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The Congressional Budget Office just projected a series of $1 trillion budget deficits—as far as the eye can see. Narrowing that deficit will require not only spending reductions and economic growth but also new taxes. One solution that I’ve laid out in a new Hamilton Project paper, “Raising Revenue with a Progressive Value-Added Tax,” is a 10 percent Value-Added Tax (VAT) combined with a universal basic income (UBI)—effectively a cash payment to every US household.

The plan would raise substantial net revenue, be very progressive, and be as conducive to economic growth as any other new tax. The VAT would complement, not replace, any new direct taxes on affluent households, such as a wealth tax or capital gains reforms.

To allow a business to recover input VAT from HMRC a supply of goods or services has to have taken place. The goods or services that have been supplied must have a direct and immediate link with a taxable transaction. The supply must have been made to a taxable person for a business purpose and VAT must have been correctly charged. Input VAT incurred is available for credit in the period in which it arises and is deducted from output tax owed in the same period. If the input tax for a given period is greater than output tax HMRC make a payment for the net amount. Where a business makes both taxable and exempt sales the trader will required to identify what input tax relates exclusively to each type of supply. Input tax incurred solely in relation to taxable supplies is recoverable by normal means. There will be instances where input tax incurred cannot be attributed to either taxable or exempt supplied exclusively – this is “residual” input tax. Residual input tax must be apportioned to determine the extent to which it relates to taxable supplies. Under a system previously known as the 8th VAT Directive refund system, a business that incurs VAT on costs in an EU member state where it is not registered and does not make supplies is entitled to recover VAT directly from that member state. Non-EU businesses are able to reclaim UK VAT via the 13th directive provided that there is a reciprocal arrangement allowing a UK company to reclaim indirect taxes paid in that country although input tax is blocked on items such as business entertainment costs or costs relating to any exempt supply

The U.S. faces a large long-term imbalance between projected federal tax revenue and federal spending, which has widened during the coronavirus pandemic. Alan Viard of the American Enterprise Institute posits that a value-added tax is a viable path to reducing the imbalance.

The U.S. faces a large long-term imbalance between projected federal tax revenue and federal spending, an imbalance that has widened during the coronavirus pandemic. Addressing the fiscal gap will require difficult policy measures, including increases in tax revenue. To narrow the fiscal imbalance, we should follow the lead of 160 other countries by adopting a value-added tax (VAT), a consumption tax that is economically similar to a retail sales tax.

Taking these five considerations into account, the broad-based creditinvoice VAT this chapter proposes would bring to the United States a progressive and growth-friendly version of the revenue source that so many other nations rely upon. America has never had a national broadbased consumption tax of any kind, but the VAT is the world’s most common consumption tax, used by more than 160 countries, including every economically advanced nation except the United States. In 2016, consumption taxes raised just 3.7 percent of GDP in the United States, mainly through state and local sales taxes, compared with 10.5 percent in other OECD countries, mostly through VATs.5

VATs are popular for many reasons. First, and most importantly, VATs raise a lot of money. Asked why he robbed banks, Willie Sutton supposedly said, “Because that’s where the money is” (Federal Bureau of Investigation 2015). As a tax on a broad measure of consumption, VATs are “where the money is” in tax reform. In other OECD countries, VATs are the third largest revenue source, behind social security and personal income taxes.6 A VAT initiated in 2020 at a 10 percent rate would raise $247 billion, or 1.1 percent of GDP, even after funding a UBI that provides families payments equal to the VAT rate times twice the poverty line. Over the course of 2020–29, the policy would raise $2.9 trillion. If a UBI were not implemented, the VAT would raise revenue by a whopping $842 billion in 2020, or about 3.8 percent of GDP.7 The 10-year total is about $10 trillion. The revenue generated by a VAT would provide an enormous pool of resources to address social and economic problems.

