeah, absolutely. I think a couple of things. One, you know, we can see ways in which households or communities on either side – if you’re talking income or you’re talking wealth – experience very different treatment just by virtue of where they're situated on the spectrum of either income or wealth.

So, on the income side, if you are making, you know, very little money and you go to file your taxes, maybe you get a refund, maybe your income taxes aren't so much and so come tax day, you're actually getting a little bit of money back from the state or the federal government or some combination. Now, you may not be getting as much as you might need and as much as you could if, say, the child tax credit were fully refundable.

We actually have made a policy decision that many lower income folks aren't eligible for the full refund if they're not paying enough in taxes. Right. That's a policy choice that we've made. There are other tax credits that you can't actually get the full refundability if you don't make enough.

On the other end of the spectrum, however, if you are filing your taxes and say you own a home, you could get the mortgage interest deduction. And that's actually the largest housing program that we run, or the most expensive housing program that we run.

So you can see ways in which even on the income side, there are policy decisions that end up determining whether or not just by virtue of how much you make, how much more you can you can get back or how your how our public policy will work or won't work for you. Now, on the wealth side, things are actually even more egregious.

So first, as we've alluded to, if you're if you're in this country, more likely than not if you are a white person, we know, on average, your wealth is significantly greater than that if you're a Black person. This comes from a whole host of reasons. From pure kind of labor market discrimination, white folks are able to enjoy greater incomes, all else equal. And so that just means on a year in, year out basis, you're being paid more. The ability to own a home in a more desirable neighborhood, to see your home value appreciate at a higher rate, the ability to save up for retirement, the ability to invest excess income into other mechanisms for wealth generation. Those are things that are afforded to you and you're more likely to be able to access than if you are a person of color, specifically if you're poor. And over time, then, that wealth accumulation not only builds up in one person's lifetime, but then it transitions into the next, into their descendants. And tax policy in this country has typically been policy that has been very lax in that transfer of wealth from one generation to the next.

And it's gotten more lax in my lifetime, such that you can see, from one generation to the next, wealth grow and accumulate. And then folks who had no hand in building that wealth whatsoever, and – I would argue for a lot of folks – even if you did build that wealth in your lifetime, it wasn't necessarily just purely from your actions, but you can see across generations where you have no hand in it at all.

You're just enjoying generations of privilege in a sense. And, like I said, we don't really have tax policy set up to catch that in any way, shape, or form. And the general narrative around it is actually such that a lot of those policies have become weaker over time.

So, that means we have a present day where the wealth of the top, of the wealthiest individuals in this country absolutely dwarfs the vast majority of low-income, low-wealth folks here in the United States. I think – and I would have to go back and look at this – over the course of the pandemic, I believe there was a statistic at one point that we were seeing one new person join the billionaire class every day, at certain points of the pandemic. At a time when people are worried about dying from a pandemic, the wealthy are just multiplying.

And the wealth of the absolute top has grown tremendously over the past few years. So, at a time when a lot of folks are facing dramatic insecurity, the consolidation of wealth and power at the top has been unfettered.

[00:18:44] April: I always found it kind of disturbing when I hear people who are in the economic space talking about economic growth and how good it is that people are, and I'm just like – there just seems to be such a lack of awareness of the people who are struggling day to day. Like you said, not even just health related, but just trying to meet their basic needs. I always found that disconnect so disturbing. I don't know if there's anything -

[00:19:19] Mike: I think we can talk about this more because I think it connects a lot to how the Groundwork Collaborative, where I work, thinks about the economy. You can build out a host of metrics right now that would tell you that the economy is working. And, you could look at broad GDP growth, you could look at jobs added, you could look at a whole host of things and you could say that things are pretty good for people.

But unless you're looking at specific communities, specific populations, or looking at where we started… You know, I could easily show you a picture, actually, where we have a country where the wealthy and the corporate elite are certainly much, much better off. But the vast majority of people are facing a level of insecurity, economic and social insecurity, that I think is a fundamental threat to the health of our democracy in our country.

[00:20:27] April: You mentioned your work at the Groundwork Collaborative. Can you talk about what you're seeing in your work that might be on the promising side? You know, the focus of our podcast is to really think about, okay, the deck is stacked against most of us. But there's more of us, right? And if we work together, we could make more progress. But sometimes it's hard to know where to start. Or it's hard to see where the good things are happening. So, I would love for you to share what you're seeing in your work.

