Dorothy Brown is an author and law professor at Emory University. Dorothy joins the Armchair Expert to discuss her new book “The Whiteness of Wealth” and how race relates to taxes and wealth inequality. Dorothy and Dax discuss the problems with the current tax system and solutions to the systemic racism of tax law. Dorothy explains the differences in married couples filing for taxes, homeownership value, and how wages are invested among white and black communities.
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
Welcome, welcome, welcome to armchair expert a MIKE badgering them join, joined by Jennifer Catfish, hey Jen, Why are you doing prepare? Oh, my god, we doing an outdoor segment for outdoor at the jurisdiction of fishermen's have absolutely Arabs, maybe some waiters, maybe waste time small river and take some say was an organism vision today, We have a professor of LAW at Emory University by the name of Dorothy Brown. Northern Brown has debt, her career to understand the ways in which you s, tax policy drives the racial wealth gap emission made complicated by the fact that the IRS, despite collecting troves of data, does not collect data. By it's her new book, the whiteness of wealth, how the tax system impoverishes black Americans and how we can fix it. This was of
very fun interview very and so informative Dorothys from New York and she, a lot of spring. In her step, which I love Yeahs, she works at Emory, It is my not alma mater by in Atlanta spiritual, my aunt went there. Also. I have a connect, you got a great connect a lot about Atlanta you're from Atlanta. You don't have to listen to this yearning everything we talk about. Please enjoy Dorothy Brown, now a shout out to a couple of our favorite black owned businesses. Today I want to tell you about Henry face masks fashion designer rich, fresh, founded Henry Mask. The colorful masks are all made in LOS Angeles and for every mass purchased. One is donated to medical workers on the front friends and families and need when a lotta businesses are sadly shutting down. Henry Mass has been growing and has been able to create over sixty jobs by the way I have so many Henry masks and they're sitting.
Over there, the gorgeous gender so gorgeous than they do like a really good job, covering her whole phase, which I really like some de jure. More visit, Henry Mask dot com, that's Henry Master Monica, ok and I will be highlighting cocoa in breezy code. When breezy is an eyewear company founded in two thousand nine by two female designers and very early designs were an the entertainment and fashion world they've done? A few really cool collabs, like with her she's, so they're awesome to learn more is it Coco, Ambrese com, that's c, o c, o and b r e e z Y Com, Coco Embree love the name he's an hello. Oh Dr Dorothy Brown, I'm so embarrassed and I'm sorry that we're late. It's me not Monica. Well, I
wouldn't be money. Well, you might be wrong. You too, can be late. And beyond worries, no worries whatsoever. I wouldn't be late for a professor though I like to get professors approval, you're right right right. We prioritize, who were trying to infer as you will be very high and the less honest of us are you, can do us from Lana. Yes, I am and you know what Monica is from Hotland. That's right did your research I'm impressed little, but I can't help it, but you from Atlanta right. Are you from the Bronx on from this outbreak? and did you stay in New York off Will you cause? You went to end my you look our lives. I stayed in Europe through college. It went too far. And then I went to law school at Georgetown. So then I went to DC and then I came back Nyu then I clerked for a judge in the tax court in Dc Practice law in DC came back to York.
Work the work as an investment baker move back in with my parents. That was apply. As you know, you think you get rid of your kids and they boom around here. Even if they got a lotta greet your it's a lottery degree you're like oh. I only see them on Christmas, no back in then I went back to DC to work at HUD and then got my first teaching job at George Mason. So I stayed in DC with Bat New York Dc New York DC, but I never took the New York bar because I did not want my parents thinking. I was ever really going to move back to New York, of course. Of course, DIN did you just move to Atlanta for the job at Emory yeah, I'm correctly and in any of those early stage of your life. Have you gone to Atlanta? I worked on a deal when I was an investment banker in Fulton County in Atlanta and who knew at the time right. I actually live here, but yeah. I worked on a deal, so I been to Atlanta a couple of times,
but not a lot. So I didn't know much about it. Lana but can you give me your first impression, because this has come up several times his I'm from Detroit and the first, am I went with Lana. I was like. Oh, my god If I were black and in Detroit I would move here yesterday like what a difference this place is, so you are so right and I'm going to continue asked where I moved to Atlanta from so I was teaching at Washington and Lee, which is Lefton in virginia- and I lived in Stanton Virginia while I live in Stanton Virginia because because instead, so it was twenty seven miles away, but I could walk down the street and nobody knew me relax agenda better, bring admin, So I won't to stand where I lived on a block that was fairly racially diverse, but there were like no black people on stand right. So but more,
first weekend in Atlanta, I'm going to the best buy, because my cable isn't hooked up and I need to get an antenna. So I can watch some tv tv the ball very resourceful, because I have a full grown male friend, Rhine Handsome, whose Ike what to do by the football game I caught the cord. Unlike do we live an ally, get a plucky montana and put it in your tv sizar. I just want to very resourceful, very competent to very direct live all these continue better day, so I'm at the stop sign into the left in me, is this Red Ferrari with a black guy, DR than it has ever leave? And yes, you seem like a fairy tale in the eighties when we will go there, you'd be like a popular middle class, straw and it was at least half black and, as you drove neighborhoods, all the middle
come neighborhoods were populated with black people. They a new cars in good clothes and says that was unfair. Enable coming from Detroit, which was two percent black and among the poorest cities, the country and truly truly a sentence like no option now, just a very bleak bleak place, and I will tell you, for the most part in Lexington, the black population. Very poor, and what I learned from being, that area and moving to Lana is when white people are used to black people who are poor, disenfranchise without a voice. They try I'm really really badly, and they think there are no consequences associated with it. So I didn't have a labour for that before