This chapter proposes a new progressive, national consumption tax: a broad-based, credit-invoice value-added tax (VAT), sometimes referred to as a “goods and services” tax. The most intuitive way to understand the VAT is that it is like a retail sales tax, but with tax revenue that is collected in parts at each stage of production rather than all at once at the retail level.2 Similar to a tax imposed in New Zealand, this VAT would tax a broad base that includes items that other countries’ taxes typically omit: education, health care, financial services, and nonprofits. To maintain parity with the private sector, federal, state, and local government spending would be taxed too, but this taxation of government spending would not raise net revenues, because the federal government cannot raise net revenue by taxing itself and because the proposal would reimburse subnational governments for the VAT they pay. Coupled with a universal basic income that varies with family size and composition, the VAT can raise substantial amounts of revenue in a progressive fashion.

The proposal comes with five important provisions and considerations. First, the VAT proposed here is intended to work in conjunction with other, highly progressive policies, like an ongoing direct wealth tax, capital gains reforms, or other policy changes that raise taxes on well-to-do households. As noted throughout this volume, there are important reasons to raise tax burdens on high-income and high-wealth households relative to others, so this proposal should be read as a complement to—not a substitute for—other ways to raise taxes on the rich.3 This is because taxes on highincome and high-wealth households, by themselves, are not likely to raise sufficient revenue to allow the federal government to control debt, invest in the economy, and provide payments to the elderly (Gale 2019). In addition, pairing a VAT with these policies is likely to make them more effective. One of the easiest ways for higher-income households to avoid wealth taxes or income taxes is to consume more—an avenue that a VAT makes less attractive. Finally, and perhaps most importantly, in light of secular increases in income and wealth inequality, it is inappropriate to ask the middle class to pay the higher taxes a VAT entails without also enacting substantially higher levies on high-income and high-wealth households.

This policy package can be made even more progressive by using a portion of VAT revenues to provide each household with a universal basic income (UBI) based on family size and composition. This benefit would be provided through quarterly payments to each family, for an annual reimbursement equal to two times the poverty line times the consumption tax rate. For example, with a 10 percent VAT, a family of four would receive about $5,200 back each year, compensating them for taxes paid on about $52,000 of consumption.4 Families that spend less than two times the poverty line would receive more from the UBI than they would pay in VAT. Families with higher spending would only face a net tax burden when they consume above two times the poverty line. Including the UBI, the VAT is remarkably progressive by conventional standards: aft er-tax income would rise by almost 17 percent in the lowest income quintile, remain virtually unchanged in the middle quintile, and fall by 5.5 percent among the top 1 percent of households.

Third, to avoid the VAT depressing the economy in the short run, most or all of the revenues collected in the years immediately following enactment should be spent on programs that stimulate the economy. For example, revenue from a VAT (aft er the adjustments described above) could be used to expand the UBI, restructure or reduce other taxes, pay for health care (Burman 2009), fund work incentives (Burman 2019), boost necessary government investments, or provide temporary stimulus, all of which would help off set any demand reduction from the introduction of the VAT. Over time, some of those uses could be scaled back so that revenues from the VAT could be used to reduce the federal debt.

["DESIGNING A BASIC INCOME GUARANTEE: TARGETING, UNIVERSALITY AND OTHER CONSIDERATIONS,” Institute for Economic Justice, October 2021, https://www.iej.org.za/wp-content/uploads/2021/10/IEJ-policy-brief-UBIG-3_2.pdf, Accessed 6/26/23, GDS – PL]

***UBIG – Universal Basic Income Grant

[Jhumpa, “Exploring Guaranteed Income Through A Racial And Gender Justice Lens,” Roosevelt Institute, June 2019 https://rooseveltinstitute.org/wp-content/uploads/2020/07/RI_UBI-Racial-Gender-Justice-brief-201906.pdf, accessed June 26, 2023, GDS-LL]

It is difficult to ascertain how EITC expansion on its own can address racial and gender wealth inequities. It is true that a large percentage of those who will qualify for the expansion are families of color. However, the amount of the credit along with the fact that the credit will most likely be used to cover basic life expenses point to the conclusion that while EITC expansion is greatly needed, it will probably not make a dent in curbing racial or gender wealth inequities. A larger benefit needs to be considered in order to help those with little to no wealth to actually begin accumulating wealth.

