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Excerpted From: Phyllis C. Taite, Inequality by Unnatural Selection: The Impact of Tax Code Bias on the Racial Wealth Gap, 110 Kentucky Law Journal 639 (2021-2022) (185 Footnotes) (Full Document)

PhyllisTaiteSocial justice issues have gained more support as a broad range of equal justice issues have come under public scrutiny; however, economic justice has not received as much attention and support. This lapse may be attributed to an overall acceptance of the status quo or American antipathy toward providing financial assistance to racial minorities and low-income households. The American principle that success is determined by strength, work ethic and self-sufficiency is rooted in Social Darwinism.

This Article will explain why the principles of Social Darwinism, as commonly understood, should not apply to people who are not truly similarly situated because of inherent inequalities and disproportionately imposed obstacles. This Article will explore these principles and demonstrate how tax code bias, facilitated by government action or inaction, has impacted the natural order of wealth mobility by implementing laws and policies that disproportionately benefit wealthy white taxpayers.

Tax policy is replete with examples of laws and policies that disadvantage minorities and low-income households. This Article contributes to the discourse in two ways. First, by identifying and analyzing laws and policies--directly and indirectly related to tax policies--that have completely obstructed or imposed barriers to wealth mobility for minority households. Biased laws and policies that promote wealth for white households and inhibit opportunities for Black households cause wealth inequalities by unnatural selection and contribute to the racial wealth gap.

Second, this Article will identify several biased laws and policies that impact wealth mobility, explain the intersection with tax policy and propose solutions to mitigate generational wealth erosion and increase wealth mobility in minority communities. Part I will describe social Darwinism and provide the framework to apply the relevant principles in this Article. Part II will outline and demonstrate the intersection between mass incarceration, tax policy and the racial wealth gap. Parts III expounds on the depth of mass incarceration and its impact on the racial wealth gap, and Part IV offers proposed solutions. Part V concludes with a call for intentional government action to facilitate income and wealth mobility for marginalized communities.

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Black people are not inherently criminals. Without transparency and accountability, true restorative justice will not be achieved. Racial injustice has been virtually unchecked in the criminal justice system; it is time to be intentional in reform initiatives. Advanced oversight and accountability will force police, courts, and schools to look for alternative solutions to incarceration. Government leaders have created laws and policies to create and maintain an uneven playing field. Minority communities have borne the brunt of overt, covert, and racially biased laws and practices. This Article has demonstrated the role law and policy played in hindering wealth building for minority households. Subsidizing mass incarceration with lucrative government contracts and permitting private prisons to convert to REITs does not serve societal interests. Instead, mass incarceration has imposed barriers to income and wealth mobility and contributes to the racial wealth gap. Tax policy should reserve tax incentives for activities designed to benefit the public at large. Therefore, correctional institutions must be permanently disqualified from being able to convert to REITs and TRSs to reap these tax benefits.

Tax policy subsidized the private prison industry but has not provided sufficient direct benefits to affected communities--predominantly people of color--to mitigate the economic effects of incarceration. Instead, tax policy has created and facilitated inequalities resulting in wealth erosion for minority communities. This is America's debt to pay, and it is long past due. The method of payment may be debatable but the existence of debt obligation is not. Federally legalizing marijuana and the imposition of an excise tax has the potential to generate the revenue to restore affected communities and positively impact the racial wealth gap. Restitutions for other legal harms attempt to restore the harmed party. There is not enough money to provide full restoration for what these communities lost; however, this does not absolve America's obligation to rebuild them.

Remedies must be designed to provide a foundation for re-building the lost resources through meaningful employment, income equality, increased generational wealth, increased access to education, and the end of mass incarceration for nonviolent offenses. The legal services, including expungement, job training and other reentry services proposed in both CAOA and MORE Act of 2020 provide necessary first steps. To get closer to restoration for systemic harms caused by the War on Drugs, and imposed disproportionately on communities of color, redress compensation must be an integral part of the solution.

Phyllis C. Taite is a Professor of Law at Oklahoma City University School of Law.

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