Turning the U.S. Tax Code from Upside Down to Right-Side Up Can Close the Racial Wealth Gap

Abstract

Abstract Over the past twenty years, the federal government has spent more than $8 trillion through the tax code to help households save, invest, and build wealth. However, an overwhelming majority of this tax spending has gone to the wealthiest Americans who hardly need the support to build more wealth. Since 1994, the federal government's massive spending on asset building has more than doubled, and there are no signs of it slowing down. This upside-down tax system perpetuates the widespread wealth inequality we are seeing in this country, and it exacerbates the racial wealth gap that is holding back so many Asian Americans and Pacific Islanders (AAPIs) and other households of color. This paper will (1) illustrate how the tax code plays a role in widening the racial wealth gap for AAPIs and other communities of color, (2) explain how current asset-building tax programs are missing an opportunity to boost the wealth of low-income AAPIs and other communities of color, and (3) propose legislative action to...