[Jhumpa, “Exploring Guaranteed Income Through A Racial And Gender Justice Lens,” Roosevelt Institute, June 2019 https://rooseveltinstitute.org/wp-content/uploads/2020/07/RI_UBI-Racial-Gender-Justice-brief-201906.pdf, accessed June 26, 2023, GDS-LL]

As a means to address economic and racial injustice, a guaranteed income has a notable history of being uplifted by racial justice advocates and movements.

In Where Do We Go from Here: Chaos or Community [2010 (1967)], the last book of Martin Luther King, Jr., the guaranteed income proposal is introduced as the simplest and most effective solution to poverty. MLK welcomes what he sees as a “cultural change” from old times, when we would see poverty as a result of individual inability or immorality, to new times, when we understand it as stemming from market failures and discriminatory practices that force people into unemployment. Because of this shift, he hopes that we may come to accept radical proposals like guaranteed income as a response to the poverty endemic to our economic systems. In October 1966, the guaranteed income proposal also appeared in the Black Panther Party ten-point manifesto under the second commitment of the program. It was envisaged as a compensation for involuntary unemployment among African-Americans stemming in part from discriminatory practices by white businessmen. The proposal was radical: If it cannot ensure a decent income to its citizens, the federal government ought to return the means of production to the community to guarantee a good living standard to its members. Decades later, the Movement for Black Lives also endorses a form of UBI as part of the economic justice platform of their manifesto. If the UBI proposal was relevant for racial equality at the time of MLK and the Black Panther Party and remains relevant today, it is primarily because unemployment, underemployment, precarious employment, and bad jobs disproportionally affect the lives of people of color. This is true because of discriminatory practices, still, and also because of broader inequalities in access to education, training, and opportunities (Shelby 2012). Interestingly, both MLK and the Black Panther Party were arguing for guaranteed income or guaranteed employment. They saw the proposals as interchangeable to some extent. After all, both policies are indeed designed to restore dignity by alleviating poverty. Guaranteed income can also help keep job guarantee proposals in check. This is because, with a high enough UBI, recipients would only be willing to take on “decent” jobs that provide them with more than just an income. If caring for a relative, volunteering in their community, or starting a business seemed like better options, then they will not be compelled to accept the jobs under the guarantee plan. This comment mirrors Standing's (2013) response to guaranteed-jobs proponents who oppose UBI: The right to an income is a prerequisite of a meaningful right to work. The contemporary proposal for UBI on grounds of racial justice comes from Dorian Warren (2016) in the Movement for Black Lives' manifesto. Under most UBI proposals [excluding those that would overall reduce the benefits available to the worse off, like Charles Murray's (2016)] those most disadvantaged stand to benefit most. Since black families in the United States are disproportionately found at the bottom of the wealth and income distribution, and since unemployment is twice as high among black workers as among white workers, black families stand to gain most from the policy. Warren (2016) also argues that the proposal's commitment to universality would make it harder for governments to exclude felons and ex-felons from the safety net. Under a system designed to target the deserving and screen out the undeserving, those tied up in the criminal justice system would be more easily excluded. This is important for racial justice given the overrepresentation of people of color in prisons, and given the discrimination experienced by ex-convicts in the labor market. Last, but not least, UBI could help disrupt the racial tropes and racial resentment pervasive around the existing welfare system. Negative racist stereotypes of lazy black youth and welfare mothers have important consequences. For a start, they force those in need to think twice before claiming benefits, the risk of stigmatization and demonization being high. This explains in part low take-up rates. Racial tropes also serve to shame recipients to keep them in check and incentivize them further to find employment. Furthermore, there is now ample evidence that racial resentment contributes to low support for welfare. Even when programs do not in fact benefit nonwhites more than whites, the myth of the lazy black recipient contributes to a welfare backlash. The pervasiveness of racial stereotypes is thus concerning both because demonized populations are less likely to enjoy the full benefits of assistance and because it contributes to a welfare backlash that is worrying from a progressive perspective. A universal income support system would be less likely to stigmatize the target population, since all members of the community would get a UBI. If benefits are destigmatized, those worse off are less likely to suffer self-respect harms and to drop out of programs they require to live well.

