Tax code horizontal equity assumptions mask racial labor market inequality

Evidence

Horizontal equity treats two households with the same income as equal and requires that they pay the same amount in taxes. I’ve demonstrated that a household where one partner earns 70,000 and the other stays home is very different from a household where both partners earn 35,000 each. However, occupational segregation reveals that a black household where each partner earns 35,000 is also different from a white household with the same income distribution. Black workers and white workers earning the same salary are rarely true peers, because of the different ways black and white workers are hired and compensated. A black worker and a white worker may each earn 35,000, for example, but the black worker is statistically more likely to be a contract employee, which means they’re missing out on the additional one-third of compensation that comes through retirement benefits and health insurance. Or, if both are full-time employees with the same salary and benefits packages, the black worker is likely to be better educated and more qualified than the white worker earning the same amount—but because the black worker was hired into a lower-level, lower-paying position, it’s taken them more time to advance and earn the same salary the white worker receives. It is not comparing apples to apples. Built into the idea of horizontal equity is the idea that the labor market is race neutral. Nothing could be further from the truth. — Dorothy A. Brown, The Whiteness of Wealth, 381

Categorization

• DEFINE: Defines horizontal equity precisely, then shows its hidden race-neutral assumption.
• XREF: Connects to what she covered on the joint return in chapter 1; also links to broader structural-racism-as-mechanism argument of the whole book.