 

[00:21:04] Mike: Yeah. So, I think this is maybe a little broader than your question, but one of the things that I'm really excited about is how we approach the economy at the Groundwork Collaborative. We have these three core beliefs and what needs to be done if we're going to see real, genuine economic justice take place.

And the first is that we center people in the economy. We often will go out and we'll say, WE are the economy. “We” being people. You know, the economy is not the stock market. It's not CEO pay. It's not how well shareholders are doing. The economy is everyday people. It's you, it's me, it's your neighbors, it's your classmates, it's your union buddies, it's your church family, whatever.

And it's our collective economic well-being, right? If we approach the economy with that lens, if we center the needs and hopes of everyday people, we will fundamentally make different policy decisions than when we prioritize businesses or the wealthy. Right. So that's the first of the pillars, right. Centering people.

The second one is we have to take on corporate power. Right? Our modern economy works the way it does because outsized corporate power dictates it that way. Workers are worse off and face more precarity in the labor market. That's lower pay, that's less safe jobs, that's less job stability because corporations hold all the cards. Consumers are worse off and we have less choice between products. When you get taken advantage of for services because there are so few choices when you're at the mercy of corporations and shareholders who prioritize making a quick buck over ensuring a safe product.

And, you know, our democracy increasingly is captured by the interests of large corporations, and that certainly makes us worse off as well. So when you look at that and you step back, only a small, wealthy elite really benefit from corporations calling the shots. So, if we're going to see economic justice, we also have to address corporate power. So that's the second.

And then third, we have to build public power. So that's unions, that's collectively owned businesses, that's a vibrant ecosystem of grassroots organizations. Public power is critical to a strong economy where prosperity is broadly shared. And I think public power, that's the pillar that I get most excited about because one, it connects people to other people, which is really important because I think in our modern economy, we are constantly pushed to think of ourselves as just kind of on our own as individuals.

But, this idea of public power is pushing back against that idea and connects you to your neighbor and to other folks. But it connects you to the economy in a way where you exist as an active participant in shaping broad economic well-being and giving you a sense of ownership in the economy that I think for a lot of people, especially Black and Brown folks, you don't often feel. And frankly, it's a feeling that I think the wealthy and corporations and economic elites don't want you to feel. So I think that public power is super important.

I think those kinds of things: centering people in the economy, reining in corporate power, building public power are super important. And those are the kinds of things, and the policies that support those things, that give me hope or keep me excited.

 

[00:24:42] April: I love that, and I am with you. That idea of public power really resonates with me, and even just thinking about rethinking what wealth means and who gets to have it and having that more collective approach. I just love that, so thank you for sharing that.

Since last time I saw you, you've become a parent. And I know that as a parent myself, it kind of shifts your perspectives on your daily work, and also on, I think, what we might want to be possible for our kids. What's the vision for the future that you want to see your kid grow up in? And what are the policy choices that we need to make to make that vision a reality?

[00:25:28] Mike: Yeah. So, I think about this a lot. I think a lot of parents stare at their kids and they think about the kind of future that they want for them. So, my kid is still pretty young. They're going to be 16 months in a couple of days. And so, this is a little sappy, but there's a poem, it's called Do Not Ask Your Children to Strive by William Martin. And in the poem, he tells the reader not to push your kids to strive for an extraordinary life. He says instead, help them to find the wonder and the marvel of an ordinary life. Show them the joy of tasting tomatoes, apples, and pears. Right. And I love that sentiment a lot.

[00:26:18] April: That’s beautiful.

[00:26:19] Mike: Yeah, but I think a lot of people, for themselves or for the people they love, they push them to strive for the extraordinary because we've made ordinary so hard for so many families. You know, you're worrying about affording rent, about whether or not your health insurance is actually going to ensure you. You worry about if your kids schools are actually teaching them and setting them up to succeed. You worry about being able to afford college. You worry about putting gas in your car. You worry about whether or not you're going to get enough hours at your job. And then in the back of your mind, there might even be the existential feelings around rising sea levels and perpetual forest fires. I mean, we have, as a society, we have failed in making an ordinary life possible.

And, I think about a generation of fortunate grandparents, maybe not my grandparents, but for this very narrow sliver of grandparents who did have stable union jobs, and you couldn't see the effects of climate change as noticeably then. And there was this vibrant middle class, particularly for white folks, who maybe they did have this moment where an ordinary life was actually something you could marvel at.