Toxic levels of wealth inequality in the United States broke into public awareness on the heels of the Occupy Wall Street Movement in 2011. Some academics and social justice advocates had tried for years to elevate wealth inequality to the public square, but it took a social movement that started in Manhattan for people to take notice. Despite the movement’s focus on social class, race—the racial wealth gap, in particular—was notably absent as wealth inequality became a public conversation. Understanding the profound intersections of race and wealth opens a window to our past, how advantage and disadvantage are passed along through family wealth, and how racial stratification is constructed and maintained. Historic wealth-amassing government policies, such as the Homestead Acts, Federal Housing Act, and the GI Bill, facilitated property ownership, homeownership, business development, and education largely for Whites, while systematically excluding similar opportunities for African Americans and other minority groups. The racial wealth gap is a result of both this historical legacy and enduring contemporary racial discrimination. As an indicator of racial inequality, framing a widening racial wealth gap against hard-won advances on the legal front provides a needed distinction between law and worsening material realities. Much discussion of what a racial justice filter might look like has been percolating, mostly in urban areas like Seattle, Oakland, Boston, Buffalo, and Tacoma. Years of strategically and doggedly seeding the public discourse by advocates and researchers resulted in increasing attention to this “new” way of looking at racial inequality— examining the racial wealth gap. A breakthrough was symbolized by President Obama’s calling out the racial wealth gap as he spoke at the Lincoln Memorial on the 50th Anniversary of the March on Washington in 2013. Taking stock of the sweep of success and enduring challenges ahead, Obama stated: “Yes, there have been examples of success within Black America that would have been unimaginable a half-century ago. But as has already been noted, Black unemployment has remained almost Toxic levels of wealth inequality in the United States broke into public awareness on the heels of the Occupy Wall Street Movement in 2011. Some academics and social justice advocates had tried for years to elevate wealth inequality to the public square, but it took a social movement that started in Manhattan for people to take notice. Despite the movement’s focus on social class, race—the racial wealth gap, in particular—was notably absent as wealth inequality became a public conversation. African-American families possess a dime for every dollar of White families’ wealth. twice as high as White employment [sic], Latino unemployment close behind. The gap in wealth between races has not lessened, it’s grown.” We are firmly convinced that focusing on the racial wealth gap serves two critical functions: providing a scope for the extent and direction of racial inequality, a story on which path the nation is headed; and a reliable racial justice filter for policy and institutional practice. wealth matters, race central Wealth is the financial value of everything a family owns minus all debts, including home mortgages, credit card debt, and student loans. The most recent Survey of Consumer Finances (2016) reports that African-American families right in the middle possess a bit more than $17,000 in net wealth. Hispanic families right in the middle report close to $21,000 wealth. This includes wealth in home equity, which is by far the largest pot of wealth for about three-quarters of families, excluding wealthy families and those in poverty. Of course, many African-American and Hispanic families have nowhere near the median figures. Many have far less or no wealth. Many are in the red. With current monthly government poverty lines at $2,615 for a family of four, the dire straits even of typical families, much less those with little or no wealth, come quickly. An event like a government shutdown affecting wide swaths of federal workers might prove a household and family challenge for decades to come. Contrary to African-American and Hispanic families, White families have amassed $171,000 in net wealth at the median. African-American families thus possess a dime for every dollar of White families’ wealth. Controlling for education, middle-class status, income, or occupation closes the racial wealth gap, but leaves major inequities in place. The racial wealth data above provide a snapshot from a good representative sample. But they are only a slice at one point in time, leaving aside questions of family origin and family trajectory over time. Therefore, it is important to examine the same families, preferably over decades, to assess contemporary race and wealth dynamics. The Panel Study of Income Dynamics is positioned well for this task, as it started examining wealth in 1984 and has continually followed the same set of families and their wealth trajectories. The figure above represents our analysis, starting with working-age families in 1984 and following them until 2015. In this sample, African-American family wealth is a rarely told and hardly recognized success story, starting at nearly $4,000 in 1984 and increasing to only $17,000 by 2015. The wealth of White families amasses from about $88,000 to $275,000 over the same period. That racial wealth gap, then, opened at $84,000 and tripled to $258,000. The reason for the racial wealth gap is a difficult one to condense, because it is about racialized structures that highlight connections between residual segregation, redlining, and housing equity; paid income from work, racialized occupational segregation, and access to, or lack of, workplace benefits like retirement plans, paid sick leave, and more; and the value of inheritance to anchor and further amass wealth for White families. The racial wealth gap definitely calls into question assumptions