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In Brief

• U.S. tax policy maintains the hegemony of White nuclear families and perpetuates racialized structural inequality to the disadvantage of families of color.
• Tax law marginalizes and penalizes culturally meaningful and adaptive family configurations formed by families of color.
• To advance justice, research on the impacts of tax policy on multigenerational and other diverse families is needed.

Efforts to dismantle structural racism require the interrogation of ideologies and the policies and practices that create and sustain racial inequality. A central ideology that shapes family policy is the belief that the White heteropatriarchal nuclear family (WHNF), defined as a married, wage-earning father head, stay-at-home mother, and children, is key to the economic and social well-being of all families in the United States (Abramovitz, 1996; Cohen, 1997; Collins, 1998; Letiecq, 2019). Various laws, including U.S. tax law, have privileged WHNFs while systematically disadvantaging other family forms, marginalizing family practices of families of color, and reproducing structural racism (Collins, 2000; Josephson, 2016).

U.S. laws and policies have also led to the unequal distribution of income and wealth by race. Exclusionary policies (e.g., Jim Crow, redlining) and discriminatory practices in housing and labor markets (e.g., blockbusting, labor-related racial violence) disproportionately marginalized families of color into unstable jobs with low wages and generated low rates of home ownership, and fewer opportunities for upward mobility than White families (Hanks et al., 2019; Pager & Shepherd, 2008).

In this article, we demonstrate how tax law, coupled with other laws and policies, marginalizes family formations and practices that are culturally meaningful to families of color and often economically necessary as a result of historical and contemporary structural racism (Brewer, 1995). We also discuss the role Family Scientists can play in redressing family privilege and disadvantage instantiated in tax provisions.

Overview of the Tax Code

The primary purposes of tax law include the collection of revenue, accounting of income and wealth transfers, and delivery of financial benefits for “socially desirable” behaviors (Kleiman et al., 2019). There are several financial benefits or penalties families can incur through tax policy (see Table 1).

When filing a federal tax return, one has the following “status” options: single, head of household, married, filing jointly, married, filing separately, and qualifying widow(er). While seemingly neutral, provisions throughout the tax code privilege WHNFs, especially asset-rich families, resulting in disadvantages across race, class, gender, and sexuality (Alm et al., 2014; Brown, 2021; Infanti, 2010; Lipman et al., 2020). This privileging includes how individuals report family members on their tax return and the tax benefits they are eligible to receive (Infanti, 2011).

Table 1

Relevant Tax Laws and Provisions

Note: Each provision at left has an embedded hyperlink to a website providing a summary of the provision. The accompanying U.S. Code has an embedded hyperlink to the text of the law.

Marriage Tax: Penalties for Black Couples, Benefits for White Couples

Many people assume that marriage comes with tax benefits, but it is important to recognize that the tax implications of this status are racialized. Brown (1996, 2021) noted that for decades Black married heterosexual couples have paid higher federal income taxes and are more likely to incur a “marriage penalty” than are White married heterosexual couples. Couples experience marriage “penalties” when they pay more income taxes than if they had not married and continued filing individual tax returns. Conversely, couples receive a “marriage bonus” if they pay less income taxes if they marry and file a joint return. Marriage penalties are highest when two wage earners have similar incomes; marriage benefits are highest when there is just one wage earner or when one spouse earns much more than the other (Brown, 1996, 2021).

Black married couples are more likely than White married couples to incur a marriage penalty because of structural inequalities that result in lower wage earnings among Black men and higher labor-force participation among Black women (Brown, 1996, 2021). Notably, in 2017 the marriage penalty was eliminated for moderate-income earners with no children, but it remained in place for lower-income earners and dual-earning couples with children, thereby maintaining a structural inequality (see Yurko et al., 2019).

Unequal Benefit From Credits: Homeownership to Children

Other tax provisions likewise provide unequal benefits to White families and exacerbate racial and gender income and wealth disparities (Lipman et al., 2020; Strand & Mirkay, 2019). For example, one of the largest housing policies supporting homeownership—the mortgage interest deduction (MID)—primarily benefits White families. Black and Latinx households respectively receive only 6.2% and 7.3% of total MID benefits, despite each comprising nearly 13% of all U.S. households (Institute on Assets and Social Policy & National Low Income Housing Coalition, 2017). This inequity builds on historically government-sanctioned policy that enforced racialized housing segregation and limited Black home ownership (Coates, 2014; Rothstein, 2018). Today, this disparity is maintained through racial biases that ascribe greater value to homes in predominantly White neighborhoods (Brown, 2021; Taylor, 2019).

