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Excerpted From: Goldburn P. Maynard Jr., Biden's Gambit: Advancing Racial Equity While Relying on a Race-Neutral Tax Code, 131 Yale Law Journal Forum 656 (January 9, 2022) (201 Footnotes) (Full Document)


GoldburnPMaynardJrOn January 20, 2021, as the Biden Administration formally took over the White House, a significant shift in racial policy commenced. Gone were the days of executive orders banning diversity training and establishing a 1776 Commission. On his first day in office, the new President issued an executive order to advance racial equity (RE [racial equity]) in communities through the federal government. The order was notable for its chosen language, which invoked equity rather than equality. In eschewing more traditional notions of racial equality, President Biden was explicitly framing his presidency within the race-conscious, antisubordination camp. While racial equality has come to connote equal treatment and race blindness, sometimes even accommodating reverse-discrimination claims, RE [racial equity] is firmly race conscious. Instead of relying on equal treatment, RE [racial equity] seeks to ensure fairness in treatment and access to resources for all. RE [racial equity] speaks the language of historical disparities and systemic racism--barriers that it aims to remove. The executive order's genuine commitment to RE [racial equity] is an important symbolic departure from previous administrations, but it puts the Biden Administration on a collision course with federal courts advocating for colorblindness.

Within the span of a week, the Biden Administration issued four executive actions to advance RE [racial equity] in housing and criminal justice. This flurry of activity reflected the fact that there was a lot of work to be done: a significant portion of the nation's minorities had lost faith in local law enforcement, and the COVID-19 pandemic had a disproportionately devastating impact on minority communities. It was within this context that the Administration proposed its $1.9 trillion recovery bill, which Congress passed without any Republican votes in the Senate and signed into law as the American Rescue Plan Act (ARPA [American Rescue Plan Act]) on March 11, 2021. This legislation was notable in its approach to stimulus and recovery. Rather than focusing its investments on infrastructure, which the Biden Administration later set out in a separate proposal, the bulk of the stimulus measure focused on redistribution through the tax system. The redistributive efforts through the tax code revived longstanding debates about spending through the tax code, and the Internal Revenue Service's (IRS's) suitability and effectiveness as an administrator of federal benefits.

An underexplored dimension of the policy choice to heavily rely on the tax system is the relationship between the Administration's commitment to RE [racial equity] and the tax code's longstanding refusal to incorporate racism and other dimensions of social inequity into its notions of fairness. To this day, the IRS does not collect racial data on taxpayers. Rather, it exists as a colorblind agency, with neither the Form 1040 asking about race nor the agency including race or ethnicity in its published data analysis. Its neutrality is also mirrored by parts of the tax academy and establishment that have long resisted efforts to bring race into tax scholarship. This general principle of neutrality is also supported by a substantial portion of the nation that believes in colorblindness. Even if people care about inequality, they do not want racial classifications to be used in decision-making. The Administration's commitment to RE [racial equity] seems to contradict such race neutrality.

This Essay analyzes ARPA [American Rescue Plan Act] from the standpoint of RE [racial equity]. While analysis reveals that the Biden Administration made some progress on RE [racial equity] through ARPA [American Rescue Plan Act], in the months since its passage, federal courts have undermined some of this progress by halting race-conscious equity programs in ARPA [American Rescue Plan Act]. This Essay argues that race consciousness is central to achieving RE [racial equity]. It further emphasizes that RE [racial equity] requires more than traditional policies that target financial need. Truly achieving RE [racial equity] requires confronting the intergenerational nature of wealth. Racial disparities in wealth can be linked to historical inequities which undermine equal opportunity. In order for race to not be a major determinant of life chances as RE [racial equity] demands, I argue that the racial wealth gap must be closed. If the Administration wants to increase the impact of its RE [racial equity] efforts, it must strive to alleviate not only poverty, but also structural issues like the racial wealth gap, a task made more difficult by recent court rulings.

This Essay proceeds as follows. Part I defines and describes RE [racial equity] as a substantive antidiscrimination concept and suggests methods for determining whether a policy promotes it. Part II analyzes several provisions of ARPA [American Rescue Plan Act] using these methods to reveal that much of the legislation's work targeted those in need and disproportionately benefited racial minorities. A few provisions also worked to reverse historic discrimination in a race-conscious manner, consistent with RE [racial equity]. Yet, courts halted two of the most promising ARPA [American Rescue Plan Act] programs because of the programs' reliance on racial classifications. Part III focuses on the two places where ARPA [American Rescue Plan Act]'s RE [racial equity] policies currently fall short: (1) the need to tackle wealth inequality more forthrightly and (2) the more difficult task of using race-conscious remedies when a substantial part of the nation favors colorblindness.

[. . .]

ARPA [American Rescue Plan Act] and the response by courts have shown us that high hurdles remain to achieving RE [racial equity]. This is not only a matter of one election or even getting the executive and legislative branches to pass laws. Today, many courts equate efforts to promote RE [racial equity] with efforts to promote racial segregation. The odds of having all three branches in perfect alignment are slim. ARPA [American Rescue Plan Act] also illustrates weaknesses in our current understanding of the Constitution as limiting the government's ability to redress historic wrongs. The status quo limitations are so strong that it is hard to imagine any large pro-equality advancements in the foreseeable future.

At our current pace, achieving RE [racial equity] will be a centuries-long project. This is discouraging, but highlights the importance of continuing the fight for wealth taxation and other levies on capital. It also underscores the smallness of the tax system when tackling a problem as embedded as RE [racial equity]. There are many decisions, regulations, and laws that have embedded racism structurally and systematically. The tax system serves as an efficient compensator of harm, but this is not always what the victims of harm want. Instead of after-the-fact compensation for discrimination, victims of inequities often prefer to have the discrimination eliminated. That is the purpose of RE [racial equity]. The tax system can play an important role in promoting RE [racial equity], even if it is not the leading one.

And yet, there is hope. The Biden Administration is engaging in equity efforts that do not raise constitutional issues. The Administration's commitment to ending private prisons and eliminating discrimination in federal housing is ongoing. States, cities, and localities still have substantial abilities to distribute aid equitably under ARPA [American Rescue Plan Act] for several years. While it will take more work to accomplish, there is more momentum than ever for important RE [racial equity] work like ending sentencing disparities that hurt Black and Hispanic people, paying reparations for victims of slavery and segregation, and ending housing discrimination. This still leaves us with hope as none of these problems are inherent or inevitable. We can still turn them around.

Assistant Professor of Business Law and Ethics, Indiana University Kelley School of Business.

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