about the significance of Civil Rights legislation and affirmative action. Over the years we have been doing this work, no one has ever questioned the authenticity of the numbers; what is constantly challenged is the narrative of what causes racial inequality. Roots of the racial wealth gap spread far beyond individual merit: • The median White adult who attended college has 7.2 times more wealth than the median Black adult who attended college and 3.9 times more wealth than the median Latino adult who attended college. • The median White single parent has 2.2 times more wealth than the median Black two-parent household and 1.9 times more wealth than the median Latino two-parent household. • The median White household that includes a full-time worker has 7.6 times more wealth than the median Black household with a full-time worker and 5.4 times more wealth than the median Latino household with a full-time worker. • Conspicuous consumption narratives fail because White households spend more than Black households with similar incomes, yet also have more wealth. Personal spending habits are not driving the racial wealth gap and cannot succeed in closing it. Lack of education, family structure, hard work, and conspicuous consumption are not the main drivers of a widening racial wealth gap. While the narrative is contested, the entire body of this research ties the racial wealth gap to historical legacy, public policy, and institutional discrimination. Our understanding of the widening racial wealth gap highlights how policy, deeply embedded racialized structures, 1984 1989 1994 1999 2001 2003 2005 2007 2009 2011 2013 2015 Median wealth holdings by race 1984-2015 50,000 100,000 150,000 200,000 250,000 300,000 350,000 (2015 dollars) Whites Blacks WINTER 2019 contexts 19 and persistent discrimination intersect. The racial wealth gap was created over long periods of time dating back to slavery and continuing in different forms to this day. Clearly, then, large-scale transformations are needed to bend the arc just to keep a steady course on the road to equity and racial justice. Valuable policy ideas promise greater equity, but few resonate on the national policy landscape. In our estimation, massive campaigns and vibrant social movements will be required to move these ideas onto the national political and legislative agenda. Four policy ideas have robust promise to reduce the racial wealth gap, if—and this is a huge “if”—they are designed and implemented in the most inclusive and robust fashion. Only a small number of policy ideas approach the disruptive and transformative goal of closing the racial wealth gap. We recognize that racial justice advocates understandably seek one simple “big fix”—a desire that has spurred the development of innovative policy ideas and created new infrastructures for wealth building. Massive racial wealth inequality did not result from a policy, but is itself a structure of historical and ongoing institutions and choices. Our experience is that there is no one solution. Instead, a broad suite of targeted policies must be pursued. The short list includes: Baby Bonds, Universal Basic Income, reducing or forgiving student debt, and a Federal Job Guarantee. None of these policies are currently in place. However, all are under serious consideration; some are even currently in the field in demonstration phases. We briefly discuss them and their potential for mobility and racial equity. baby bonds We believe that Baby Bonds best capture both the conceptual spirit of equity and racial justice and potential effectiveness. In Review of Black Political Economy, economists Darrick Hamilton and William Darity propose giving every baby born in the U.S. between $500 and $50,000 on the day they’re born. Recently, Senator Cory Booker (D-NJ) proposed similar “Opportunity Accounts.” The Baby Bonds proposal seeks to disrupt wealth inequality by leveling the playing field for the next generation. A bond between $500 and $50,000 would be adjusted for their family’s wealth. The average middle-class child would receive around $20,000. These bonds would remain locked until the child turned 18, when the funds would become available to pay for college, buy a home, or start a business. These Baby Bond accounts could reduce the racial wealth gap significantly. Had Baby Bonds been implemented a generation ago, for example, the Annie E. Casey Foundation’s 2016 analysis shows that the Black-White and Latino-White wealth gaps for 18- to 34-yearolds would have been entirely wiped out by now. While a significant public investment, the Baby Bonds Only a small number of policy ideas approach the disruptive and transformative goal of closing the racial wealth gap. Generation Grundeinkommen, Flickr CC A 2016 demonstration in Germany asks a pertinent question in support of basic income policies. 20 contexts.org proposal starts to look pretty inexpensive weighed against the costs of massive and widening wealth inequality and dwindling social mobility. Since the Baby Bonds proposal scales according to wealth, it provides the biggest benefit for those who aren’t born into wealth. Some children are lucky enough to have key resources when they reach adulthood, largely due to their family’s wealth and inheritance, but others aren’t as lucky. The Baby Bonds proposal solves the “luck” problem by providing the same resource advantage to everyone when they turn 18. Given what we know about family wealth, its distributive equity impact is transformative. universal basic income Universal Basic Income (UBI) has been receiving renewed interest, funding, pilots, organizational support, and media attention (see Calnitsky, this issue). In theory, at least, individuals would receive one-quarter of the national domestic product per capita, which in the United States translates to about $1,200 a month. This is marginally above the official poverty line for one person. Currently in the United States, Canada, and other countries, various UBI