Impact of Racism on Economic Inequities

Impact of Racism on Economic Inequities
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Impact of Racism on Economic Inequities
One of the key challenges facing America today is racism, with minority groups feeling its burden on almost all fronts. The U.S. prides itself as one of the most developed countries in the world but racism and its effects continue to prevail. As a result of racism present in different systems in the country, there is a prevalence of economic inequities. According to Beech et al. (2021), among the developed countries, the U.S. is one of the leaders in poverty rates, with communities of color experiencing the highest burden. In this case, structural racism is a major challenge preventing the progress of minority communities. Racism present in American systems including the tax systems perpetuates economic inequities limiting educational, healthcare, and economic opportunities for minority groups. Structural racism is arguably to blame for the widening wealth gap between whites and African Americans.
Structural racism, as can be seen in the country’s tax system, is a key contributor to the economic inequalities that have had unwelcome consequences for minority communities. According to Strand and Mirkay (2020), beginning around 1980, there has been a shift in the country’s tax systems that has exacerbated wealth inequality. Local and state tax systems played a role in increasing economic inequities by shifting from taxing wealth to taxing income and lately to taxing consumption (Strand & Mirkay, 2020). As a result of the shift in tax systems, local and state governments collect more taxes from low-income families compared to high-income families relative to their levels of income. As such, the tax systems contribute to income inequality in the sense that the after-tax incomes of poor families are reduced. The main reason for this disparity according to Strand and Mirkay (2020) is the fact that states depend significantly on consumption and sales taxes, on which poor families spend a large portion of their income. An interesting statistic related to tax inequities is that the tax contribution of the poorest 20% households in “Terrible Ten” states is up to six times more than the income taxes paid by the wealthy households (Strand & Mirkay, 2020). It is also important to recognize that the levels of income differ significantly between Whites and minority groups. Strand and Mirkay (2020) point out that in 2016, the hourly earnings of Black men were 70% of White men’s earnings. In essence, with minority groups receiving lower income, the taxation system further discriminates against them by having them pay a higher proportion of taxes compared to White people. The structural racism that characterizes the tax systems in the U.S. contributes significantly to economic inequities with minority communities being on the receiving end.
Structural racism contributes to poverty that limits educational, healthcare, and economic opportunities for minority communities. Majorly due to racism, poverty affects minority groups the most compared to Whites. According to Beech et al. (2021), in the U.S., the wealth of Black families is ...