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Dorothy A. Brown became a tax lawyer to get away from race. Growing up as a Black girl in the South Bronx, she had seen how racism limited the lives of her family and neighbors. Tax law, she believed, was different—it was about numbers, and the only color that mattered was green. Then she sat down to prepare tax returns for her parents, a plumber and a nurse. James and Dottie Brown, hardworking middle-class Black Americans, seemed to be paying an unusually high percentage of their income in taxes. Brown, now a professor of tax law at Georgetown, spent decades researching why. Her conclusion, published in her book "The Whiteness of Wealth," challenges a foundational American belief: that the tax code is color-blind.
The racial wealth gap is not an accident. It is a structural outcome of government policy, implemented largely through tax and transfer policies that have historically favored already-wealthy white individuals while working against Black families' income and wealth creation. From the payroll taxes deducted from every paycheck to the estate taxes that dissolve generational wealth, the American tax system operates as a quiet but powerful engine of economic suppression.
The First Cut: Payroll Taxes and the Weight of Wages
The tax code treats different types of income unequally. For most Black families, the primary source of income is wages and salaries—money earned through labor. For many white families, a larger share of income comes from investments, dividends, and inherited assets. The tax code rewards the latter and penalizes the former.
Payroll taxes for Social Security and Medicare apply to every dollar of earned income up to a certain cap. Income above that cap faces no payroll tax at all. Because Black workers are overrepresented in lower-wage and hourly positions, and because they have less access to the types of investment income that escape payroll taxes, a larger percentage of their earnings goes to fund these programs. The tax code's structure means that a family earning modest wages pays payroll taxes on every dollar, while a wealthy family earning millions from investments pays none on the vast majority of their income.
The Second Cut: Income Taxes That Shape Entire Lives
Brown's research demonstrates that racial bias in the tax code operates across the entire arc of a person's life. In her book, she takes readers into Atlanta, introducing families across the economic spectrum whose stories show how tax law rewards white preferences and practices while pushing Black Americans further behind.
Consider education. Tax subsidies for college attendance and student loans interact with the tax code in ways that disproportionately benefit white families, who are more likely to have generational wealth to draw upon. Consider marriage. Tax policy around marriage and filing status creates different outcomes for Black and white couples due to existing wealth disparities. Consider homeownership. The mortgage interest deduction—one of the largest tax expenditures in the federal budget—primarily benefits those who already own homes and have substantial mortgages, a group that is disproportionately white due to decades of housing discrimination.
The result, as Brown documents, is a tax system that subsidizes activities and personal choices that disproportionately benefit white taxpayers while offering far less support to Black families making the same choices.
- Education subsidies – Tax benefits for college savings and student loans favor families with existing wealth to invest.
- Homeownership deductions – The mortgage interest deduction largely benefits white homeowners who had access to the housing market.
- Marriage penalties and benefits – Tax code provisions around marriage create disparate impacts based on existing wealth.
- Workforce subsidies – Many tax benefits for workers are structured in ways that favor higher-income earners.
The Third Cut: Inheritance and the Fortresses of Wealth
The most devastating cut may come at the end of life. The tax code's treatment of inheritance—what Brown calls the "legacy" section of her book—creates an unfair advantage for families who already have wealth.
Dynasty trusts allow wealthy families to transfer assets to children, grandchildren, and great-grandchildren without incurring repeated estate taxes. In several states, these trusts can last for multiple generations or even in perpetuity. A family that accumulated wealth in the 19th century can continue to grow it tax-free today, funding private education, business ventures, and political influence for descendants who never worked for the initial stake.
Charitable remainder trusts offer another legal pathway around estate taxes. A wealthy individual can place appreciated assets into a trust, sell them without incurring immediate capital gains taxes, receive a lifetime income stream, and upon death, direct the remainder to charity—avoiding estate tax entirely.
These vehicles are legal. They are widely used by tax attorneys for wealthy clients. And they are almost entirely unavailable to families who have not already accumulated substantial assets. For a family that has built wealth over a single generation—as many Black families are attempting to do, having been excluded from wealth-building for centuries—these trusts are irrelevant. The tax code's inheritance provisions, Brown argues, are designed to protect and grow existing white wealth while offering no comparable support to Black families trying to create wealth for the first time.