designs are being tested, typically none at the full UBI level. Stockton, California’s UBI has received the most coverage. That pilot program involves a small group of families receiving $500 a month for 18 months, with no strings attached. Advocates from various perspectives are enthusiastic about UBI’s impact on work narratives, poverty alleviation, remedy for automation and artificial intelligence, gender equality, and framing public wealth as its prime funding source. Sovereign wealth funds such as the Alaska Permanent Fund, which utilizes a slim part of the common wealth of oil revenues, are exemplars of common and public wealth. Skeptics focus on UBI’s drag on work and employment, inflationary impact, meager redistributive potential, and removing financial incentives to work. From our transformative perspective, UBI falls short in its framing tied to work, loss of work, and poorly paid work. The scheme falls on the labor and income side of the resource ledger, leaving the wealth component virtually untouched. In this way, UBI schemes need to be UBI Plus, with the Plus part highlighting wealth accumulation features. UBI may indeed be promising for a better standard of living, some income guarantees, and a degree of freedom from the cruelest bondages of the labor market. Current UBI designs, however, do not touch or impact wealth accumulation, wealth inequality, power relations, or the racial wealth gap. That is the extra mile that we suggest for the UBI movement. We are confident of the transformative opportunity to frame UBI in the context of reparative justice on wealth and race. reducing student debt Outstanding student loan debt was mostly unchanged in mid-2018, standing at $1.41 trillion. According to the Federal Reserve Bank of New York, nearly 11% of aggregate student debt was over 90 days delinquent or in default, but this still likely underestimates the extent of newly delinquent student loans because many are in forbearance, deferment, or grace periods. Nationally, about two in three (65%) college seniors who graduated from public and private nonprofit colleges in 2017 had student loan debt, a slight decrease from 2016. These borrowers owed an average of $28,650, only slightly higher than 2016 graduates. Data from the Survey of Household Economics and Decisionmaking (SHED) confirm that student loan debt differs along racial and ethnic lines. According to the Urban Institute, among 25- to 55-year-olds, 39.2% of Blacks, 30.5% of Whites, and 29.6% of Hispanics report having some type of student debt, either for their own education or relatives’. Among those with student loan debt, Blacks owe higher amounts of student loan debt (on average $43,725) than Whites ($31,367) or Hispanics ($30,741). While bachelor’s degree recipients are typically better positioned than other students to repay their loans, certain groups of graduates still struggle with their debt. For example, graduates from lower income families are five times as likely to default on their loans as their higher income peers, with 21% of Black college graduates defaulting within 12 years of entering college. There remains an urgent need for federal and state policymakers to address the challenges of affordability and burdensome debt for all college students. However, many current proposals do not take race, family wealth, or income into account. Our research, reported in Less Debt, More Equity: Lowering Student Debt While Closing the Black-White Wealth Gap, shows that targeted policies that lower student debt levels for families with A brief examination of potentially disruptive, transformative policy ideas moves us closer on how to link economic equality and racial justice to social mobility and poverty alleviation. WINTER 2019 contexts 21 fewer financial means would steer scarce public resources to those with financial need as well as lower the racial wealth gap. federal job guarantee A Federal Job Guarantee (FJG) recommends a set of bold policies aimed at full employment and ending poverty. This is achieved through providing universal job coverage for all adults so as to eliminate involuntary unemployment. FJG proposals intend to eliminate poverty wages by establishing a minimum annual wage indexed for inflation for full-time workers above the poverty line for a family of four. Proposals, as outlined in a 2018 brief from the Center on Budget and Policy Priorities, account for regional variation and for wage advancement. The impact is not only to guarantee employment to anybody who wants to work at a paid job, it also frees up workers to search for higher paying and more satisfying work. That feature further motivates employers to build a workplace culture that retains satisfied workers. A critical feature of some FJG proposals is the inclusion of benefits. FJG centers on paychecks, full employment, and ending poverty—all of which are income-based labor market ideas. Thus, the inclusion of benefits that crosswalk income to wealth protections and wealth accumulation forwards these proposals past labor market limitations. Specifically, health insurance, paid sick leave, maternity/paternity leave, paid vacation time, and retirement plans are benefits that protect wealth while building it. A high degree of occupational segregation maps to occupations and economic sectors offering (and not offering) workplace-based benefits. Robust FJG proposals incorporating healthy benefit packages extend much-needed protections and target workers of color most often concentrated in lower paying occupations without access to workplace-based benefits. These kinds of policy features commend FJG as one solution to the racial wealth gap. In closing, a brief examination of potentially disruptive, transformative policy ideas moves us closer on how to link economic equality and racial justice to social mobility and poverty alleviation. Racial equity needs to be our North Star, pursued within policies regarding individual, family, or community social mobility.

