New Progressive Revenues Could Begin to Right Historic Wrongs

We need to address the racial wealth gap to build a resilient economy that works for all

The burden of the COVID-19 pandemic and economic recession has fallen disproportionately on Black and brown households. These communities continue to face systemic racism that manifests itself in police brutality, mass incarceration, and economic and political disenfranchisement, all of which have only been heightened with COVID-19. One indicator of these inequities is the racial wealth gap. Nationwide, the typical white family has eight times the wealth of the typical Black family and five times the wealth of the typical Hispanic family.[1] Income inequities by race, ethnicity, and gender also continue to persist.

Homeownership and affordable housing are major building blocks for wealth in the United States. Black and brown communities have been kept from homeownership through a series of policies known as racially restrictive covenants and redlining. Racially restrictive covenants prevented Black and brown people from buying homes in neighborhoods, while redlining of the areas in which they were allowed to live denied mortgages for homeownership for these same Black and brown people. These neighborhoods were restricted from accessing financial capital to build their households and communities, while segregated economically and racially, by practice and by law.

Thanks to the tireless work of Black organizations such as the Seattle chapters of Congress of Racial Equity (CORE), the NAACP, the citywide Central Area Civil Rights Commission (CACRC), the Central Area Motivation Project, and other organizers across the United States, these formal policies no longer exist. While these formal policies no longer exist, their impacts continue today.[2] In 2018, Black family homeownership was about half the rate of white family homeownership.[3] This disparity is likely to continue to grow as historically Black and brown neighborhoods become gentrified and increasingly unaffordable.[4]

This presents a serious threat to our shared economic resilience. The health of our economy depends on the health of all of our communities.[5]

One solution is to capture a portion of the wealth that has been built as a result of discriminatory and racist practices embedded into our capitalist economy and redistribute this wealth to communities of Color to enable homeownership and ensure affordable housing.

HB 1465 will reform the estate tax, decreasing taxation on small estates, and increasing taxation on large estates, and, in so doing, generate about $100 million annually in new revenue. $30 million will be allocated to the new Equity in Housing Fund. This fund will be used to remedy homelessness, including foreclosure prevention, rental assistance, outreach engagement services, housing services, and behavioral health with priority for agencies, programs, and services which address current and historical racial inequities. BIPOC community organizations that are already on the forefront of local solutions to these problems will have priority in funding, addressing the problem right at the root.

It is essential that we take action now to acknowledge existing disparities and begin reversing the racial inequities baked into our history. Reforming the estate tax and allocating a portion of those funds to a new Equity in Housing Fund through House Bill 1465 will begin doing just that.

 

Notes

[1] Bhutta, Neil, et al. “Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances.” The Fed – Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances, 28 Sept. 2020, www.federalreserve.gov/econres/notes/feds-notes/disparities-in-wealth-by-race-and-ethnicity-in-the-2019-survey-of-consumer-finances-20200928.htm.

[2] Bekele, Sara. “Structural Racism Helps Explain COVID-19 Disparities.” Economic Opportunity Institute, 28 Apr. 2020, www.opportunityinstitute.org/blog/post/structural-racism-explains-covid-19-disparities/.

[3]  U.S. Census, American Community Survey 2018, Table S2502

[4] Nelson, Glenn. “How Seattle Can Slow Gentrification – and Why It Must.” Crosscut, Crosscut, 9 Oct. 2020, crosscut.com/opinion/2019/11/how-seattle-can-slow-gentrification-and-why-it-must.

[5] Noel, Nick, et al. “The Economic Impact of Closing the Racial Wealth Gap.” McKinsey & Company, McKinsey & Company, 15 Jan. 2021, www.mckinsey.com/industries/public-and-social-sector/our-insights/the-economic-impact-of-closing-the-racial-wealth-gap#.

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