Tax Cuts and Jobs Act Will Supercharge Racial Wealth Divide, Finds First-Time Analysis

Stephen Herzenberg |

Pennsylvanians, even more than other Americans, strongly support fair taxation—because Pennsylvania’s tax system is one of the most unfair in the nation, taxing middle- and low-income families at much higher rates than the richest 1%. Yet when Congress passed huge tax cuts on a party-line vote last year, it made the U.S. tax system much less fair, with most of the benefits going to the richest Americans—72% of the individual tax cuts go to the top 20% of families, with the corporate tax cuts also tilted towards the richest Americans.

new report from the Institute on Taxation and Economic Policy released today highlights another way that the Tax Cut and Jobs Act increases economic inequality: it rewards existing white wealthy families at the expense of the economic security of households of color as well as at the expense of the middle class and poor. On average white households will receive over $2,000 in cuts compared to less than $1,000 for white Latino and Black households. The struggles families of color have in accumulating wealth is one of the powerful ways that racial inequality in America gets transmitted across generations (because families cannot afford college, a house, retirement savings or to save enough to stop living paycheck to paycheck). In the future, the huge deficits resulting from this tax cut could also lead to reductions in spending that hurt middle- and lower-income families of all races and ethnicities, while also reducing economic growth.

Members of Congress who supported this tax cut revealed through their action a preference for an economy that works for the mostly-white 1% rather than an economy that works for all Americans. The PA representatives who voted for the tax cut who are running for reelection or—in the case of Lou Barletta, for U.S. Senate—include Barletta, Brian Fitzpatrick, Mike Kelly, Tom Marino, Keith Rothfus, Lloyd Smucker, Scott Perry, and Glenn Thompson.

Go here for more information on the new ITEP report and here to access the social media toolkit so that you can help spread the word.