AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Black-White Differences in Income Tax Liability
AEA Papers and Proceedings
(pp. 658–663)
Abstract
The federal income tax does not explicitly discriminate by race or ethnicity but can still generate disparate outcomes when a group’s activity correlates with determinants of tax liability. Using Survey of Consumer Finances data and NBER’s TAXSIM model, we find that untaxed forms of income accrue disproportionately to White households across most income levels. Black households face lower tax rates than Whites in low-income groups due to differences in filing status and dependents but face higher rates than White units in high-income groups due to differences in income composition. We also examine cross-group implications of historical and prospective policy changes.Citation
Gale, William, Oliver Hall, and John Sabelhaus. 2026. "Black-White Differences in Income Tax Liability." AEA Papers and Proceedings 116: 658–663. DOI: 10.1257/pandp.20261128Additional Materials
JEL Classification
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination