Understanding the Racial Wealth Gap Is Critical During Tax Reform Policy


April 18, 2017
by Ashley Burnside, Emerson Hunger Fellow via the Congressional Hunger Center

From the land grabbing practices against Native Americans, the exploitation of Africans during slavery, racial discrimination in the New Deal and anti-immigration policies following World War II, up to current day tax policies, the racial wealth gap has been and still is a large problem in the United States.

I recently attended the Aspen Institute’s Summit on Wealth & Inequality. This is a daylong summit filled with a variety of panels, speakers and presentations on wealth, inequality, race and the business industry. Speakers ranged from researchers to business owners to people with the lived experience of poverty. During the summit, there was a panel on the racial wealth gap. The Aspen Institute also recently hosted a 2017 Symposium on the State of Race in America that also included a panel on the wealth gap.

As a new Hunger Fellow at RESULTS, I have been attending these events to better understand the current implications of the racial wealth gap, especially since Republicans in Congress plan on introducing tax reform legislation soon. During these panels, I learned powerful statistics about the racial wealth gap and about the social factors that impact the wealth divide.

According to the panelists, for every $1 that White Americans own, Black Americans only own 8 cents, and Latino Americans only own about 9 cents. Further, the racial wealth gap has only worsened in recent decades. In 1984, the wealth gap between White and Black American families was about $84,000. By 2015, it had nearly tripled to $245,000, in great part because of the Great Recession in 2008.

Inherited wealth plays a very important role in maintaining this wealth gap between White Americans and communities of color. According to the panelists, a little over half of White Americans receive some type of financial assistance or inheritance from their parents. For Black Americans, only 1 in 10 receive this type of financial support from their parents. And for that 10 percent who do receive financial support, they inherit an average of $30,000 less than their White counterparts.

An inheritance or support from your family can be especially helpful while purchasing your first home. Professor Thomas Shapiro, a panelist, described how one White family he recently interviewed for his new book bought a new house. Their parents ended up giving them a $30,000 check to purchase the house after the couple struggled to fundraise the money through weekend garage sales. When Shapiro interviewed the family, they never brought up the check from their parents. Instead, the couple explained that they deserved the new house because they worked hard and held garage sales to make money.

This story is one example of how White Americans are sometimes unaware of the financial support and privileges they enjoy simply because of their skin color. This lack of awareness can make White Americans less understanding of the built-in disadvantages that people of color experience in the United States, and can blind them to the existence of the racial wealth gap.

One panelist named José Quiñonez described how Latino American families are also at a disadvantage for being able to accumulate generational wealth. According to Quiñonez, in 2012 50 percent of the Latino adults in America were the first generation in their family to be born in the United States (one or both of their parents immigrated to the United States). In 2012, 75 percent of Latino adults in the United States were either first or second generation.

This has an impact. There is often not the opportunity to accumulate wealth when your family has recently immigrated to this country. Meanwhile, White American families have enjoyed decades of tax policies and opportunities that help them accumulate wealth.

As tax policy becomes the next big policy issue in Washington, it is critical that we keep focus on the racial wealth gap to ensure that all families have equal access to building wealth.

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