teaching in that area, because you didn't see that New York right, you didn't see and right- and it was like you know- there's something about the racism. That's like crazy! and when I went to one way or another in like a wipers, you above it you almost I'm so sorry, I've, let Europe as you don't know why I can beat me as best ran whatever you could have leverage right, there's an element to wipe, only you re out voiceless black people and how badly they treat them that I didn't know what that looked like before like there's all these strata in its like. Yes, the folks in Detroit. I know we're looked at as like a wrong above homeless like the way you think of homeless, like oh, they ve been disposed, they're, just sitting there in its over for them in this weird thing happens in your brain were yet you're. Looking at them is people who have left this,
you're old, that I you're just the only way in including in being yes and of course, I also drew up at the height of the crack epidemic, So you were seen like zombies. Walk around in states that were right. Very novel in the aid lies right, that's breakthrough and its different. You take things a granite. So like growing up in New York, a black person could speak their Martinez number. Do I was in high school and were picketing for more money from the city, just what you did, but when I lived in cincinnati- oh my god, since the matter. He is really the south right, the airports in Kentucky and right, don't pay attention a battle. What are the jokes I heard was
wait apparently said when the world comes to an end. I want to be in Cincinnati because it's ten years behind the rest of the world, so I remember pushing for more black students to get hired at law firms and somebody at a Cincinnati law fir and said that may be how they do it in New York. But that's not how we do it here and I'm like okay, what about is confused and make us, I got genuine. You won't you, but it was very in very backwards and it took like, I think, the thirteen or fourteen dead, unarmed black person murdered by the tops before the riots like if they had just stopped the twelve. They would have been right, you're right that is so telling that's so so telling of what the expectorated reality and threshold and critical masses of a place that if there's one and people go crazy, you're, like ok, probably purty approaching, egalitarian,
twenty year, like me, a mayor so used to this I would argue Judy, other area that is stark in that way. Is the delta in the south? like when you're along the Mississippi River. Radiating may be two miles out from that is also uniquely. The people are written off in a way that seems unique and very challenging its ironic they'll, because people would assume Georgia is incredibly racist, south and like new, maybe wouldn't put Cincinnati in that box, but at last lives in Georgia and it's very very different, very different yeah. Who was it that said the moral it wasn't Dyson? It was Bridge on her right yeah. I thought this was interest in you, VE, probably heard of being in the land about he said at last. The moral centre of the. U S like you have defined essential Centre in New York, you have the entertainment centre here, but the deadline is the moral centre or moral industry I like
or at least Lena lights. The thing for this, this the city too busy to heat, but I call be ass in every way after street names change for white people. Not wanting to have the same street address is black people, ok, they're back that people don't talk about because we're like, oh as a city to visit, hey, we integrated blah blah blah so yeah, but you don't want to live on the same street name as black people. So don't come with they're, right yeah. I have that stance is an outsider. I'm not vested in this. Now that the ok yeah you're, not the English, that identifies the beacon. So I think we were all agree, no ones in the end zone dancing in Atlanta. It's not like done, that they haven't achieved the finish line status, but also
very incrementally ahead of so many places, o absolutely in a lot of that is attributable to like the vision of major jack someone Maynard became mayor, one of the things he did that really built the black middle class if he required black professionals, deals so wanted airport contract. You better come to the table with some blackfoot deal. I worked alone was because I was a black lawyer in the phone and my client was a black investment banker at the firm street. So I learned that the real then why we were at the table was because Maynard is like you. I get many steady business if you go and at first the White community bought, but when they didn't get the business they decided they would have to live with. The fact that they have to coal represent deals with black people. Ok, sir. That's me as such
to double edged sword. For you personally, and I give you my own personal example so not too long ago, Another comedian who I like so much and who I've interview? and we have since talked about it, everything's groovy, but he was saying saying basically there's a movement for, like average looking white dudes to have their own shows and he It's me as an example in math and self evident fighting words that, MR that that light, but I dont have fighting words. Ok, can you The aim here is what I said. I call them, and I said I am not upset that you think I'm average looking. I too think I'm average working what I'm really and about is that you wouldn't think I had earned the position I have through. We gonNA, groundlings, studying at you see, lay like All these things. I did it really herds that you think I'm always sittin here goes on? Why and I was like oh man, what a great feeling for me to experience, because this is how every black person that is in a white color job, probably feels that the people around them through
they're only there because of that, so as much as it's so great it was mandated and you did get a seat at the table. I imagine it's also very ripe for complexity, so here's a funny story. First meeting of this deal I'm flying from DC, and let's put it this way when the sun isn't shining people lose their minds in Atlanta, so there's fog and the airplane circling in the crap I'm going to be late, I'm going to be late. Of course, I'm going to be late, so I get the cab go straight to the meeting. My butt is not in the chair before White Baker Number one asked We requested flying answer it and then wiping the number to ask me a question and I saw it and then we move on and afterwards I sense of my client. Is it what was that about? Oh, there were just testing you because they thought you were just here, because you were black, hang back out of the poor,
