Racial Inequality in the U.S. tax system
Tax season is here and a new study is shedding light on inequalities in our tax system. Black taxpayers are at least three times more likely to be audited by the I.R.S than other taxpayers.
The study, which was a collaboration between the University of Michigan, Stanford, the University of Chicago, and the U.S Treasury Department, is one of the most detailed ever on race and the tax system.
The reason for this racial disparity isn’t what you’d expect. The IRS isn’t targeting Black taxpayers — the agency doesn’t keep data on race. But the outdated algorithms it’s using are.
Lack of funding is another problem.
We speak with a co-author of the study and a leading expert on race and the tax system later in the hour. First, we talk about funding.
Last month, House Republicans voted to cut $80 billion from the IRS budget in one of their first legislative moves. The bill doesn’t have enough votes to pass in the Senate, but the efforts showcase what could be an uphill battle for the agency should the GOP control Congress in the future.
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