The Black-White Wealth Gap

In all the discussions about the Bush tax cut, it seems no one has mentioned the issue of race. This is too bad, since more than any "diverse" Cabinet appointment, more than executive changes in affirmative action regulations, indeed more than any explicitly race-based policy, the $1.6 trillion tax reduction currently on the table will affect prospects for racial equality--for the worse. While African-Americans will be disproportionately left out of the income tax bonanza, the most troubling aspect of Bush's proposal, from the point of view of racial equity, lies in the repeal of the estate tax.

The federal estate tax, which has been in place since 1916, affects only the richest 1.4 percent of the deceased. As the law currently stands, the first $675,000 of net estate value is exempt from tax for individuals ($1.35 million for couples). Because of a 1997 change in the law, this exemption amount will rise steadily until it reaches $1 million for individuals ($2 million for couples) in 2006. Exemptions are even higher for businesses and farms. Since the number of African-Americans who would benefit is infinitesimally small, Bush's goal of eliminating the tax altogether would exacerbate the already growing wealth gap between blacks and whites.

In fact, if there is one statistic that captures the persistence of racial inequality in the United States, it is net worth. (If you want to know your net worth, all you have to do is add up everything you own and subtract from this figure your total amount of outstanding debt.) When we do this for white and minority households across America, incredible differences emerge: Overall, the typical white family enjoys a net worth that is more than seven times that of its black counterpart. (Latinos--a very diverse group--overall fare slightly better than African-Americans but still fall far short of whites.)

Subscriber Login

User Name

Password

Subscribe Now!

The only way to read this article and the full contents of each week's issue of The Nation online is by subscribing to the magazine. Subscribe now and read this article -- and every article published since for the past five years -- right now.

There's no obligation -- try The Nation for four weeks free.

• Get The Nation at home (and online!) for 68 cents a week!
• If you like this article, consider making a donation to The Nation.
• Reprint this article. Click here for rights and information.