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Race, Ethnicity, Poverty, and the Tax-Transfer System
Sponsored by the Urban-Brookings Tax Policy Center

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Katharine Graham Conference Center, Urban Institute
2100 M Street, N.W., Washington, DC
Friday, April 4, 2008, 9:00–10:30 a.m. (light breakfast at 8:30 a.m.)

The tax and transfer systems in the United States are designed to be race blind, but they can affect racial and ethnic groups differently because of their unique socioeconomic characteristics. This seminar examines how well three programs work for racial and ethnic minorities (and poor people generally): wage subsidies, Social Security, and public education.

  • Most social welfare programs serving non-elderly families have focused on those with children. While undeniably worthwhile, that approach ignores other low-wage workers in need of assistance, including many young minority men, whose interaction with government is often through the criminal justice system or living with recipients of public assistance. Indeed, government programs often penalize low-income workers who marry or who formally provide for their children. Eugene Steuerle will discuss his research with Adam Carasso, Harry Holzer, and Elaine Maag on alternative more targeted ways to provide wage subsidies to those left outside the current system.
  • Most Americans pay more payroll taxes for Social Security and Medicare than they do income taxes. These taxes are regressive, representing a larger share of income for low-income people than for those with higher incomes. However, Social Security benefits are highly progressive, replacing a much larger share of the earnings of those with low incomes than those with high incomes. But mortality and marriage rates that differ by race, gender, and education partially offset the program’s progressive design. Melissa Favreault will discuss her work with Gordon Mermin on these factors and options to make Social Security work better for disadvantaged populations.
  • Education is a key pathway out of poverty, yet schools that primarily serve minority students historically have failed to provide the opportunities available in predominantly white schools. A series of state court cases has addressed one cause of that disparity, the dramatic differences resulting from reliance on local property taxes to fund schools. Kim Rueben will examine the success of court mandates equalizing spending for minority and white students and why the rulings have nonetheless failed to narrow the large gaps in educational quality and outcomes. She will present alternatives addressing inequalities in education.

Panelists will include:

  • Melissa Favreault, senior research associate, Income and Benefit Policy Center, Urban Institute
  • Kim Rueben, senior research associate, Urban Institute and Tax Policy Center
  • Eugene Steuerle, senior fellow, Urban Institute, and codirector, Tax Policy Center
  • Discussant: Mark Lopez, associate director, Pew Hispanic Center
  • Discussant: William Spriggs, professor and chair, Department of Economics, Howard University
  • Moderator: Margaret Simms, senior fellow and director of the Low-Income Working Families Project, Urban Institute