Wednesday, October 11, 2023

NYU Tax Policy Colloquium: Jeremy Bearer-Friend's Race-Based Tax Weapons, Part 2

 My prior post offered some background regarding the 4 case studies in Jeremy Bearer-Friend's paper. This one will focus on the paper's terminology of race-based (and other, such as class-based) "tax weapons" - a proposed takeaway from the analysis, and well worth discussing although I like case studies (including these) whether or not they have specific takeaways for contemporary readers.

The paper defines a tax weapon as a provision reflecting use of the tax system to harm political rivals. A tax weapon is race-based insofar as the targets are people in particular racial or ethnic categories. (It views a yacht tax that a progressive government might impose as a class-based tax weapon.) Again, this is a proposed analytical category, rather than necessarily being grounds for condemnation. And it views the Texas poll tax and Thatcher Community Charge examples as showing that a tax weapon can be race-based even if it doesn't facially use race or ethnicity as a category. 

This is obviously so as to the Texas poll tax, given how it was deliberately used to disenfranchise Black (although also poor white) voters through the discretion applied by its local enforcers. But for the Thatcher Community Charge, I think the case is a bit more complicated.

In support of viewing the Community Charge as a race-based tax weapon, the paper adduces the following points:

(1) By massively shifting tax liabilities in a regressive direction, it greatly shifted burdens from white to nonwhite taxpayers, given underlying racial economic inequality in the UK.

(2) Other details of the tax could also be seen as reflecting implicit targeting. For example, the Community Charge was generally higher in urban jurisdictions where nonwhite individuals disproportionately lived, than in disproportionately white rural jurisdictions. And, since (although a head tax) it was collected through households, it resulted in a higher charge on nonwhite households, which on average had more adults in residence.

(3) There is evidence strongly suggesting that the sainted (in some circles) Thatcher held racist views.

In response, let's start with #2. If I correctly understand the Community Charge, 3 adults (say) would pay the same tax whether they lived in one household, two, or three. So the fact that nonwhite adults were more often found in the same household didn't make the tax worse for them - this was, rather, a product of its being a head tax rather than a property tax in which more affluent individuals would pay more (and businesses would pay, too). I'm also not sure about urban versus rural, as the former presumably spent more, too.

In terms of #3, yes I agree that the perhaps not so sainted Thatcher appears to have been a racist. This comes as no surprise, whatever virtues one might conceivably ascribe to her in other respects.

But #1 is at the heart of the matter. And here, I think, we face a tricky issue. Let's start with what the Community Charge was. Both its central point and its main effect was to shift tax liabilities massively downwards in the social scale - to make the UK fiscal system far less progressive. There was also an element of Mitt Romneyesque "47 percent" thinking. By making poorer individuals pay for community-level spending, the thought was that this "skin in the game" would cause the governments to spend and do a lot less. Part and parcel of Thatcher's efforts at the national government level to greatly shrink government's role relative to that of the private sector.

Did that promise to have large adverse effects on racial equality? Absolutely yes, given distribution in the UK (and US) both then and now. Could one in good faith support such a policy without being a racist? Also absolutely yes, although I myself would oppose it even in a society without racial inequality, and all the more strongly in a society with such inequality. Does the fact that one could in theory support it without being a racist mean that it is cleared of being a race-based tax weapon? Not necessarily, although I have not yet discussed (but will below) the broader "tax weapon" terminology.

Certainly in the United States (which I know best), but also I gather in the UK, race is so utterly central a cultural and sociological category that one simply can't ignore it. It's like the proverbial elephant in the room. Moreover, race and class are so poisonously intertwined that it verges on impossible for an American to have a view about taxes, social spending, and progressivity that doesn't have race as at least an important background factor in one's emotional responses. E.g., one important reason why the US has so much less progressive an overall fiscal system than our peer countries is that race causes a lot of policymakers and voters to think of poor people as "them" rather than as "us."

So, yes, I see the point to viewing the Community Charge in the UK, or flat tax proposals et al here, as having a racial character, and as in practice strengthening white supremacy, even though they are not just (or directly) about race and may be supported by particular individuals who are not even unconscious racists.

But as to calling them race-based tax weapons, there are also further issues around the question of whether "tax weapon," race-based or otherwise, is a useful new terminological category. Note, by the way, that the above analysis could be extended to call all progressivity-reducing measures (even just as between 2 potential tax reform proposals, neither of which is present law) race-based tax weapons. This in turn would raise questions as to how much we gain from the terminology, either analytically or politically.

The paper proposes "tax weapon" as a useful addition to the standard categories of (to quote the paper) revenue, redistribution, and regulation. Let's modify this terminology slightly to consist of revenue, distribution, and regulation. (Removing the "re" from "redistribution" so that we don't have an implicit baseline such as pretax income.) Tax weapons are distributional, so what is the distinguishing feature? Perhaps animus? I.e., wanting to harm a particular group as distinct from just not wanting to help them as much as one wants to help other groups that are more to one's taste? Or, targeting that can't be explained just on conventional broader grounds? But this in turn might work better for race than class, given that a focus on, say, ability to pay, or on the negative externalities that one attributes to economic inequality, is pretty much straight-up distribution policy.

Perhaps "tax weapon" is best viewed as an intensifier for what one deems especially odious and extreme distributional policies. For example, when it's used (as in the Texas poll tax example) to achieve massive Black disenfranchisement, or (as in the California example) to place huge tax burdens on non-voting immigrants, or (as in the Kenya example) to require multiple weeks of labor that is effectively unpaid given the underlying poll tax obligation, then we need to signal that this is not business as usual. Likewise, perhaps, when (as in the UK community charge example) one is aiming at a really large downward shift in tax burdens. But I myself don't find it enormously helpful analytically. Plus, if we imagined for a moment that academic discourse can affect public political outcomes, the effect on political rhetoric wouldn't necessarily be positive. The "weapons" rhetoric could potentially do ill as easily as harm. E.g., imagine that all efforts to increase tax liability at the top of the distribution were now subject to being pilloried as "class-based tax weapons." (Although how much difference this would make, compared to rhetoric about "class warfare" and "envy is unclear.)

Still, an interesting paper and topic, both for itself (the case studies) and for the broader reflections about tax, class, and race that it encourages.

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