The Great Deception: Why the Top 1% of Earners Are Not the Top 1% of Wealth
This distinction is critical for understanding the racial impact of the tax code. White families are disproportionately represented among the top wealth-holders, not just because they have higher incomes, but because they have had generations to accumulate assets that grow without being taxed. A white heir who inherits a portfolio of stock worth $50 million can live a life of extraordinary luxury without ever paying income tax at the top rate. They simply borrow against the stock, using the loan proceeds for living expenses, and pay back the loan with future appreciation or pass the debt to their estate. The loan is not taxable income. The appreciated stock is not sold, so no capital gains tax is triggered. The wealth compounds tax-free.
By contrast, a Black professional earning $300,000 a year as a physician cannot avoid the income tax. Her money comes as a W-2 wage, reported directly to the IRS, with taxes withheld from every paycheck. She has no generational portfolio to borrow against. She has no dynasty trust sheltering her assets. She pays the full freight of the progressive income tax, and she does so while watching her white peers who inherited wealth pay a fraction of their economic gain in taxes.
Federal Reserve data consistently shows that the racial wealth gap far exceeds the racial income gap. A Black family in the top 10% of earners has significantly less wealth than a white family in the top 10% of earners. This is because white wealth-holders have had access to tax-advantaged asset accumulation for generations, while Black families—even high-earning Black families—are still in the first generation of building wealth from wages.
The tax code's preference for unearned income over earned income is the mechanism that converts this historical disparity into a permanent structural advantage. Capital gains are taxed at a maximum of 20%, compared to 37% for ordinary wages. Dividends and interest face similar preferential treatment. Meanwhile, the wealthiest families employ teams of attorneys to structure their affairs so that they never technically "realize" income at all. They live on loans secured by appreciated assets, pay no capital gains tax because they never sell, and pass the assets to their heirs at a stepped-up basis, wiping out all unrealized capital gains taxes entirely.
The Black physician earning $300,000 cannot access these strategies. Her wealth is in her human capital—her ability to work—not in a portfolio of inherited stock. The tax code penalizes her for working while subsidizing her white counterpart for inheriting. This is not a bug. It is the design.
The Myth of Mimicry: Why "Acting White" Won't Close the Gap
A common argument holds that if Black families would simply make the same financial choices as white families—investing in homes, saving for college, contributing to retirement accounts—they would achieve the same results. Brown dismantles this argument. The tax code does not reward behavior in isolation; it rewards behavior that is supported by existing wealth.
A Black family that buys a home receives the same mortgage interest deduction as a white family on paper. But because Black families have historically been denied access to the best mortgage products, redlined out of appreciating neighborhoods, and targeted by predatory lenders, the actual benefit of the deduction is far smaller. The tax code assumes a level playing field that has never existed.
The hard-work trope—the belief that financially vulnerable families across all races can become and remain middle class simply by mimicking white behavior—ignores the structural advantages that white families bring to every financial transaction. Those advantages are encoded in the tax code itself.
What Reform Would Require
Brown does not argue that tax policy alone can solve the problem of the racial wealth gap. But she insists that policymakers cannot pretend to be unaware that the federal tax code is rife with provisions that increase white wealth while impoverishing Black families.
Meaningful reform would require rethinking fundamental assumptions about how the tax code treats different types of income, different family structures, and different paths to wealth creation. It would require closing the loopholes that allow dynastic wealth to escape taxation forever. It would require taxing capital gains at the same rate as earned income. And it would require acknowledging that the tax code has never been neutral—it has always rewarded those who already have resources while penalizing those trying to acquire them.
The racial wealth gap is structural, not behavioral. Historically discriminatory redistributive policies have favored already-wealthy white individuals while working against Black families' income and wealth creation. The tax code did not create this gap alone, but it is the primary mechanism through which the gap is maintained and widened with every passing generation.
As Brown writes, changing tax policy alone cannot solve the problem. But without changing tax policy, no solution is possible. The question is whether Americans are willing to see the tax code for what it is—not a neutral arbiter of revenue, but a system that has quietly, consistently, and legally privileged whiteness for more than a century.