Tax Code Switch

Planet Money

NPR

Business, News

4.6 • 29.8K Ratings

🗓️ 19 April 2023

⏱️ 25 minutes

🔗️ Recording | iTunes | RSS

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Summary

This past January, researchers uncovered that Black taxpayers are three to five times as likely to be audited as everyone else. One likely reason for this is that the IRS disproportionately audits lower-income earners who claim a tax benefit called the earned income tax credit. And this, says law professor Dorthy Brown, is just one example of the many ways that race is woven through our tax system, its history, and its enforcement.

Dorothy discovered the hidden relationship between race and the tax system sort of by accident, when she was helping her parents with their tax return. The amount they paid seemed too high. Eventually, her curiosity about that observation spawned a whole area of study.

This episode is a collaboration with NPR's Code Switch podcast. Host Gene Demby spoke to Dorothy Brown about how race and taxes play out in marriage, housing, and student debt.

This episode was produced by James Sneed, with help from Olivia Chilkoti. It was edited by Dalia Mortada and Courtney Stein, and engineered by James Willets & Brian Jarboe.

Help support Planet Money and get bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.

Transcript

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0:00.0	NPR.
0:01.0	It is tax week in America.
0:09.1	And you know, a couple of months ago, there was this pretty eye-popping, slash troubling
0:14.5	discovery in the world of taxes.
0:16.3	Mm-hmm.
0:17.3	And it came from a study by a bunch of university researchers and a couple of people from the
0:21.0	US Treasury Department.
0:22.0	I'm Dan Ho.
0:23.0	I'm a professor here at Stanford.
0:25.2	Daniel Ho was part of this team, part of this study, which decided to take a look at
0:30.6	IRS audits.
0:32.0	Specifically, who the IRS audits?
0:35.7	And the big thing that we found in the paper, it's a really disturbing finding, is that black
0:41.5	taxpayers are three to five times as likely to be audited as everyone else.
0:47.0	Three to five times more likely to be audited by the IRS if you are black.
0:52.6	This finding was a big deal, made headlines.
0:55.9	It was also a bit of a puzzle because the IRS does not collect data on taxpayer race.
1:01.6	Like they're not allowed to even do that.
1:03.9	We don't think that what is going on here is any evidence of explicit bias.
1:08.4	After all, IRS doesn't observe race and ethnicity of the taxpayer, but really stem from
1:13.6	its sort of existing institutional priorities and selection processes for how audits get
1:19.6	surfaced.
	...

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