But today, we've really failed in making an ordinary life possible, let alone where someone can sit back and actually enjoy it. So, I think for my kiddo, I just want to work really hard to build a future where even if she strives for just an ordinary life, all the things that she deserves just by existing – good schools, good health, a clean environment, freedom from racial oppression – all those things are just taken care of so that she can just have a chance at living an ordinary life and find the wonder and marvel just in that.

So that’s kind of where I’ve landed.

[00:28:26] April: I love that so much. And I think it takes the pressure off your kid too, right? Like, being you is enough, right? Being you is beautiful and should be enough in the culture that we've created together. So, I just I love that.

 

[00:28:43] Mike: And we can do it. One, I want to make it clear, there are countries that have- I think sometimes when you get that kind of quote-unquote pie in the sky, people start to say, yeah, sure, if it was possible, we could do it. There are places that are much, much closer to achieving that. Where we can see quality of life as much higher, stresses lower. The burden of raising kids is lower. So, it's not “pie in the sky.” And in a country where, as we've been talking about, the wealth exists, we can do that here. So, I think that's also really important.

[00:29:20] April: Thank you for reminding us that these are actual policy choices that we could be making. It's not out of reach. It's not something that we have to create out of thin air. There are examples across the world for us to be able to achieve this vision that you have. I love that.

Before we wrap up, is there anything that you would like to say that you haven't had a chance to say? Like, maybe I didn't ask a question that got to it.

[00:29:50] Mike: Yeah, I'm trying to balance some of the heavier things that I lifted up earlier, especially around race and tax code, with the things that I do find encouragement, specifically on the policy end. And you know, this is not a weedsy thing. I have been encouraged more and more and more – and I would encourage the listener to be a part of this – I have been encouraged more and more and more that the policy solutions… just broadly understand that policy change – both needs to be bold but needs to be inclusive, and I would say expansive – is possible. I think that there has been more and more space increasingly to envision bigger, bolder policy change and not have to see policy change as something where you tinker around the edges.

And I think part of that, obviously, is because the moment demands that. But I do think just the comfort of it is really encouraging. So, like when we talk about health care, the fact that we can have a conversation about “Why don't we just give everybody health care?” is like a legitimate conversation.

Or when we talk about childcare. Someone can say, “Well, we should just make sure everyone can have childcare.” Or, “Let's cancel student debt”. Right. The bigger idea now seems to be something that we can talk about and engage. Now, getting it across the finish line is like a-whole-nother thing. But the fact that it's a part of the conversation is really encouraging to me.

And this is one of those things where I keep reminding people that, whether you think it can happen or it can't, you're right. And so, think that it can happen. You know, think that it can because that's what makes it possible and that's what makes it a part of the conversation is that if people think it's feasible and lean into it, and not give in to the cynical pushback that says, “Oh, how would we pay for it? Or, “Oh, how would that work?” Or, “Oh…” No. We can do that. Other places do it. You know, we've got brilliant people, we can figure it out. But we've got to believe it can happen.

[00:32:22] April: See, that's why you're the perfect guest for this show. You just said it's possible so many times.

[00:32:27] Mike: There we go.

[00:32:28] April: I'm feeling encouraged by you, as well, Mike. I think you're right. It is possible. And in Washington, you know, we decided that there is so much wealth here that we should pay for things like education, child care, making that more accessible, and that's what the capital gains tax is doing. There's people here with so much wealth. We can make these systems stronger and make them more inclusive.

And I just loved what you said, too, about the people power concept of getting more people involved and having folks understand that they're part of the economy, too, and they can be a part of the decision making. I'm feeling so encouraged by this conversation and I just really thank you for taking the time to talk with me, Mike.

[00:33:19] Mike: Yeah, absolutely. Thanks for having me on. And yeah, I'm really excited to continue to see the great work that's happening out in Washington state, and be in conversation.

[00:33:35] April: Just want to give another big thank you to Mike for joining us on WA Possible. During the interview we referenced a few books. You can find more information about those texts, other helpful resources, and a transcript of this episode in the show notes and on our website budgetandpolicy.org/podcast.

Thank you for listening to WA Possible. This podcast is sponsored by the Economic Security Project, the Washington State Council of Firefighters, AARP of Washington, and United Way of King County. Our theme music was created by Spokane beatmaker Revanth Akella and the WA Possible logo was designed by Seattle based artist Eileen Jimenez. If you enjoyed this episode, please consider subscribing, giving us a review, and sharing our podcast with your friends and family.