FACT Policy Fellow Sofia Gonzalez interviewed Amy Matsui, Director of Income Security and Senior Counsel at the National Women’s Law Center, on the connection between gender and U.S. tax policy. This is their conversation, edited for clarity and length. FACT does not necessarily endorse the policies reflected in this discussion.
The interview below follows and expands upon a public panel discussion held by FACT, the Nawi Collective, and the Global Alliance for Tax Justice (GATJ), which was held in March as a part of GATJ’s Global Days of Action on Tax Justice for Women’s Rights. A full recording of that panel discussion can be found here.
- In which ways can U.S. policy shift to be more inclusive when it comes to our tax system and general taxation practices?
The way that I approach tax policy is based on the premise that tax justice is gender justice, because the tax code is not gender-neutral. We say that history is written by the winners: so is tax policy. It’s written by people who had the power in the early twentieth century, who imbued the tax code with their values and experiences. And defined who would get taxed, how they got taxed and how those taxes are implemented. Because tax policy was written mostly by wealthy white men, for example, it doesn’t recognize the contributions of women and people of color that hold up our economy.
At the same time, the tax code is a super powerful economic driver. To make the tax code more inclusive is to harness the power of the tax code to advance an economy that works for everyone. This includes everything from recognizing the realities of people’s lives, how we engage in the paid workforce, how people are managing unpaid labor like domestic work and caregiving, the way their different parts of our labor market are compensated, the way we accept part-time work or unstable work for our workers, and what profit structures are. We need to reorient the tax code so that it’s supporting all workers, not just those at the top who wrote the tax code to begin with.
- FACT is a coalition committed to transparent financial systems and tax practices. Can you talk more about how the IRS might move forward with policies, like more transparent information through disaggregated tax data, that could help advance the conversation on race?
There is information that we have already. The IRS and Treasury don’t provide tax data disaggregated by race, gender, or other characteristics. Nor do they have intersectional cuts of that data. They only reflect tax data by income. So, on one hand, because households of color and women who are supporting families on their own are underrepresented at the top of the income scale and are overrepresented at the bottom, we do have a general sense when we track by income about how taxpayers by race and gender are faring on tax expenditures in tax policies. On the other hand, we need a clearer, more granular picture to know how women and people of color are not benefiting from tax policies to the same extent that men and white families are. We can make our policies better and more effective when we have a more precise sense of how they are operating.
The IRS has committed to trying to provide more equitable data, including a report that they put out earlier in the year about tax benefits by race. And again, it confirms, with a lot more clarity and specificity, what we suspected around tax expenditures: that is, that white households are benefiting more from many tax policies than households of color are. This data will only hopefully improve following President Biden’s executive order on advancing racial equity and supporting underserved communities through the federal government.
We also know that it’s much harder to get data on gender. In part, that’s because it is difficult to break open the tax structure for married couples, who jointly file, to isolate what members of those households are earning. On top of that, it’s even more difficult knowing whether there are women of color and men of color within those households. Any steps that the IRS or Treasury can take that can advance the precision of the data around those characteristics are going to improve our understanding of how tax policies are working.
And then one of the places that I am really looking forward to is how the IRS and Treasury start building this work out: to evaluate and assess, in advance, what the impact of a particular tax policy will be on equity. We need “equity impact” assessments, similar to the environmental impact assessments when the government considers a particular environmental project. We are excited for the federal government to build on that model and think about, in advance, how a particular tax policy not only affects total revenues collected or funds available to spend, but also the impact on equity for specific demographic groups. There are smaller models already developed by organizations and certain municipalities, which hopefully can be scaled.
- Another important outcome of the increased IRS funds is to improve its capacity to audit taxpayers. This is not to deepen the disproportionate targeting of those who claim EITC, but to go after the high-income earners who dodge taxes through complicated tax schemes, including through the financial secrecy vehicles — LLCs, trusts, and other entities — that FACT is hoping to make more transparent. Can you speak to other reforms that may help combat the financial opacity perpetuating the racial wealth gap?
I think we need to better highlight how very high-income and high-wealth people are able to shelter their assets from taxes. Average people really don’t understand that the tax system has been weaponized so that the wealthy can shelter and prevent themselves from paying taxes, and limit what they contribute to the system from which they have greatly benefitted.
When we think about low and moderate-income households, in comparison, society tells them the story that if they are responsible and put away money over time and they’re not buying oat milk lattes, they should be able to save and build a nest egg. And when they fail to accumulate that wealth, society ascribes it to a personal failing. But this approach fails to recognize the huge structural impediments to saving for low- and moderate-income workers, compared to the huge structural incentives and benefits for those who already have wealth to make it grow even larger. Not to mention the financial secrecy tools that empower them to do so far from the light of day. It’s important that people understand that it’s not about personal choices, but rather about U.S. policy choices, systems, and structures – including the tax system.
- In which ways does corporate tax avoidance disproportionately affect women and minorities?
The way I think about how corporate tax avoidance is related to women and people of color is in terms of lost revenue. We have corporations that are benefiting from inequitable and discriminatory economic systems and structures. The labor market, worker power, the ability for workers to organize themselves and bargain for a dignified work life that enables them to support themselves and gives their families access to opportunity – is stacked against workers.