like brilliant yeah, I had better than you. I guess I learn that part of the cost of doing business. Even if Maynard didn't have that rule. If I'm in the room why people assume it's because of a form of action soon, I'm not qualified, they assume and I've had that forever. So I dont, even the justice that much anymore or depending on the mood I'm in a shit. I like it as an opportunity to make you like. Never do this again haven't thought. Why would imagine you could say kind of the art of war approach, which is your ear? I'll appear, weaken, be strong. Let's do it like that's a great for me to start from with your expectations? Low? Yes, yes, because what I try to do when people do stuff like so I
at a conference presenting my reason, tat work and the first comment was directed at me and it was I own white male tax law, professor, who would tell you he's progressive and he says Dorothy S he knows your work is a relevant because blacks are poor and dont pay. A lot in taxes I met this half roads were full of tax law provides is all over the country, and this is what the jackals says for his right. So my response, was well. If you're right, then what we wanted, our children to grow up to be poor and the room burst out laughing. He turns beat red because there's nothing. A white guy hates more than be a laugh, and that is my super bowl yeah yeah, you watch handmaids tail. Oh, I watched the first two seasons and it just got too much so I couldn't watch it. That's a lot
yet severally Stockholm born, but yet in that they close. Maybe it's not the writers scope, but it's a man's greatest fear is being humiliated in public in a woman's greatest spheres being murdered by a man. Oh yeah, ok, whose Billy it in public I've heard that yes, the hours yeah I'd rather be shot in the back of the head, and related the boy when a part of any marginalized group that you can choose to use some of these opportunities. Fine you know like even the other day. Sometimes when I'm talking to people further podcast on like scheduling as from talking to people's publicists, and then I'm just like this young girl who they're talking to who doesn't really have any power. I work for tax and once they start,
going down a road and like no. No, no, no! No. No. I will tell you right now. You have no leverage, it you're coming on horizontal, and I will tell you when I make the decision not to a course for me and yes, it feels really good to be like don't do this to the next person right right? No, it's very true, and as a black woman who teaches task, it's a very white male field, and then I had the audacity to write about systemic racism in tasks when all they want to talk about is class. It's not race. It's class black people are or in don't be a lot in taxes, it's this mindset that, if we're talking about black people than their poor and they're, not paying a lot and taxes when three quarters of black Americans are not living in poverty, so can you tat lover Do the friggin mayor yeah, like really I gotta tell you. So it's been an uphill battle
explain how, because on the surface you could say I imagine if you're, not outsider, Newman, studied this. The way you have the IRS is one of them. Few agencies that will actually never ask your race right, you're, not putting your ethnicity on the tax form. So it could be argued that if ever there were a system that couldn't possibly we target erase it, be the one that doesn't even know whose races who yes and so to responses one is pro public aid. Done, research showing that people who claim the earning of tax credit are being audited to a great degree and it's disproportionately impacting black people because they live in the south. So the audits have been disproportionately in the south were lots of black Americans live what I hate to slow you down, but I don't know that everyone knows the earned income, so I think everyone gets to deduct. I don't know what the last time I did ten
fifty easy it was like. Eighteen, grand- I don't know what it is now, but so earning earned income tax credit for or low income wage earners? The greatest amount is, if you have children and the least amount is, if you had no children and if you're making like sixty thousand dollars, you not eligible so its purely for low income. Wages And it's really really complicated said the tattler professes freakin complicated. So you have people in Congress, Republicans typically who say it's rife with fraud and abuse, and it really is then it's just so complicated people literally. Don't know they do the trifling error. Probably it's right with Arab. There is a government studied that showed when you went to tat return, preparers as well as individuals and government officials. They all made mistakes. How complicated is that? Ok, so does this arnica chats credit, and it could give you a refill
so if you are eligible for credit that is higher than the amount of taxes that were withheld. You get money back from the government and these are low income wage earners. So it's like a really good thing and it lifts children, poverty. What their number now, like Fer, a single person in and firm somewhat dependence like. What can you make tax free federally? At this point, I want to say twenty something: ok, twentysomething thousand roughly ok, and if your in the earn income tax credit range, you will wind up getting a refund back. So it's kind of like a wage supplement, yeah well, more than of eitc planets are white, but what the Propublica research showed is: there's a disproportionate percentage of black people being audited, because the audits are in the south where a lot of black
people live okay, so you could say how is this possible? The IRS doesn't collect statistics on race. I guess it's just stuff happens. It can't be racism, so not collecting raise data. Does it mean black people look targeted because the system finds a way. What am I right in saying that this gets into a really debated issue, which is we evaluate racism on policy or results and my book looks at it, way. It looks at it on policy and it looks at it on results and what you see is the policy would have told anyone who was paying attention. It was going to affect black people negatively. So are they doing these audits based on
errors that occur? Is a disproportionate amount of errors being occurred in the south, so the IRS would say they do these audits because their easy, they can do them by male. They can do them by correspondents. Dorothy says they do them because they are not represented by a turn, because if you really want to decrease the tat gap, which is the amount of money that all the government versus how much is paid you hedge funds, you don't go to the poorest Americans, that's not where the freaking money is, but that's where the people who aren't represented by council are so it's you can. You can like case the case close the own? but you could do all right all they yeah. Where would appear that they ve, chose a quantity over quality strategy and that they know they're gonna have to invest a bunch to win one of these cases against a law firm right and it's easy.
