The Black Tax: why have African Americans been cheated by the system for so long?

Ciivil rights march in DC in 1963. Photograph: Buyenlarge/Getty Images

Property value assessment may not sound like the most thrilling of topics, but according to historian Andrew W Kahrl’s new book The Black Tax, it represents a hugely important piece of structural inequality in the US, one that implicates a wide range of topics, including the process of gentrification, the quality of public schools and other amenities, and maintenance of local infrastructure.

Kahrl argues that for decades now the assessment process for homes has been used prejudicially against African Americans, leading them to pay more than their fair share in property tax despite receiving less benefits than those living in white-dominated areas. These unequal taxes have had all sorts of downline repercussions, making them a “missing piece” of the puzzle when it comes to inequality in the US.

Kahrl traces this story back to America’s post–civil war period – in 1865, a delegation of Black leaders told the victorious general William T Sherman that in order to guarantee their freedom what they needed was land of their own. In the postwar south, tax policy immediately became a tool of social engineering: in some cases, it was being used to force Black people back onto plantations, but it was also used by progressive governments to break up large estates to make way for Black landowners, ultimately “fuel[ing] the sharp increase in Black landholdings during these years”.

Already by the beginning of the 20th century, the Black tax was taking shape. Kahrl finds that, among others, WEB DuBois in Georgia shed light on the fact that “the property held by the wealthy enjoyed ‘wholesale undervaluation’, while the ‘very small estates of the poor’ were overvalued, with Black-owned land the most overassessed”. Misusing the assessment process to overvalue Black land by as much at 50% – in spite of Black people generally being afforded inferior parcels of land than white people – was one way that power brokers were setting the stage to perpetuate forms of exploitation and segregation against Black residents.

As the 20th century marched forward and suburban development began in earnest, the assessment process continued to be there, becoming a significant factor in white flight. “Because of unfair tax practices against African Americans, whites could actually have lower tax rates generate higher overall tax returns,” Kahrl explained to me. “That kind of sweet deal was predicated on excluding African Americans from those housing markets. It really incentivized the segregative impulsive of suburban communities.” The impacts were astonishing – in one example, unfair tax regimes led to extreme differences in funding for public schools, meaning that nearly half of African American students in Chicago’s public schools did not get a full day’s education in the 1950s, compared to only 2% of white people.

According to Kahrl, while other civil rights reforms were being made in the 1960s, the Black tax skated by unscathed. Ultimately, as he puts it in The Black Tax, “for the post–Jim Crow generation of Black southerners, these local struggles to gain control over tax administration became a key battleground in the larger fight to dismantle white supremacy’s fiscal structure.” Even in places where Black people managed to wrest control of municipal power, the forms of discrimination that had been built into community power structures remained tenacious, and the Black tax proved hard to dismantle.

Today, the Black tax largely survives via forms of systemic inequality. “What we often see now is bias or favoritism toward certain types of property and property owners, like high-end development,” Kahrl told me. “The wealthy may have greater access to political leverage, or they’re better able to utilize the tax appeals process. It’s not necessarily an assessor whos conniving to overtax certain populations anymore.” In one example that he notes in The Black Tax, by 2005 Black people were well over-represented among holders of subprime mortgages, despite not generally posing a higher risk to lenders. This had repercussions in terms of property taxes, where Black borrowers were more likely to be suddenly hit by a demand for a lump sum payment, whereas those who were not in the subprime market did not tend to receive such treatment. These shocking demands for property tax payments were a significant driver of defaults among Black borrowers.

“Property taxes needn’t necessarily be a source of discrimination,” Karhl told me. “It’s the only wealth tax that we have in this country. It could be a great source of progressive taxation, but in practice it’s the opposite.”

Although The Black Tax focuses on bias against Black people, Karhl offered that similar misuses of tax policy are also perpetuated against other marginalized groups. “Many of the things I look at in the book aren’t just about African American people,” he said. “African American experiences are particularly insightful because public goods and services are heavily financed at the public level.” He also argued that structural inequalities in tax policy leave everyone worse off and that the benefits to reforming the system would go far beyond the Black community. “This system harms all of us in ways,” Karhl said.

There are solutions to this problem: according to Kahrl, the US is the only federated nation in the world without a system to ensure fiscal equity at the local level. “Germany, Canada, India and Australia, have fiscal equity programs. In those nations, the federal government ensures there’s a baseline, where federal dollars are delivered to localities based on need. That at least would be a good first step.” He pointed the finger at the Reagan administration, which began the defunding of local governments that has continued to snowball since the 1980s, resulting in things like unclean water, the resurgence of formerly controlled diseases, and the use of fines and fees to bolster local budgets.

Some of solutions have been applied in US localities – in 2017, for instance, the Chicago Tribune reported on unequal assessments, leading to public outcry and the election of Fritz Kaegi, who campaigned on a promise to reform the system and who has largely kept that promise, shifting the property tax burden from homeowners to large commercial interests. Karhl hopes that these actions will portent larger and larger reforms via local governments. “Wherever we live, we should work toward correcting these problems,” he said. “We should be working at the local levels to demand accountability.”

The Black Tax is out now