The revenue lost to corporate tax dodging could, instead, contribute to services that help America’s women and their families. Caregiving is labor that has been traditionally understood as women’s work. Paid caregiving is overwhelmingly female, and is predominantly performed by women of color and immigrant women. Moreover, it is work that is vastly underpaid. What we’ve seen for the childcare workforce is that they are paid less than dog walkers. They are not paid commensurately for the skilled work that they are doing and the importance of this work to the economy.
So when corporations are not contributing their fair share of taxes, we lose revenues that could be invested in public goods like child care. If we invest in child care, paid family and medical leave, and care for aging and disabled folks, we are making it possible for women to stay in the labor force, even when they have caregiving responsibilities. We are making sure that people are not having disruptions to their work day-to-day, and throughout their careers. Lastly, when we invest in care, we can make sure that care workers are paid adequately and create new, sustainable jobs. More caregiving supports also would help the U.S. economic bottom line.
By way of example, President Biden’s budget for FY 2024 estimates that raising the corporate tax rate above the 2017 Tax Cuts and Jobs Act level would raise $1.3 trillion over 10 years. Paired in that budget are investments in child care of $600 billion dollars over 10 years, paid family and medical leave, $325 billion over 10 years, investments in home- and community-based services for $150 billion. Those are investments that raising revenue through more robust corporate taxation would help to support. And those investments would make the economy work for everyone, rather than perpetuating the inequity and skew in the economy.
- How do you see the question of strengthening international tax policy — i.e. corporations paying their fair share, instead of using loopholes to dodge taxes — as told through the lens of race and economic opportunity?
The tax system exists so that we can fund our shared priorities: the things that make our economy stronger, the things that support really broad prosperity, and inclusive economic growth. Strengthening international tax policy is important as a way of making sure that companies aren’t able to shelter their profits to avoid contributing to the overall economy. They must contribute their fair share to support the same public systems, programs, and resources that we all benefit from, helping support everyone rather than just hoarding profits for themselves and their shareholders.
- We at FACT often talk about how the tax code encourages corporations to move labor and tangible assets offshore to avail themselves of tax breaks. But we haven’t yet talked about how the tax code continues entrenching tax policies by using norms in certain white communities to set tax policies that still disadvantage black communities. Can you elaborate?
Tax policy communicates our values and our priorities as a society. Unfortunately, those priorities and values were set by people who succeeded in and continued to benefit from an inequitable and discriminatory economy. They’ve continued to reinforce those norms in the tax code over time.
I think a lot about the groundbreaking research that Dorothy Brown and other critical tax scholars have spent decades conducting. For example, we have policies that favor income that comes from capital gains. But we’re not recognizing that stock ownership is disproportionately enjoyed by white families and households. Black families have had fewer opportunities to invest in the stock market, and black workers are less likely to be employed in positions that offer stock ownership as one of their benefits.
Similarly, we’ve seen that women tend to invest less in stocks and own fewer stocks than men do. When our tax policies have a preference for income from investments like stocks, that means that our tax code is giving those benefits disproportionately, again, to the wealthy. These racial and gender inequities are perpetuated and reinforced.
Likewise, when we think about the tax preferences for intergenerational wealth transfers, there is kind of this race- and gender-neutral idea that we want to encourage families to support the “next generation” and set them up well to succeed. What we’re not thinking about is that black families are less likely to pass money down from older generations to the next. In fact, it may very well be that younger black workers are having to subsidize their older family members, rather than the other way around. We also aren’t recognizing that even when transfers happen between generations in black families, the legacies are generally speaking going to be smaller than in white families. So again, we have to recognize that if we set up a system that privileges intergenerational wealth transfers, that is going to benefit white families compared to black families.
We further need to recognize that black families and Hispanic families are often single-headed households. Especially women of color are less likely to own homes. That means that when you reward households for home ownership through the tax system, again women supporting families on their own are less likely to receive those tax benefits. I think all of these examples demonstrate the role of tax policy in growing wealth, and the extent to which there are racial and gender disparities.
It requires us to hold our policy makers to account to make sure that we’re not just reifying privilege. Instead, we should be supporting access to opportunity and the economic success of people who don’t have access to it already. We should be using it as an engine for equity.
- What can tax policy advocates and organizations do to take action?
Well, we’re at a very critical tax policy moment, with debates around the expiring 2017 Trump tax cuts, and everyone’s engagement is going to be crucial. I have had the benefit of working for an organization that for 50 years has worked on tax policy as a gender justice issue. And when I talk to other organizations and communities, people really do understand that with progressive tax policies, we will have more resources to invest in all of the different policy solutions that we care about. The thing that people tell me – and this is really endemic in the women’s rights field now – is they just don’t have capacity to work on tax policy, or weave tax policy into their own advocacy. Women are under siege: we’re in a landscape where Roe v. Wade has been overturned; LGTBQ folks are under assault for their very lives; right now, we’re fighting for the soul of democracy. As a tax advocate, I look at my job as one of trying to facilitate and make it easier for my partners in the movement to incorporate tax advocacy into their work in a way that makes sense for them, and bring more voices to work on taxes.
Part of my job as an advocate is to try to provide tools and resources so that people can feel comfortable talking about tax policy in a way that is authentic to them, that’s organic and connected to the work that they do. I want them to incorporate tax advocacy in a way that reflects their values in the work that they’re already doing, and where I can, I want to advocate for creating more capacity and resources and space for groups to engage in tax advocacy. I think investing in the work that all of us do – toward gender justice, economic justice, and environmental justice – will ensure that people have the space and capacity to make those connections and harness our collective strength toward shared goals, through having a more equitable tax system.