It gone abominable community. It is easy to pick on people who don't have the sophistication to respond. They get A letter from the Irish me start panicking and it's just its fraught right, so that happens in the absence of any race data, though I was on a panel once and I was talking about recent tap and there was someone from the IRS and said we don't want to know. We don't want to know well, okay, but I wrote a book that says Jesus you don't know Demi black people, I get screwed, ok! Well, that's like claiming prince of the law when you get pulled over. We don't really accept that exactly exactly so. I understand this mindset I bet says: well, we don't really want to know, but black people pay and how to tat
That's, so I want to know. I want to state that right, so this color blind approach that the Irish has taken, which is contrary to virtually every other government. Agency is, in my mind intentional, even though I can't like show you the smoking gun, but you say every other government agency collecting race statistics, and you don't do it. That's not after them. That's like I don't want to know. I don't want to have to deal with this, which is to say its color blind, its class, not rates. That's often what I get in it caused me to change my scholarship a little bit. I started just talking raised and the white academic. They wilder the ethical clouds and not raise, and then I would have to Van showed them race and were asked that showed
for example, at all income levels, black people would disadvantage this way. Then its causes them to stop talking about here is just not to mention. Class and race are connected like if you can't say that their separate among the women we ve done it's a lot of these episodes and just learning like you can't parcel out the fact that there are so many black people in these our income ere, it all systemic. It's all part of racism in general yet, but the other thing I want to see is like also what a bizarre defence to an inequality which is like none other just fucking over lower class people. Yes, That already to me is like okay, even if let's say they were right about that. Why is that now? Why are you so proud, yeah, yeah yeah? Oh, no! No we're fucking over poor people, Dorothy yeah we're not forgetting black people. All poor people need to get box by us we'll do it. My way
Sunday exact. It also belies one other point progressive White Americans want to believe that the black middle class and the White Middle Class have the same experiences and what my research dies is hit them over the head. That is exactly not the case and that really hard, at least for liberal white academics, to hear really hard, because they want to believe and its american dream, and they want to believe that black people get to a point where they don't have to do with racism, because if they don't, they have to look in themselves and say: maybe I'm part of the problem. And let me tell you- academics walk around in denial and a lot of different levels and that's one of the biggest once their racism. Oh my gosh. Sure when I one are you with Mama. Can I ask worse if she wants to argue by saying you wanna dance and if she says yes, ok
dance. I am always very concerned about by a merry options, so it's race or its class. To me, I'm a little nervous about saying it's one or the other and I'll give the example. So some black academics in fact came out and said. You know what you're saying that black people are disproportionately by CO bid your also kind of ignoring the perfect correlation between black people living in densely populated areas. Yes, you can say its per disproportionately black or you could say it's disproportionately people living in densely populated areas. Now I think both things are true. I think it is uniquely hard on black folks, and I think there are other criteria that with becomes-
Animals were black folks that make it likely that these things will be different. So I dont know what I want to make sure, but it made me think of that, were I think. Ok, it's most. Certainly you have the data disproportionately affecting black folks when it comes to federal taxes and also bigger percentage. You say: seventy five percent of black folks are not living below the poverty line, and do we know what percentage white folks, I know white folks? Are them this poor, so I think the poverty rate and wake immunity is nine percent. Twentysomething percent forgot black Americans, so, to wit, we get the disproportionate percentage of black living in poverty. So I hear that thinking about hope it exists of what black people are more likely to have co morbidity s because of racism. I e stress high blood pressure right so
even if you were to look at the percentage of white men live in highly dense population versus black Americans. And then you could normalize and say: okay, there's that piece, but then the black people. We are living with stress that a white peers don't have which leads to high blood pressure, and research that I talked about where middle income black in Hispanics more likely to have bear outcomes even when they have health insurance, because they're dealing with a racist system, stay tuned for more armchair expert. If you dare we are supported by pandora. Now I adore my mom she's, a first love of my life and its mother's day, and that is exactly why I went to Pandora and bought my mother, a beautiful necklace there.
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These ships, and in that process they were not being given water rights, are a great number of people died, during the migration to the boat and the people that live. Where people that had an abnormally high salinity count in their body, so it prevented them from dehydrating. Then they were put on boats for a month. Long trip again no water. So then there was a whole other wave of people who die from dehydration. So the only well that made here in the slave trade or people who were genetically predisposed to have a very high salinity count which kept them live. So it was this two rounds of forced natural selection. So We need to acknowledge that that is a health condition that was created against you,
well, but you will now live with in this country. Forever. Is genetically been predispose for that and, of course, now we also have on top of that the stress of racism. You know years ago there was a book by Ellis, Pose called the rage of a privileged class, and it was basically a book stories about black people seemed to have made it partners in law firms and this partner law firm women on a Saturday and a white male junior associate didn't know be wise and asked him for ideas and a partner
the ILO in Yemen that but what they how'd. You do therefore get those you're fired. You feel so much better. What years later, he was telling the story and it got injustice. Angry I mean there's like crap. We deal with on a daily basis and the systemic racism bet you deal with in these jobs. It is the beer and everybody has to figure out what works for them. What works for me as its! when stuff a harder. We delete fight, not enough that today, really is the prevailing like this is a more residual racism, even as a college that you're here. Look at this, your tenured, professor discern expectation of granite that the measure being requiring at all times. Yes we're just so Not me so we are absolutely themselves rods,
Wherever I know I am from the south and, unlike I'm very direct, you never have to wonder what is doing. They are as one of my colleagues that we know you don't care what we think that, unlike my working you haven't been yet there is this. You should be grateful and, unlike for what yeah you not discriminating again beach with another hire me cuz, I'm black, so there's certainly is bad and I've been a law professor, since one thousand nine hundred and ninety one- and where is my fourth law school like the joke. They're, all crazy, but being tenured is like the best job ever I love. I love my job. I love my students. I love my job. We got to go In our view, an old class made of mine and anthropology you see lay whose I'll become like he's one Macarthur grants he's now, professor. You see
and we're interviewing amongst agent. Unlike what stories are we going to tell his eye fell on ten yards? Let's talk run from the cops on your motorcycle interaction and bullets. Whatever happens like yes, yes, yes, so what is the disparity like? What are the numbers, how much more our black folks on average pain in their taxes like what are those numbers? So I haven't done that calculation? What I'm John is look at. How tat lies? Disadvantage black americans when they engage in the same activity, is white, kids. So, like, let's take marriage, a lot of people think when you get married me, you gotta tat sky well with your why they had three year. That's problem what it means, if your black, that is not what it needs so, let's take, took up one couple and its typically
He makes one hundred thousand dollars. She is a stay at home spouse and then we'll take a couple who makes fifty thousand dollars each. The one hundred zero couple gets the tax cut when they get married, because if he was single, he would be paying higher taxes. But the rate schedule for married means his taxes go down. So the units taxes go down that fifty fifty couple, they're not getting a tax touch and when you step back for a minute and say the tax large reach, those to households, the theme, but they are so not the same thing to workers to get the income of one one. How do we treat them the same and by treating members say saying we give the hundred thousand dollars
