Today’s economy, rife with job loss and rampant inflation, is forcing more Americans to turn to their immediate family and extended kin to make up for financial shortfalls. Not everyone shares the same vulnerability to economic crises. Black Americans are disproportionately riddled with the compounding financial effects of COVID-19 and student loan debt, while also dealing with the cumulative economic impacts of systemic racism. Despite holding less wealth per capita, many studies show that Black families give more financial assistance to family than other racial groups. Nicknamed “The Black Tax,” this intra-communal financial support can be life-saving. Financial assistance is a positive cultural phenomenon that ties Black families to one another socially and emotionally. However, the Black Tax, allows the state to shift the costs of social support to Black women and it deepens the racial wealth gap. 

The Black Tax is a practice that emerges out of institutional neglect.

The racial wealth gap was created through discriminatory governmental policies. The state historically offered white men educational subsidies and affirmative action in labor and employment protections, and helped to build an economic safety net for white families. At the same time, legal and political systems intentionally barred Black families from accessing these goods. These political actions created the racial wealth gap and, subsequently, the perpetual financial disadvantages which create the need for economic collectivism. 

Gender and the Black Tax

The economic burden of care often falls on the shoulders of Black women, who are more likely than other groups to provide financial assistance to their family members despite being among the lowest paid and most precarious workers in our society. In research examining how Black families experience The Black Tax, I spoke with many Black women on the verge of economic ruin themselves, who provided significant financial support to family members. Latasha reported giving hundreds of dollars regularly to her siblings’ children. She described her decision to provide a home to her nephew: “We have a nephew…He’s a very good kid who stays in a bad neighborhood and is just not in a good mental space.” Living in an expensive metro area, Latasha sees the educational faults of her nephews’ neighborhood as a problem she must solve. Respondents like Latasha provide for those who had taken care of them in similarly difficult times. Many describe these transfers as sacrifices they were proud to make, knowing that they may eventually need to ask for family help themselves. 

Why are Black women more subject to the Black Tax than other groups?

First, factors like labor market discrimination, deindustrialization in the urban core, and mass incarceration often place Black men at an economic disadvantage. As a result, Black women’s income and labor lead 68% of Black households. Additionally, Black women have historically developed networks of survival for themselves and their families, both giving and receiving money and other forms of aid. Black women’s economic uplift of Black families continues to this day. More than 25% of new Black parents reported receiving financial support from their mothers, while less than 10% received money from their fathers. Finally, many Black women share a sense of racial or cultural duty to give back to their communities. Black Americans give away a higher share of their wealth than whites to charitable organizations – demonstrating altruistic ties well beyond the family unit. 

Neoliberal Austerity Burdens Black Communities

Black families literally do the work of nation states’ in building a robust social safety net for their communities. In my research, many of the financial troubles Black Tax participants were attempting to solve were subsidies that other countries offer to their citizens for free: unemployment assistance, scholarships for higher education, childcare, reliable transportation, and safe, affordable housing.

American neoliberal austerity makes vulnerable individuals responsible for solving community-wide problems. To make matters worse, the U.S. fails to acknowledge the cost savings it reaps from Black families.

The Black Tax is a form of caretaking that depletes Black women’s long-term savings. Women I spoke with talked about emptying their retirement accounts to assist family members with serious financial needs. Donna, a 54-year- old secretary who makes about $40,000 a year, had just given her sister $6,000 the weekend before our interview. When I asked what motivated her, she said, “It’s family…that word is not just a word. It’s an action for me.”

Some may argue that the inner financial workings of the Black family are beyond the government’s purview. This argument assumes that my personal decision to give money to a brother that’s nearing homelessness or my niece who wants to attend space camp has nothing to do with government. However, decades of social science research show that American policymakers created these crises. Unfair state and federal policies have made Black communities more vulnerable to housing insecurity and starved Black students of school resources.

My financial “gifts” to my family attempt to redress not just temporary needs, but deep systemic injustices. 

Addressing the Black Tax in Federal Policy

Current tax code definitions do little to acknowledge the impact of the Black Tax. Take dependent tax credits, for instance. The rationale for dependent tax credits is that Americans who offer care and financial assistance to loved ones deserve repayment for their expenses. These credits acknowledge the substantial economic burden of caretaking, and these credits make an enormous financial difference, literally lifting families out of poverty. However, current regulations rely on white middle-class models of family life in determining who is a “dependent.” At present, dependents must live in one’s household and receive more than half of their income from the taxpayer to be eligible. This definition fails to acknowledge the financial support Black women and other precarious groups give to those who may not live in the same residence.

A policy which allows American families to receive a tax break for financial transfers beyond a reasonable threshold, for up to five family members outside their households, would be a large step towards alleviating the costs Black women bare.

This policy could be modeled after the Child Tax Credit; during the pandemic these credits demonstrably reduced poverty. Reimagining the definition of one’s dependents as beyond one’s household would begin to repair the life-sustaining financial work Black families perform on behalf of the state.

Policy efforts to reduce the racial wealth gap via wealth redistribution programs like reparations, forgiving student (and parent) loans, or a federal job guarantee would significantly reduce the tax on Black women’s economic futures. In the absence of a healthy federal safety net, the Black Tax is both a hallmark of traditional racial solidarity and evidence of government neglect. Without an immediate investment in the expansion of the social safety net, Black women and their wallets will continue to unfairly attempt to solve racialized poverty, broken educational systems, rising inflation, and much more. To begin reversing centuries of racialized violence and the racial wealth gap, policymakers must take steps to alleviate the undue and unequal economic burden of care faced by Black women and families.