The Internal Revenue Code generally does not refer to race or ethnicity, but federal income taxes may contribute to racial disparities when factors that affect tax liabilities are associated with race. Historically, it has been difficult to assess those effects because of the absence of data linking tax liabilities to race and ethnicity.

This project will use the Urban-Brookings Tax Policy Center's enhanced model to examine how the federal tax treatment of capital income and wealth might affect Black families differently than white families. We will also consider the racial equity effects of alternative tax policies—both those aimed at reducing the tax burden of all capital holders and those that would explicitly redistribute wealth in ways that could narrow the racial wealth gap.