a wager household attacks cut, but the other one no tax cut and guess what senses Bureau data tells us. Hundred thousand dollar, also with the one worker, is likely white and that do equal earner household is likely black and white this came out in nineteen forty eight, it was eminently predictable. Even in nineteen. Forty eight, the more black wives work than white was really so. This event news this news, tat law, that's driven by white members of Congress, who know what their family looks like things. Yet this makes total sets yeah. So I want is more problems before your solution, so it's another example homeownership everybody talks about where we can solve the racial wealth gap. If we get more black people own at home, because it's true the majority
Black Americans are renters, not home owners and the majority of White Americans or homeowners. So you think we just need to get more black homeowners. Well, no and here's the problem, white homeowners and black motors live in different neighborhoods. So again, let's use example: why homeowner spends on thousand dollars on a home. Black home spends a hundred thousand thousand people live in LA Not me who live in LA let's be clear: they're, not Californians, continue! No, no! No! No! You are very, very correct, so your audience is like what is she talking is a high level of debt, a daisy number guy deepening number. So the hundred there dollar home in the wider neighbourhood is going to appreciate significantly. Why? Because my are you homebuyers a white,
they want to live in virtually all white neighborhoods that most white Americans actually live the black homeowner. Then women that no, the black homeowner lives in a racially diverse or all black neighborhood, and that home is not going to appreciate the way the home in the white neighborhood would so our tax he says if you are married, a new seller home and you make half a million dollars. You get to keep that tax, free but if you sell a home at a loss, you don't get a tax break for the loss. You don't get to deduct there. You don't get to deduct you just wait by by to the loss. Well, what we see is homogeneous white neighborhoods, aware of the significant tax free appreciation is an aunt Rachel.
The verse for all black neighborhoods, those homeowners or more likely to sail for a law is a non deductible laws. So you look at this and you got You know, tax regain, makes sense, no loss, okay, but black people once again engaged the same baby, you're get disadvantaged and it's why homeownership increasing on the black community will not solve the racial wealth gap. Problem, because we're not buying in those those all white. Why? Why not? Because if we do it's really good financial investment but the White neighbours conglomerate outside you, and if you have kids there in school, then the chief gonna target them
or this behaviour, when they're just doing what the white kids are right, but there is perceived as young criminals. So you have all this. What I call racism tree eyes You then have to engage in if you're black in an all white neighborhood, because you want to get financial benefits. If you look, in a black neighborhood or a racially diverse neighborhood. You don't have that issue, but tell you don't put all your money in your house, I will tell you, don't take who met with alone, because you're, not necessarily gonna, get out of your home. What your white Kali get work gets out of their homes and I want to bring up some weird statistic. I learned in an LA geography class. I don't know where falls into this, but I just always think about this. This
statistics. I might get a little wrong, but its it was virtually this. If you take the four groups in LOS Angeles, that our homebuyers, why people, Asians, Latinos and black people why people want to live a white people? First, they give lunar Paul. They prefer to live with all white people. And then they would prefer next to live, to have asian neighbors, then Latino, then black. Yes, if you as Asians Asians, want to first live with all white people Then they want to live with Asians. Then they want to live with Latinos and they want to love black people and then Latinos one of them with all why people than second Asian that last black black people wanna live with all white people, then Asians
and latino, then black this was in two thousand- is not to look at a research shows that black Americans are fairly closely supportive of either an all black or racially diverse neighbourhood. Their least favorite neighbourhood is the all right. Ok and research shows that the animals against black homeowners doesn't translate to Asian and latin next year, so that what you said at the beginning. Absolutely right at least favourable is the black homeowner right there, and when I presented this research, I got the most push back from white law. Professors who basically were living in all white neighborhoods and didn't want to get called out for it yeah. So they like didn't like what the research showed and they would always try to
talk about well. Is it really rate or is it that you know we don't want our property values to fall and we're concerned, and my response is as a black homeowner. I don't care whether you put on a plan in costume and go marching or think you're. The best person ever own, raise my whole values are being affected. The exact same way, so I'm here right here is something that's a lot of white Americans care about because they want to prove that their not racist. But if you're talking about the impact on black well intent is a relevant yeah. I'm getting hurt, yeah Oh well, that's a great example too great example is there are jobs? Okay, so let's say
We have again black worker white worker, their incurables next to each other and less suspend disbelief and assume they each make a hundred thousand. Can I use your fingers because it says the labour market is gonna, pay the White guy more, even though their equally qualified, but we're gonna, suspend disbelieve for the sake of her example. So the White guy who has a hundred thousand dollars salary? Has his parents pay for his kids k through twelve? When, Graham I die, he inherited the house, the black,
On the other hand, if sending cash home to his parents, maybe a grandparent, maybe a sibling, because they're about to be evicted or the light is about to get turned off. So research shows black college graduates are more likely to send money up to their parents and grandparents White College graduates are more likely to get money from their parents or grandparents for down payment for homes paying for K through twelve, in other words, well builtin the area now? Imagine they both have a hundred thousand dollars salary, which one of them is gonna, be most likely to map out when there were time in account, the employer often arise the white guy with a hundred thousand dollars. You not send money home to mom and dad or red pirates right. Also, all those things you just listed basically estate, tat, stuff, there's a toy
three million dollar deduction, so they're also receiving all of that tax free. Oh it's! Even worse. It's tax free under the income tax system to write, so it's never tax right, whereas the black college graduate. Send money to their parents. They can't maps out on their retirement account if we are lucky they'll be able to participate somewhat like them also more likely to make an early withdrawal because they need the money in Riga and there's a heavy tax penalty on early withdrawals so, if you have a job and two people they're experiencing that work, that salary very differently
based on race, okay. So now, let's get into what some of the solutions could be, because I can already see a potential problem, which is what you're saying is most certainly true, and also there is some significant percentage of Americans who are not in the category that they're paying up when they are some receiving right. There are some now multi generational, successful black family. So how do we do which is not going to reward those folks, but then help the folks that are being penalized. So first I'll say that when black people manage to wrestle wealth out of a system designed for white wealth. It's a miracle and not the dorm. It's not something we should expect. So
I don't look at it as finding out a way not to reward those successful black people who have managed to wrestle wealth out of a system that wasn't designed for us, but I also think about that's aberrational. Most black Americans haven't figured out how to wrestle wealth out of the system because the system is designed for that not to happen when I think about solutions. The first thing I think about is: we've got to have race and tax data, published period full stop? If I hadn't become a detective over the last twenty five years and did the research and then wrote the book, you wouldn't know, you still wouldn't know yeah, but that wouldn't stop black people like my parents, paying higher taxes, and so we ve gotta make this the new we're raised data is published and President vines first executive order was about Rachel Equity across.