If you name a disease in American society, whether it be heart attacks or COVID-19, poverty, or evictions, Black Americans are disproportionately brutalized. The underlying disease is white supremacy, in all its heinous and hidden forms. It hides in white systems. And it hides in white people’s hearts. The United States never achieved freedom for Black Americans. As Fredrick Douglass noted, as wage slavery and disenfranchisement replaced slavery after the Civil War, “Emancipation for the Negro was freedom to hunger, freedom to the winds and rains of heaven, freedom without roofs to cover their heads… it was freedom and famine at the same time.”

Universal basic income, an unconditional payment to all rooted in the belief that everyone has a right to natural resources and the economic fruits of our labor, represents a way to make economic freedom a reality. For Black and brown Americans, it will help counter many of the innumerable barriers to voting: the cost of voting documents, forced relocation, the inability to take off work to vote, intergenerational nihilism, and the economic insecurity that makes it impossible for poor Americans to run for office themselves. Universal Basic Income posits that an individual’s right to life, particularly in a world scourged by a pandemic, should not depend on the profit-driven interest of a corporate employer. Its philosophy contends that the more conditions put on accessing economic relief, the harder it is for people to use and access it — as any person who has received welfare or applied for unemployment benefits will tell you.

[Jhumpa, “Exploring Guaranteed Income Through A Racial And Gender Justice Lens,” Roosevelt Institute, June 2019 https://rooseveltinstitute.org/wp-content/uploads/2020/07/RI_UBI-Racial-Gender-Justice-brief-201906.pdf, accessed June 26, 2023, GDS-LL]

