Trump’s tax plan would widen racial wealth gap

By Josh Hoxie

Thursday, Sept. 28, 2017 | 2 a.m.

The majority of black and Latino voters didn’t pull the lever for Donald Trump last November. He is, however, the president — and thus has the power leave a lasting effect on the trajectory of their lives.

Trump recently made headlines for making significant reversals in policy positions on issues ranging from immigration to the national debt ceiling. Perhaps he could change his tune on how he addresses the growing racial wealth divide as well.

Will the already deep racial wealth divide grow wider under Trump, or can we begin to close it?

Just released figures from the Census Bureau show that black and Latino families saw a slight uptick in their household income last year. They still lagged far behind their white families — with median households earning more than $10,000 less than their white counterparts — but the racial income gap did get a bit smaller over the very short term.

Unfortunately, the long term trends go in the other direction.

A just released report I co-authored titled “The Road to Zero Wealth” looks at trends in household wealth, which includes the total sum of a families’ assets minus their debts. And wealth, not income, is the better measure of long-term financial stability.

The median black family today has just $1,700 in wealth, with Latino families not far ahead at just $2,000. White families, meanwhile, own more than $100,000. That gap is staggering.

And it’s getting worse.

The report looks at racial wealth data over the past 30 years to project what we can expect in the future if current trends continue. By 2020, the end of Trump’s first term, median black and Latino households stand to lose nearly 18 percent and 12 percent of the wealth they held in 2013, respectively.

Median white household wealth, on the other hand, looks set to increase 3 percent.

At that point, white households will own 85 times more wealth than black households, and 68 times more wealth than Latino households. That’s in just three years — let that sink in for a moment.

Looking a bit further into the future, black families are projected to own no wealth at all by 2053. By that point, our country will be majority non-white, but whites and non-whites will be farther apart than ever.

But that’s assuming nothing changes. If Trump moves forward with the policies he campaigned on, especially his tax “reform” plan, the gap surely grows.

Trump’s tax plan is heavily skewed toward providing massive tax breaks for the ultra-wealthy. Half of the proposed cuts will go to millionaires, according to the Institute on Taxation and Economic Policy. Less than 5 percent go to families with household incomes below $45,000.

Perhaps more insidious is Trump’s plan to eliminate the federal estate tax, also known as the inheritance tax. This levy applies exclusively to the wealthiest 0.2 percent of households and is intended to curtail the growing concentration of wealth in families like, say, the Trumps. Fortunately, the president has other options. He could choose to expand, rather than abolish, the estate tax.

He could also address the deep disparities in homeownership — and particularly in the mortgage interest deduction in the tax code, which benefits the wealthy and those who already own a house. Thanks to generations of discrimination in housing and credit, black families trail whites in homeownership by a margin of over 30 percent.

Unfortunately, it’s unlikely Trump changes course. While the president is nothing if not mercurial, his commitment to protecting the wealth of the already wealthy has remained steadfast.

That the vast majority of the nation’s wealth is, and always has been, held in predominantly white hands at the expense of non-whites hasn’t concerned him. Perhaps, however, he’ll change his mind.

Josh Hoxie directs the Project on Taxation and Opportunity at the Institute for Policy Studies. He wrote this for InsideSources.com.