The government, including this aggregating at a byways rights there. Now a mechanism. I just don't think he has the right people at Treasury to do it. Okay, so there's this big picture. We want this John, but then you don't have people who have ever talked about race and tax in charge good luck with that right, but step one. We have the executive order, so there's a framework to move forward. The second thing I think- and I talk about this in the book- is something I call a reparations tat credit that would compensate black Americans for the years of pain, higher taxes I would argue that even the black Americans, who have wrestled wealth out of the system, have paid higher taxes because of their race, so I'm gonna give you an example.
The apple, please be Jason. Bianca fish is by Iraq Obama, Michelle Obama. Ok, he was president, and, along with him, came his tax returns. Now nothing made me happier as an academic studying reason to act than a black today and who became president release. Let twenty years of establishing wouldn't tell me nothing after carrying out this region it out of a girl. I got a black Emily's directors of the mind right, there's like get nor the Nixon recordings or such like a treasure dries throttling gold. Nobody was more excited than I was. It was like every hypocritical I'd like weight by under which this year and what I found where there were two Obama's
they were. The early Obama is between two thousand and two thousand and four they were both lawyers, but they were broke, has hell they have. A hundred twenty thousand dollars a student debt. They had to get a down payment for their conduct from his grandmother. They had almost no savings, they were brought up at the democratic convention. They can twenty twelve Michelle Obama said something like we were young in love in so broke, and people like my them. Like I asked me, the death of their people Get a miracle happened, the meal was. He ran for Senate and was picked by John Kerry. To give the speech he gave about purple. The Eric nobody knew. We was before that speech when he gets this speech and his publisher decides to re issued rings of my father
that did not do well when it saw the first time so they got the rights they issued. The paper bag best seller. He then gets a million dollar book deal that changed air. Thing they paid off their student loans. They were able to open child savings account. So Molly and fashion which they never did before and what I discovered is at their income level. They paid higher taxes than the average, linear, because the average millionaire gets a lot of this income from star. The ad hoc. Yes, the you got it a little bombers didn't have that, because even wealthy black people don't have stocks to the extent of wealthy white people, so I learned from the Obama's that even rich black people wonder immortal
There's been rich white people because of how we earn money. Royalty income is TAT the same way as wages income from is tat at a low preferential rate. I haven't said enough: the whiteness of wealth, how the tax system impoverishes black Americans and how we can fix it that your book, we just keep referencing your book and I've not set it enough, the whiteness of wealth. He could remember that title. Ok, please continue. Yes, so what's my solution, so my ideal solution is this reparations tat credit which would work for every Blackmore again because we pay higher taxes. Unfortunately, theirs is think on the Supreme Court. They won't let right, so targeting black Americans for tax relief would require me to prove that Congress intended to tat black Americans higher than it was a discriminatory process. Intent
yeah and all Congress can say, as will know, we will make a tax policy for the majority of Americans. That's all they have to say and they win yeah. So my next best alternative is something called a wealth tax credit. Why? Because the Supreme Court says we can discriminate on the basis of wealth and we can't discriminate on the basis of race so because there's this racial wealth gap, my wealth tax, which would apply to any taxpayer in a household with below median wealth, is going a disproportionately benefit black Americans because we have significantly below median wealth, but it's also gonna benefit wait, Americans and below median wealth households and let necks and asian Americans in a digital community. So to me, that's something I would think a lot of people could get behind the adding. That's? U make we us
our approach because you're using their own tool self. We had an expert on talking about systems and said it doesn't really matter what the intention of a system is whatever the results. You're seeing are the exact results the system supposed to produce. The mere fact that those are the results prove that the system is designed to do that, whether that was the intention or not. I do love the idea of taking the exact same approach, which is having these results. We don't like and using it in reverse, is very clever and then my big picture idea for reform would be to get rid of these deductions and loopholes and taxfree breaks, because they tend to disproportionately benefit white taxpayers and basically tax income from labor the same way as income from capital and
not have deductions? Other then like a living allowance, which, I would argue, is what you and individual or you are household, would need to live on minimum wage with minimum wage and got it. What would it actually take for you to thrive and the amount over that you'd pay taxes, impressive tax system in the amount under that you don't pay taxes, the difference gets refunded to you in a sense and expanded on income tax. Credit, so that we might big picture idea for how to fix this, get rid of the deductions and loopholes which are part of the problem yeah. I am in favour of that now I dont know this. I should read this at some point, but I guess if I was trying to explain why capital gains could be ultimately more beneficial, at a rate of twenty percent, would simply be there.
