A new study says that if wealth generation continues under the current federal policies, it will take the average Black family 228 years just to gather the same level of wealth its White counterpart enjoys today. Latinx families will need 84 years to get here.
“The Ever-Growing Gap” is from nonprofit Corporation for Enterprise Development and progressive think tank Institute for Policy Studies. The 32-page report culls data from the Survey of Consumer Finances to explore how the current wealth gap will grow exponentially if the impact of historical and present day inequities—from housing discrimination to tax policies that benefit the 1 percent—does not subside. And because of shifting demographics, that ever widening chasm will impact more than communities of color.
“By the time people of color become the majority, the racial wealth divide will not just be a racial and social justice issue impacting a particular group of people—it will be the single greatest economic issue facing our country,” the report’s authors write.
The report also discusses how federal programs that are supposed to help families build long-term wealth in the form of retirement savings, entrepreneurship, higher education and home ownership actually benefit millionaires more than working families, with the big earners receiving $145,000 in public tax benefits versus the typical family’s $174 break.
The authors made some recommendations for closing the gap, including the following from a statement posted about the report:
- Conducting a government-wide audit, launched by an executive order from the president, to determine the role federal policies play in perpetuating or closing the racial wealth divide. The audit, which would be overseen by a specially appointed ombudsperson, would include recommendations for how each government agency can reduce its role in growing the racial wealth divide.
- Fixing unfair, upside-down tax incentives to ensure households of color also receive support to build wealth.The report points out the United States already has the resources to do this through the tax code, which currently doles out more than half a trillion dollars annually to help primarily wealthy households build more wealth.
- Adopting revenue measures that would reduce wealth concentration at the top and generate significant funding that could be re-invested to create opportunity for those at the bottom. These include closing loopholes in the federal estate tax, creating an annual net worth tax on wealth over $50 million or a similar high threshold at a low rate of 1-2%, and reinstituting estate taxes in the more than 30 states that currently don’t have them.
Read the full report here.