Dear President Biden,
You have pledged to fight to rid our nation of systemic racism. I believe you mean that. But it seems that many in your administration do not. Or perhaps they simply underestimate your resolve.
When you announced your plan last week to rebuild our nation’s infrastructure, you showed a way to pay much of the cost with tax increases on corporations. You did not dwell on the complex details, yet you did take time to single out the Cayman Islands and Bermuda to blame for the failures of our corporate income tax. For reasons that I understand all too well, you identified the wrong culprits.
In your remarks, you explained that corporations had hidden profits in the Caymans and Bermuda. That may be true, in a sense. But it also encapsulated the racism and xenophobia you promised to purge from our political discourse.
The tax experts you surround yourself with know that Switzerland belongs at the top of any list of tax havens. The same goes for your beloved Ireland. In her testimony, Kim Clausing, your deputy assistant secretary of tax analysis, carefully noted that you need not look beyond Europe to find four of the “big seven” corporate tax havens (Ireland, Luxembourg, the Netherlands, and Switzerland). But your advisers also know that whenever a new blacklist of tax havens gets drawn up, those wealthy, white countries somehow escape inclusion.
Having read this far, you likely understand your mistake. Your predecessor routinely exploited racism, both pointed and casual, for political gain. And now you know that you have too. While I suspect you would gladly take responsibility for doing it, I don’t blame you.
I blame your extraordinary team of tax specialists. When Paul Krugman joked that there were no tax experts that had not already joined your administration, I immediately thought of one whom they had not even had a conversation with until a few days ago.
With her acclaimed book The Whiteness of Wealth, Dorothy Brown showed the world what we tax nerds long suspected. As Brown bluntly puts it: “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.” While the long-standing IRS refusal to calculate statistics by race makes hard data scarce, nobody knows more about the ways racism affects our tax laws than Brown does. The reason your team snubbed her, despite your vow to challenge systemic racism, helps explain why they did not adequately warn you against using your bully pulpit to indict a pair of majority-Black countries for the failures of our global tax system without mentioning majority-white Ireland or Switzerland.
They simply don’t want to talk about race. Which is a problem. One of your first actions as president was issuing an executive order addressing systemic racism. For the first time, that will force our nation’s tax officials to acknowledge that the tax law may not only reflect but also exacerbate white privilege.
While that represents an important first step, you must do more if you want to avoid divisive tax rhetoric and policies. First, I hope that you personally reach out to Brown to learn more about her ideas. Next, you need to make sure that you have experts on your team who focus specifically on race and taxation (seriously, they exist). And most important, you need to tell everybody at Treasury that you really mean what you say when it comes to systemic racism.
Thanks to the efforts of former Representative Charles Rangel, we already know what anti-racist international tax policy looks like. He rejected the idea of selectively punishing tax havens with sanctions. Instead, his Foreign Account Tax Compliance Act threatened penalties on banks worldwide—even in Switzerland—that did not identify tax cheats. The fact that, within the United States, the 10 counties with the highest audit rates all happen to be overwhelmingly Black, suggests that similar opportunities for anti-racism exist here at home.
Even if you managed to completely vanquish racism in every other part of government, failing to address it in taxation would be a problem. That would be like replacing all our gas guzzlers with electric cars only to fuel them with coal-burning power plants. You can’t fix systemic racism without taking a hard look at—and sometimes being told a hard truth about—the laws that provide the fuel our government runs on.