Labour doesn't turn over right, so labour you're gonna make a hundred thousand dollars. In a year and we're gonna. Take thirty thousand of that lets. You say now: if we do capital gains capital gains can turn over many many times in a year right, so someone who's investing. They could make a hundred thousand dollars next month. They can pay twenty percent of that now. Have thousand thousand dollars to reinvest now they're going to turn that over that cumulatively, it would actually be more money coming the federal government. If we allowed that money to keep moving quickly and incentivizing, that is that the rationale for it, because that does seem to be plausible one hour. End goal should be to collect as much taxes as possible. What would be The best way. Another argument is the corporate tax, which I'm pretty in favour of key in low simply because we're competing with the globe is not something we can realistically say we're. Gonna have thirty percent observances
go to England, where it's percent, so I do think. Sometimes we got to factor these things in what is the capital gains? Defence love, depending on what they re ask right there, what is it takes into account? Inflation right? I pay ten thousand restart today and appreciates to twelve, but what? If that two thousand is attributable to inflation, it's not fair to tat. All of it like you would wager another. One is what that's described. It's called the lock. In fact, I won't sell because I'm afraid to pay taxes so I'll just hold it and then that's not good, because you wanna get capital moving. So there are easy push Baxter this. So I'm gonna take the Royal T income the book income from
is it an open that is treated like wages come? But he wrote that book a really long time ago and he still getting royalty income like five ten fifteen years later, and nobody says we should act in less because this was a combat was built over a period of years right we say if Rossi, so it's tat like wages, the other push back is the holding period. How long do I have to hold stop so that when I sell it, I get the low preferential rate a year and a day. So don't talk to me about inflation because really a year and a day. So when you look at the details of the law that governs the preferential rate, you realize it's kind of be and Ronald Reagan. Ronald Reagan's, tax reform, ACT of nineteen. Eighty six had at the pillar: taxing income from stock, the same way
his income from wages. That was one of his big innovation, so that was in nineteen. Eighty six and we ve had a time not too distant past, where they were TAT, the same and civilization as we know it did not to an end. More market was a born yeah. You got a factor that Monica was born you care as early as a force that has to be considered in all the arguments. I was eleven yellow right, so I do think there is married to taxing another argument for taxing ink restock the same ways. Labour is the complexity that is built up around trying to recharacterize wage income as capital gains and eligible for the preferential rate is a cottage industry. It is a full employment for tax Lordes act right yeah. So, by treating those the same, we would get rid of a lot.
Inefficiency, I'm just gonna, say it, because if there's no way around it there's no way around it so just deal with it. So that's my boy is showing there's no legitimate reason in my book for taxing income from stock differently than income wages stay to arm chair dishes. There we are supported by liquid death. Don't get scared, it's delicious, refreshing water. It's currently stocking our fridge and I'm popping them several times a day. It is, and it's really funny every time I see it out. I do a double. Because I think it's beer do you think I'm doing it all but yeah. But you know that's what it looks like, but it's actually just mountain spring water and look if you fall in love with liquid death. The way I have because it is the most delicious water in there's no plastic, which I love, you kids may fall in love with it, and I just want to warn. You may get a call from a teacher this, as they saw your kid on zoom class. Bang
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as you know, I'm so into cooking is Aaron Franklin, teaching taxes, style, barbecue yeah. I mean how you ever have access to him. Now you can learn how to write anything from a book or a screen played it just a letter or not to communicate with your boss or your family, how to make a dinner worthy of a Michelin star or just how to make really great scrambled eggs, whatever you're interested in their hundreds of video lessons from a hundred plus of today's most brilliant mines available anytime anywhere on I o S, Android desktop Apple TV, Amazon, fire TV, an Roca I highly recommend you check it out, get unlimited access to every master class and as an arm chair, you get fifteen percent, often annual membership, good master, Classed dotcom, Slash Dax, that's master class dotcom slashed acts for fifteen percent off master. I was watching I view with you, and I was thinking about the idea that Biden might change this. What is very easy to predict is that
He says starting calendar year, twenty twenty two we're gonna tax capital gains at labour tax rates. What is certainly gonna happen, is you're gonna, see in enormous sell off by the end of the year, the stock market, so that everyone can take that twenty percent tax rate. So you are Then a sea billions and billions. Maybe a trillion dollars will leave that market. When your thoughts on that, my thoughts on that is, people are only gonna sell off if they think it makes economic sense. They're not gonna, sell, If they ve been a wider losing their money? They think the company is gonna turn around. I don't think it's good. His knee jerk. As that right and vines plan. The last time I checked in was, if you
Have I think, it's more than a million dollars, then you're going to pay income from stock at the same level as income from wages? So it's not everybody! That's going to be effective, so I think it's too timid. That is his plan and he is the president. So he gets to have the plan he wants to have. So I people said this: the five well five a horrendous crash in eighty. Eight was that the year we had, her India's crashing eighty seven, because a programme traded that had nothing to do with. Those who say that the savings and loan scandals I would feel that no, we actually was when I say, program trading I mean literally like a computer program was trading and the high sell off now they have said it breaks, it won't happen that way. They'll start the market and we ve seen
yeah, like with the last year's. Alright, it's just that trading stocks so that with the support of the eighty seven, but it wasn't the tat spread so investors who want to be able to keep their privilege and this low twenty percent rate always talk about human. Do. Oh, it's gonna be the worst thing ever it's it's like the real estate lobby that when you you're talking about repealing the mortgage interest, the dirty, for example, they go. It's gonna, be this awful thing. Home values are good, a crash wool What we know the trunk tax cuts bites and being the amount of the standard deduction, but people who don't itemised can take so every taxpayer gets a choice. You, arab all the deductions, the tax law allows and you get that him out, and then you compare it with the government standard.
