The Whiteness of Wealth: How Tax Rules Were Built on Racism — And What You Can Do to Protect Your Assets

The Whiteness of Wealth by tax law professor Dorothy A. Brown offers a powerful and data-backed argument: the U.S. tax code isn’t color-blind. What looks like impartial law actually reinforces patterns of racial inequality, advantaging white Americans while holding Black families and other people of color further behind. Brown’s deep research shows that seemingly neutral parts of the tax system—homeownership incentives, filing categories, investment preferences, and deductions—were written for and benefit white families in ways that aren’t obvious at first glance.

1. The Tax Code Rewards White Patterns of Wealth Building

Brown’s core point is that the design of tax laws reflects and rewards the economic behaviors shaped by historical racial inequality.

Marriage and the “marriage bonus”
The U.S. tax code allows couples to file jointly, meaning one spouse’s income can be taxed at a lower rate if the other spouse earns very little. That historically advantaged white families following the breadwinner model. However, Black families are more likely to have both spouses working similar incomes, meaning they often don’t receive as much benefit—and can even pay more when married.

Mortgage interest deduction and homeownership
Owning a home is one of the largest drivers of U.S. wealth because of tax breaks like the mortgage interest deduction and favorable treatment of capital gains from home sales. But these benefits disproportionately go to white homeowners. Historically, discriminatory lending practices, redlining, and segregation limited Black homeownership and restricted Black families to neighborhoods where homes appreciate more slowly—or even depreciate when racial demographics shift—a dynamic that Brown highlights in her research.

Capital gains and investment income
Investments (stocks, businesses, rental properties) often generate capital gains, which are taxed at lower rates than ordinary income. White families are vastly more likely to hold investment assets than Black families, meaning tax policy amplifies already uneven access to wealth building.

2. Homeownership Isn’t a Guaranteed Path to Wealth—Especially in Black Communities

Brown challenges the conventional wisdom that buying a home always builds wealth. While white families living in predominantly white neighborhoods have seen sustained home value growth, Black homeowners often don’t benefit the same way for reasons rooted in segregation, appraisal bias, and disinvestment.

Property values decrease with Black presence
Research shows that as the percentage of Black residents in a neighborhood increases, property values tend to stagnate or even decline, not because of the quality of the homes but because of racial bias in the housing market and appraisal practices. Brown highlights how these unspoken market behaviors diminish the wealth-building potential of Black homeownership.

Tax break timing and lack of appreciation
When homeowners sell their homes, they can exclude up to $250,000 (single) or $500,000 (married) in gains from taxable income. But if the home didn’t appreciate—or lost value—there’s no gain to exclude, and losses on sales are not deductible on personal taxes. This means Black homeowners are less likely to get that tax advantage because of systemic forces impacting property values.

3. Education, Retirement, and Work Tax Incentives Favor Those Already Ahead

Brown also discusses:

• Student debt tax breaks that offer limited relief, even as Black students are more likely to take on debt and less likely to graduate with corresponding wage benefits.

• Retirement account disparities — Workplace retirement plans like 401(k)s offer pre-tax contributions and matching, but Black workers are less likely to have access to these benefits. That means fewer opportunities for tax-advantaged retirement savings early in life.

What You Can Do to Protect and Build Your Wealth

Understanding how the system is designed can help you make intentional choices that grow your financial security within the existing rules—and (when possible) advocate for equitable policy change. Here are steps that work for most people:

1. Max Out Tax-Advantaged Retirement Accounts

Maxing out contributions to an IRA or 401(k) reduces taxable income now and accelerates compound growth over time. Whether traditional or Roth, getting the full tax benefit can significantly boost long-term wealth.

• Traditional IRA/401(k): contributions may be tax-deductible today.

• Roth IRA: contributions are after-tax but grow tax-free—especially powerful if you expect to be in a higher bracket later.

This strategy is especially effective if you start early and keep consistent contributions. Compound interest over decades significantly outweighs short-term market volatility.

2. Invest in Education for Future Earnings

While The Whiteness of Wealth highlights inequities in education tax breaks and loan burdens, investing in education strategically remains one of the strongest long-term wealth builders.

• 529 plans for kids — Save for future college costs with tax-advantaged growth and withdrawals when used for qualified education expenses. Many states offer tax deductions or credits for 529 contributions.

• Continuing education for yourself — Certifications, graduate degrees, or technical skills can increase earning power and resilience in a shifting job market.

3. Build a Diversified Investment Portfolio

Owning a home is valuable—but it shouldn’t be your only investment. Stocks, bonds, index funds, real estate investment trusts (REITs), and small business ventures offer ways to diversify and grow wealth.

• Stock market investing allows ownership in productive assets that historically outpace inflation over time.

• Diversification protects your portfolio against downturns in any one asset class (like real estate).

• Many advisors recommend allocating funds in tax-advantaged accounts first (retirement, 529s), then in taxable investment accounts.

4. Plan for Homeownership With Eyes Wide Open

If buying a home makes sense for your family, do it—but:

• Evaluate neighborhood trends and long-term appreciation data, not just current prices.

• Be cautious of overvaluing perceived wealth benefits—historical and systemic factors affect future growth.

• Consider long-term community investment rather than short-term speculation.

Homeownership should be part of a broader wealth strategy, not the only strategy.

5. Stay Informed—and Advocate for Change

Brown’s book makes it clear: policy matters. Knowing how tax law affects wealth builds the foundation for informed advocacy.

• Support efforts for tax policy reform that closes loopholes and distributes benefits equitably.

• Demand transparency from agencies like the IRS on racial disparities in tax data.

• Engage with local and national policymakers on wealth-building equity.

Final Thought

The Whiteness of Wealth reminds us that financial inequality is not just about personal choices; it’s also about the systems those choices are constrained by. But knowing how the rules are stacked empowers you to navigate them more effectively—and to help create a fairer system for future generations.