American black taxes: comparing what we pay

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How much do black American households pay in federal income taxes? How do these tax payments compare to payments from the rest of the nation? What could a black American nation do with the income taxes we pay?

These are important questions to ask today as we face an American government that is increasingly unable to respond fully to the demands of black America. Also, the questions are relevant because the idea (prospect) of black freedom in the form of nation building is forming in the consciousness of black Americans.

To answer these questions, we collected 2019 data from the main source of US tax information: the US Department of Treasury, Internal Revenue Service, Statistics of Income (SOI) Division. While SOI tax data is available by income size, it is not available by race.[1] Therefore, we have prepared a rough estimate of Black income taxes using the ratios of Black household income to total U.S. household income from the U.S. Department of Commerce, Census Bureau, Current Population Survey (CPS) for 2019 .[2]

Comparison of Table 1 (below) with the above source data will reveal that we have collapsed some income size categories to force consistency between the SOI and the CPS statistics. Panels A and B of Table 1 show that we mapped CPS total household income to SOI adjusted gross income (AGI), which are similar concepts, but not perfectly matched. Notably, the difference between the total CPS household income and the total SOI AGI is only about $400 billion. Similarly, the difference between the CPS Total Black Household Income and our rough estimate of the SOI Total Black AGI is only about $50 billion.

We apply the income size class ratios for CPS Black household income to CPS total household income in panel A to the SOITotal AGI in panel B to obtain the SOI Black AGI. The Black-Total ratios for the detailed income sizes are equivalent in the two panels, but the ratios calculated for CPS Total Black Household Income-CPS Total Household Income and SOI Total Black AGI-to-SOI Total AGI are slightly different; 9.01% versus 9.71%, respectively.

Panel C of Table 1 reflects the application of the CPS Black-Total income ratios by household income size categories from Panel A to the SOI total income tax in Panel C.3 Again, then that the detailed ratios of income tax by size in part C are identical to the ratios in part A, the calculated total ratio between black income tax and total SOI in part C is less than the ratio of total household income to CPS in panel A; 7.49% versus 9.01%, respectively.

Important points to remember from Table 1 are:

(1) Black income is concentrated in the highest income categories (Panels A and B);

(2) Black income taxes are concentrated in the highest income categories (Panel C); and

(3) Black America’s share of total income and taxes is much lower than our share of the US population (about 13% for 2019).

Even so, with a population of 42.8 million and income taxes estimated at $118,418 million, black Americans rank above two select nations (Uganda and Ukraine) whose population size is similar (see Table 2 below).

Table 2 shows that the tax statistics available for Uganda and Ukraine include income taxes paid by households and corporations. Uganda collected $1.5 billion and Ukraine $15.2 billion in income taxes in 2019. By comparison, black American households alone paid $118.4 billion in income taxes. income, that is, not including income taxes paid by black-owned corporations.

Given the obstacles black America faces in achieving income and wealth equality in the United States, black Americans should be aware of our contributions to the nation in the form of income taxes. More importantly, we must understand that, in an American context, we produce goods and services, earn revenue, and pay income taxes for the operations of the federal government on par with nations that far exceed the size of our people.

A key question to ask is: how can we replicate and expand our current levels of production and income as a distinct nation that would allow us to enjoy black freedom?

By Brooks RobinsonBlackEconomics.org

References:

[1] SOI data is from “Table 1.1 All Returns: Selected Income and Tax Items, by Size and Cumulative Sizes of Adjusted Gross Income, Tax Year 2019 (Filing Year 2020)” in Personal Income Tax Returns: full report 2019; https://www.irs.gov/pub/irs-pdf/p1304.pdf#page=6 (Ret. 041122). SOI data for 2019 is the most recent available. We exclude consideration of negative SOI revenues from our analysis because CPS data for households only recognizes positive income. We use CPS household income data in the analysis because the majority of SOI income ($7.6 trillion) for 2019 is reported on joint returns filed by married individuals and surviving spouses in households.

[2]CPS data is from table HINC_02_1_1 (all races) and table HINC_02_1_6 (black only) “Age of Head of Household-Households, by Total Cash Income, Household Type, Race and Hispanic Origin of Household Head; » https://www.census.gov/data/tables/time-series/demo/income-poverty/cps-hinc/hinc-02.2019.html (Ret. 041122).

[3] The stated method used to estimate Black SOI income tax is equivalent to applying the ratio of total SOI taxes in Panel C to total SOI AGIs in Panel B by AGI size to estimated SOI Black AGI in panel B.

[4] Readers are urged to consider the information in Table 2 in light of the fact that for 2019, when black America’s purchasing power (an indicator of gross domestic product (GDP)) exceeded $1 trillion , the GDP of Uganda and Ukraine was estimated by the International Monetary Fund. at just $38.0 billion and $154.0 billion, respectively. https://www.imf.org/en/Publications/WEO/weo-database/2021/October (Ret. 041422).

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