Deduction amount and whichever one of those is higher, is the one you use to reduce your taxable income. Will the Trump tax cuts expanded the standard deduction so much that right now only about one in ten Americans itemised the doktor one in ten. So if you have more distant Only if you're the one in ten are you getting any benefit from it, so the Trump tax cuts did this and we knew it was gonna happen We heard nothing from the real estate lobby I even as I was making the argument, I cannot ignore that it is very parallel to the original argument of the south, which is half our economy. Is this slave Labour, this is how America is competing with England and all these other countries, and we cannot recover if we transition out of this model, and yet
here? We are on big US economy in the world, so I am aware of the IRA. Need that it is virtually. The same argument is that we can't recover from this right and of course we can yeah yeah family things as they can ever be. No do it will be fine. I wanna. Let you go you given so much of your time, but I want a nerd out for one second on sub. Prime mortgage is because this became one of my he'll have fascinations, for I dont know what reason I think, the big shore, no Prior to their anyway, I had written a script about people getting me then with the elite. Basically insult. Ok! So when I first was watching and we were finding out that all these people have these subprime mortgages? My knee jerk was all these people are response, Well, they borrow money. They knew they couldn't pay back. That's on them right! and then, as I learn more about it, I learned that, of course they were being targeted. They were beans,
all they were being bag to do this and the thing I was mad about them about being that they agreed to something they could not good on their promise. I then learned that all the sub prime mortgage lenders a media. Got rid of their responsibility, so they ve bundled those up into mortgage backed security. And they sold into Germany. They said you guys deal with this fuckin house of cards because we know it's going to collapse So then I went walk now. I certainly don't feel bad for the bankers that are holding shooting notes because they knew this was gonna happen. Hence them bundling them together and getting rid of them. Then I learned even the third layer which drove me insane, which was some people were smart enough to go. All this is going to collapse. I want a credit default, swap what's a credit default swap well, that's me binding Sharon's on something I don't even own, so they're, saying
but I was originally. If you had a million dollars a GM stock, you could buy this thing, a credit default swap in for ten dollars a month. You could ensure that if that's company ever went completely out of business You would get the one million dollars it's an insurance policy, but they allowed people to buy the insurance policy and stuff they didn't even own, which is insane to me, and you talk about that that legislators can't do the tax forms. The derivatives market is absolutely unexplainable even the people selling them. The instruments are so complicated. No one fucking knows how they work. So when I looked at this enormous thing, this two thousand and eight meltdown- and it was really the blame- was given to the people who bought money and to find out no, no, no, no two point Trillion dollars was borrowed against the bullshit thing, so the cumulative value of the homes was in the billions the derivative market built on its back was in the trillions. These credit defaults like
against my o. This whole thing is all right that then, of course, here work specifically exposed the fact that once again, very disproportionately preyed upon people of color. Yes, yes, yes, yes, yes, lack. Americans with six figure, incomes were given sub. Prime mortgage is its outrages, and actually some of the banks had like said a lawsuit. It was that bad I love Michael Lewis, so I read the big short more than once literally love that book. When you read it and you figure out, they didn't they held they were doing golden is that all of these companies that you think they're at the top. They don't know what they're doing it was like. This is so much stop. If you don't know what you're doing you shouldn't be selling a security period, full stop like what I represent. Investment banker is one of the partners said Dorothy,
if you don't understand a deal, don't do it. That was like the best and you get a bunch of people who didn't understand it and they we're going to make money and they thought the train was never going to stop and it stopped and it crashed and they took the whole Freaking economy Aig big companies. Issuing these credit default swaps had no idea what they were even selling people they didn't know what they were promised that they didn't think about. The fact that all rumour can collapse, Bear Stearns and that we ve guaranteed a hundred fifty billion dollars that I mean the hot, what a racket it so you, blame the little guy on the street when you ve got the people that are supposed to know how it works, don't understand and they all got burned in there now blaming everyone ire and who got bailed out the banks, not the little guys with the mortgages write it, just messed up, and I know some level the bankers were counting,
getting failed down they're like we're too big to fail. They're, not gonna. Let us fail, and that is what and by the way I am in support of them. Having bailed out the bankers, I think we would have seen an apocalypse without that. But yes, you can't bail out the bankers and then not bail out the ten billion you're gonna bail out the four trillion dollars and not bail out the one hundred billion. Also, the consequences of all this stuff runs so deep right like so many of these people who are affected are now very. Extreme can on people who are so anti government and critical of the government. A lot of this led to that yeah there's a direct highway from that distrust all this and I saw it so I was teaching at Emory in two thousand and eight I had students who had jobs. That
not pulled from them, because law burns didn't know what the hell was happening next and they retrenched, and it was heartbreaking. They did everything right. They got the best grades, they interviewed, they got the job, they're really excited and the rug gets pulled out from under them. The carnage was vast yeah I Oh man. Thanks for that, thank God there are watch dogs like you. It is so complex. Your average person doesn't have an appetite for what really that the mechanics of how all this stuff works
tell you a great place to get your arms around. It is the whiteness of wealth, how the tax system, improvises black Americans and how we can fix it. I'm really truly grateful that this is the work you do and I really hope people read this book and really understand the complexity of the systemic racism. Every time we think we understand something. There's another layer right like. I think the new concept that people are broadly starting to understand is this inherited wealth. Yeah. If you don't get a house price to you, that's a big thing. You really get a sense that it's all it's very yes Dorothy, your radical. I love your hair, of course you from the south and There will always know your opinion or in a room with you, yeah, that's our favorite. We need everyone's opinion. We like to dance yet region, oh yeah right. We gave the little by little but such a great I'm talkin. You Dorothy thanks round,
on it was my pleasure. Okay, be good. Okay thanks! You too take care.
Transcript generated on 2021-05-21.