(continued) The American Racial Wealth Gap
The Social Security Act of 1935 did not include domestic or farm workers, so those in these areas of work could not gain benefits. At that time, most black people lived in the South and primarily made up the domestic and farm worker populations. As a result, many blacks were not allowed to receive Social Security’s wealth building benefits. When the military was integrated following World War II, people of color were legally able to gain the benefits of national service. But the administration of things like the G.I. Bill were left to individual states so blacks in the South were once again denied the ability to build wealth.
Even after the Civil Rights Act of 1964, the Voting Rights Act of 1965, and the Fair Housing Act of 1968 the legacy of segregation and suppression stands with structural inequity that is difficult to dismantle. Despite these laws being in place, programs like SNAP (Supplemental Nutrition Assistance Program) forbid those that are enrolled to build wealth. Federal wealth building policies often do not help the people they are designed to lift up; instead the tax cuts benefit the wealthiest Americans - most of whom are white. The racial wealth divide is the result of restrictive practices and programs that continue today, causing our poorest to suffer and lose wealth.
But there is hope. Public policy created the wealth gap and public policy can fix it. The United States needs to change our nation’s tax code to stop subsidizing the already-wealthy and start investing in opportunities for low-wealth families to build wealth. Specifically, there is great need to reform the mortgage interest deduction and other tax expenditures, bolster and expand the federal estate tax, close the income gap for both people of color and males and females, and create a net-worth tax on multi-million dollar (and billion dollar) fortunes. We must protect low-wealth families from wealth-stripping practices by strengthening the Consumer Financial Protection Bureau and close offshore tax shelters currently enabling the ultra-wealthy to hide their assets. It is not enough to limit the wealthy but we must invest in new programs like Children’s Savings Accounts, federal jobs guarantees, automatic-enrollment retirement accounts, and a racial wealth divide audit of government policies, all of which are vital to reducing the gap between the ultra-wealthy and the rest of the country.
To learn more about the racial wealth gap, watch Vox’s Explained season 1 episode 3 “The Racial Wealth Gap, Explained” and read “The Road to Zero Wealth: How the Racial Divide is Hollowing Out America’s Middle Class” for deeper knowledge on the topic.
Written by Caroline Cooper