MONTHLY INSTALLMENTS MODEL

[Kourtney, DIONNE POHLER , RAFAEL GOMEZ , AND AKSHAY MOHAN, “Public Policy in a Time of Crisis: A Framework for Evaluating Canada’s COVID-19 Income Support Programs,” Centre for Industrial Relations and Human Resources, University of Toronto, Toronto, Ontario, Canada, JSTOR, Accessed 6/25/23, JCP – PL]

In the context of income support programs, equity is a standard of fairness in both distributive outcomes and process, and it also encompasses public economic notions of vertical and horizontal equity. Horizontal and vertical equity considerations imply, respectively, that those in similar circumstances (i.e., job loss) should receive similar supports and that those in dissimilar circumstances (i.e., with greater needs) should receive differing treatment (i.e., more supports). Notions of horizontal equity might require that income support provide relief when a job is lost, whereas notions of vertical equity might require that income support be provided when someone is unable to work.

[Kourtney, DIONNE POHLER , RAFAEL GOMEZ , AND AKSHAY MOHAN, “Public Policy in a Time of Crisis: A Framework for Evaluating Canada’s COVID-19 Income Support Programs,” Centre for Industrial Relations and Human Resources, University of Toronto, Toronto, Ontario, Canada, JSTOR, Accessed 6/25/23, JCP – PL]

***TBI – Targeted Basic Income

[Jhumpa, “Exploring Guaranteed Income Through A Racial And Gender Justice Lens,” Roosevelt Institute, June 2019 https://rooseveltinstitute.org/wp-content/uploads/2020/07/RI_UBI-Racial-Gender-Justice-brief-201906.pdf, accessed June 26, 2023, GDS-LL]

Reckoning with Race and Gender in America to Promote Healing and Transformation

[Benjamin, Sydney Shreiner, “Racial Differences in Economic Security: The Racial Wealth Gap,” US Department of Treasury, September 15, 2022, https://home.treasury.gov/news/featured-stories/racial-differences-economic-security-racial-wealth-gap#:~:text=The%20racial%20gaps%20in%20economic,impact%20economic%20security%20for%20all., accessed July 1, 2023, GDS-LL]

THE IMPORTANCE OF WEALTH FOR ECONOMIC SECURITY

[Benjamin, Sydney Shreiner, “Racial Differences in Economic Security: The Racial Wealth Gap,” US Department of Treasury, September 15, 2022, https://home.treasury.gov/news/featured-stories/racial-differences-economic-security-racial-wealth-gap#:~:text=The%20racial%20gaps%20in%20economic,impact%20economic%20security%20for%20all., accessed July 1, 2023, GDS-LL]

ADDRESSING RACIAL DIFFERENCES IN WEALTH WILL BENEFIT ALL AMERICANS

Many factors contribute to wage disparities, including geographical segregation and labor market segmentation, as well as different access to educational opportunities and to social and professional networks. In some instances, individual circumstances that lead people to select particular jobs or professions (e.g., family responsibilities, strong connections with their local communities, etc.) also become an element. In this report, we focus specifically on labor market segmentation and on the underrepresentation of women and Black workers in high-paying industries and jobs.

Our research reveals that after accounting for demographic, geographic, and educational differences, among workers with a bachelor’s degree or higher, Black men earned 18 percent less than White men in 2010. By 2019, that gap had grown to 24 percent, largely due to increased underrepresentation of Black workers in high-paying industries and occupations.

The picture is much the same when looking at wealth—that is, total net worth rather than yearly income. In 2021, the top 10 percent of Americans held nearly 70 percent of U.S. wealth, up from about 61 percent at the end of 1989. The share held by the next 40 percent fell correspondingly over that period. The bottom 50 percent (roughly sixty-three million families) owned about 2.5 percent of wealth in 2021.

Moreover, inequality in the United States outpaces that of other rich nations. This is captured by the steady rise in the U.S. Gini coefficient, a measure of a country’s economic inequality that ranges from zero (completely equal) to one hundred (completely unequal). The United States’ Gini coefficient was forty in 2019—the same as Bulgaria’s and Turkey’s, and significantly higher than that of Canada, France, and Germany—according to the Organization for Economic Cooperation and Development (OECD), a group of advanced economies.