Dorothy Brown: ‘The System for Wealth Building Is Designed to Build White Wealth’

Photo: Ann Watson

How often do you think about your taxes? Once a year, maybe, when it’s time to file, or when you got married, or when you bought a home? If you’re white, taxes are often an inconvenience at worst. The tax code may even benefit you when you get married and start filing a joint return. If you’re Black, says Emory University law professor Dorothy Brown, your story is likely different: The joint return is less likely to reward a marriage with a tax cut when two spouses of equal income work outside the home, something that’s more likely to be true of Black couples. That’s not an accident, she argues in her new book, The Whiteness of Wealth. Well-off, mostly white Americans litigated and lobbied their way into making sure the tax code protects their wealth. Black Americans, who typically lack family wealth, were left out and deliberately held back. They can’t catch up, and that’s the point. The system is working as designed for whom it was designed: white Americans.

In The Whiteness of Wealth, Brown brings the American tax code to life. Hands shape it and wield it like a shield in the defense of the most powerful among us. The tax code tells a story about American priorities. The news isn’t good, Brown writes, but there’s still time to change the future.

This interview has been edited for clarity and condensed for length.

Your book’s getting a lot of attention. In fact, you were even on the cover of Bloomberg Businessweek. Why do you think your ideas are getting so much mainstream attention right now?

I really think it’s because of the summer of 2020 with the murder of George Floyd. So many white Americans were home working from home and able to watch it on TV. And it opened people’s eyes to the idea of systemic racism, but not just in the criminal justice field. You had lots of corporations over the summer saying Black Lives Matter. I started getting calls this summer from reporters talking about business and race, and I actually got some calls talking about race and tax. The summer of 2020 helped people think about systemic racism in nontraditional ways.

Say that you’re somebody, like me, who picks up this book not knowing that much about tax policy or the history of how it came to be. What are the biggest lessons you hope they take away from your book?

One of the biggest lessons I got in writing it, in researching this, is when white and Black Americans engage in the exact same thing — marriage, homeownership, job, paying for college — tax policy advantages the white way of engaging in behavior while disadvantaging the Black way of engaging in the behavior, and that’s huge.

The task outlined in your book, as I understand it, is to reform the tax code in a way that it’s no longer a tool of white supremacy. It feels monumental. What are a few of the biggest obstacles in the path of that task? 

It would be taking away these loopholes and deductions that, as I show in the book, rich white Americans litigated to get. Now people expect them. So you’d be asking people to give up privilege, which most privileged people do not want to do. But I think we’re in a moment where people are talking about fairness. This is what’s fair given the decades of oppression.

What would you say to a white American who reads this book and wonders what they can do individually or as part of a group to make a material difference?

White Americans can advocate for analyzing tax-return data by race. We should all want to know the truth, we should all want to see this, the IRS doesn’t currently do it and they should be agitating for that to happen. Secondly, a lot of what the book talks about is the reason that Black Americans, for example, lose when it comes to homeownership is because white homeowners have preferences for who they want their neighbors to be and who they don’t want their neighbors to be.

I presented my research to progressive white law faculties, who really don’t want to hear what I have to say because they know how good they are on race. What the research shows is they may be good on race, except when it comes to where they want to own your home. Think about where you live. Think about who benefits from the decision that you’ve made and how do you want to compensate for that? The next time you buy a home, do you want to think about moving into a racially diverse neighborhood? And if you do, then you need to be sensitive to the fact that you may be an outsider and you don’t get your preferences 100 percent of the time. How do you become a good white ally in a racially diverse neighborhood? How do you advocate for fair outcomes in schools? You know, you want to send your child to X, Y, Z University, but do you know what the graduation rates are by race? Are you agitating for the graduation rates to be equal? What are you doing with the privilege that you have that could benefit Black Americans?

In your chapter on legacy, I was struck by the story of Susan, a white woman who became wealthy off a single share of McDonald’s stock and also her social relationships. She knew a guy who knew a guy who happened to be a broker. Can you say more about how those networks and relationships keep the Black-white wealth gap as wide as it is?

It was a friend of a friend who taught her how to invest in the stock market for free. He was trying to build up his base. He would explain why he made trades and she would make her own trades. And as a result, she has a multimillion-dollar portfolio. Those networks you see in the white community, you don’t see them in the Black community. The white community often takes them for granted, like: Doesn’t this happen to everybody? Well, no, it doesn’t. One of the things you see in that chapter is that white families didn’t want to be referred to with their last names. They wanted to keep their anonymity. I think a lot of Americans, particularly white Americans, want to believe that they got where they are through hard work and meritocracy. They don’t want anybody taking that away from them, when the reality is all of us have a certain level of luck as well as strategy in our ability to build wealth.

There’s a level of social connectivity. There’s also a level of luck in timing. This was at the beginning of the stockbroker’s career when he was looking to build up business. He didn’t have much, at which point he wouldn’t have needed her so much. So there was a lot of luck in that story that I think we all need to spend some time thinking about.

In a way, it’s not really luck, is it? It’s something else. 

It’s a connection. It’s having friends of the family. It’s being able to seize the opportunity because she had extra money to invest. You know, part of what my book shows is that Black Americans have less money, in part because of tax policy. Every April 15, they’re losing money. So you also have to have extra resources to be able to invest in the stock market, which she clearly did.

As you said, so many of the white families in that chapter wanted to remain anonymous, which made me think about how often these social relationships and wealth-building patterns are invisible to people who are of a different race or are further down the socioeconomic ladder. How key is that invisibility to growing and protecting white wealth?