Tax provisions like the earned-income tax credit (EITC) and the child tax credit (CTC) are typically viewed as successful antipoverty programs, yet Black and Latinx families receive the EITC and CTC unevenly, and fewer benefits per child, than do White families (Brown, 2004; Curran, 2021). Importantly, families with more children benefit less from both credits, and approximately 40% of Black and Latinx families have three or more children, compared to about 33% of White families (Curran, 2021). In 2020, the maximum EITC benefit for one child was $3,584. The EITC for a second child was 65% less than that of the first child, 21% less for the third child, and zero for additional children.

The CTC maximum benefit is calculated per child, yet lower-income families do not fully benefit because of earnings requirements. For example, in 2018, a single parent must have earned $30,000 annually to receive the full CTC for one child and the earnings requirement increases for each additional child (Greenstein et al., 2018). These earning requirements result in Black and Latinx families on average benefiting less from the CTC than White families (Curran, 2021).

Concurrently, provisions bar undocumented immigrants from claiming the EITC and CTC, disproportionately impacting these families. To receive the EITC, the taxpayer and the child must have Social Security numbers (SSNs)—not individual taxpayer identification numbers, which is a way that many undocumented immigrants pay federal taxes—thereby excluding undocumented immigrant parents, even if their child is a U.S. citizen, and millions of married mixed-status families in which only one partner has an SSN (Larrea, 2013; Nery, 2015). While undocumented taxpayers can claim the CTC, their child must have an SSN, which excludes undocumented children (Get It Back Campaign, n.d.).

Harsh Intersections: Taxation and Antipoverty Programs

The history of racialized economic oppression has resulted in disproportionately higher rates of poverty among families of color (Hanks et al., 2019; Pager & Shepherd, 2008; Solomon et al., 2018). For low-income families of color, tax policy can intersect with family policies and antipoverty programs (e.g., welfare reform, child-support enforcement) in harsh ways. For example, among families who coparent children across households, strict enforcement of child-support wage garnishment, high payroll taxes, and interception of tax refunds as a form of punishment for nonpayment of child support can have devastating effects (Haney, 2018; Holzer et al., 2005). Combined, these policies can drive poor nonresident parents of color deeper into poverty (Ha et al., 2018) and increase their risk of incarceration for nonpayment of child support (Zatz, 2016). Furthermore, there is no specific tax credit available to parents who pay child support to help offset their contributions (Nichols et al., 2012). These policies can disincentivize labor-force participation (Huang & Han, 2012) and decrease parents’ ability to financially support their children (Cancian & Meyer, 2018).

Unrecognized Family Forms in the Tax Code: Multigenerational Families

Many families of color maintain multigenerational networks of mutual aid (i.e., communal pooling of resources) through extended family and nonkin ties that are necessary for general economic well-being (Burton & Dilworth-Anderson, 1991; Martin & Martin, 1985). These interdependent networks are culturally important and help families maintain positive social and psychological well-being in racially hostile environments (Butler, 2012; Martin & Martin, 2002; Spencer & Swanson, 2013). Yet the tax code offers limited support via tax credits to these multigenerational family units that are more prominent among families of color (Cross, 2018; Pilkauskas & Cross, 2018). Conversely, WHNFs disproportionately benefit from other provisions in the tax code that allow families to pass down income and wealth via tax-free gifts and inheritance, maintaining intergenerational wealth (Brown, 2021).

Conclusions and Implications for Family Science

In complex ways, structural racism and WHNF privilege are embedded in the U.S. tax system—and here we’ve only scratched the surface. Family Scientists should continue to explore how tax policies intersect with other family policies to (re)create structural (dis)advantages and wealth inequality among diverse families. For example, more research is needed to surface the racially disparate multigenerational impacts of tax policy, given the history of policies that generate and protect WHNF wealth to the economic disadvantage of other families.

Family Scientists can also advance antiracist policy reforms that redress the legacies of structural harm endured by families of color. For example, the United States could move to an individual filing format similar to those used in other countries, which would neutralize unequal marriage benefits and penalties (Brown, 2021; Infanti, 2010). Family Scientists can advocate for making permanent the 2021 American Rescue Plan Act, which temporarily expanded the CTC, making it fully refundable regardless of earnings. Permanent expansion and including families regardless of immigration status could cut childhood poverty by more than 40% (Marr et al., 2021). Last, a wealth-based refundable tax credit for those with wealth below the national median could help narrow the racial wealth gap, as it would disproportionately benefit Black Americans and other racially marginalized communities who have encountered barriers to wealth generation (Brown, 2021).

In sum, tax policies and laws are critical sites of WHNF privilege and structural inequality. Family Scientists must continue to interrogate how the tax code reproduces structural disadvantages among families of color and translate their research in the classroom and in the Family Science discipline.

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