Oh, it’s crucial to not only growing white wealth, but it’s also crucial for people who want to victim-blame. They want to say that if Black people would just work harder and get married and save money, they would be able to do what white people can do. But really, what my book shows is white people live very different lives than Black Americans, even when they may have the same job. So college graduates, if you’re Black, you’re more likely to have extended family that you have to finance, whereas if you’re a white college graduate, your extended family is giving you money. It could be someone in the next cubicle from you, but they are leading a completely different life. And you’re sitting there, if you’re a Black American, going, What am I doing wrong? And the answer is nothing. The system is what’s wrong. And it’s benefiting your white peers and disadvantaging you right now.

The Wall Street Journal reported last week that older white millennials are finally closing the wealth gap with their parents, but older Black millennials have not. In fact, they’re at 50.2 percent of where their own parents were at the same age. How might you explain that discrepancy to someone who saw this headline?

That makes total sense to me. We see that with Black Americans who have good jobs, they are often the first in their family to have a job that pays that well, which means their family is going to rely on them when they have financial emergencies, when a relative is about to be evicted, or a relative’s electricity is going to be turned off. Because there’s no safety net, because the parents were victims of Jim Crow, because they weren’t able to build up wealth. Black Americans wind up supporting parents and grandparents as well as trying to prepare their children to embark on their own higher education and career. So it’s not a surprise at all. It’s eminently predictable. Whereas with respect to white Americans, we see their grandparents and their parents paying for down payments for a home, paying for K through 12 private-school tuition for their children. We see gifts and inheritances that are disproportionately received by white Americans making a difference here.

In your chapter on good jobs, you write at length about how much more likely white workers are to have jobs with certain benefits like health insurance or retirement plans. You know, I’m a labor reporter, so when I read this, I immediately thought of unions and collective bargaining agreements. So I had a two-part question for you related to this. The first part is, in your view, how important are unions to equalizing the Black-white wealth gap? And what are the limitations of unionization?  

First, I will say unions have a fairly sordid history with race discrimination and excluding Black people from unions. I hear a lot of people championing unions and I go, well, my father, who’s now deceased, was a plumber and it took him decades before he was able to join the plumbers union because he was Black. So I would say to the extent unions equally represent members, regardless of race, then you would imagine those benefits that the union negotiated would flow to Black as well as white Americans. But I think that’s a big assumption. I think, which jobs are union jobs? What’s the racial composition of those jobs? I think we have to be mindful of that.

Let’s put it this way. The statistics I talked about in my book, the area where the differences between Black and white workers are the smallest are in government jobs, because everybody gets the same benefits. The problem is that we’ve seen lots of layoffs and cutbacks in the state and local governments. We’ve also seen Black Americans disproportionately holding those jobs. So the recent cutbacks have really hurt the growth of the Black middle class. But when we talk about jobs that come with these benefits, that’s where you see the most parity between white and Black Americans and the private sector is where you see the most disparity.

There are frequent comparisons between our current moment to the 1930s and prior. People link our state of inequality to the Gilded Age. Aides to President Biden said he plans an FDR-sized presidency. There are calls for a second New Deal. But as you outline in your book, a lot of those progressive-era policies were racially regressive. What must we keep in mind to avoid making the mistakes of the past?

Every time I hear another New Deal, I cringe for just that reason. Excuse me. Black people were left out of FHA loans. Excuse me. Black people were left out of VA loans. What we need to do is focus on who is included and who is excluded. When we talk about social security, domestic workers and farmers, agricultural workers were excluded, initially. You’d have to ask yourself what percentage of domestic workers and agricultural workers were Black and you’d find a significant percentage. So whenever we have legislation that starts carving out who is eligible for it is when we need to put our antennae up and ask, “What are the racial impacts of this provision?” One easy way to do this would be to make sure the Biden administration did its own racial impact analysis to make sure they weren’t excluding a segment of the population that was disproportionately one race or another.

What are the long-term consequences for Black Americans if we fail to enact the reforms that you discuss in your book?

Well, the racial wealth gap will continue to grow. And you might see Black Americans start to disengage from the American project. If, as I’ve shown, the system for wealth building is designed to build white wealth while stripping Black Americans of what little we have, then why should we buy into this system? Maybe we shouldn’t. So to me, part of America going forward is Black Americans believing we could get ahead. And what my book shows is that most of us can’t get ahead.

So this is also a project of building an America people can actually believe in. 

Right. Because right now it’s not working. It’s not working for most Black Americans. And I’m talking about Black Americans who get married, buy a home, go to college. Everything that people say is the right thing to do. And Black Americans fall further and further behind because at every milestone, tax policy comes in and advantages white Americans doing the exact same thing and disadvantages Black Americans.

Are you optimistic that you’ve got a receptive audience in the White House right now?  

I am optimistic because President Biden’s first executive order was around racial equity. It was around seeing to it that data would be disaggregated by race, and seeing to it that a racial equity push would come in all government agencies, including the Treasury. My concern is I don’t see personnel at Treasury that are equipped to do it. I don’t see people who he’s put in positions having any kind of a history of dealing with systemic racism in tax. So he has this lofty goal and I absolutely believe he believes it.  But there’s a disconnect between what his executive order says and the people who are supposed to carry it out at Treasury.

Has anyone from the administration reached out to you?

Yes, actually, yesterday.

Maybe that’s a good first first step! 

That’s what I think. I agree. What is the old adage? Trust but verify. Talk is cheap. I’m going to have to see some things. But, yes, I do think there is a sincere commitment to do better when it comes to systemic racism and tax reform.

‘The System Is Designed to Build White Wealth’