The New Yorker Radio Hour - Race and Taxes, and Jane Mayer on How to Kill a Bill

Episode Date: April 2, 2021

The investigative reporter Jane Mayer recently received a recording of a meeting attended by conservative power brokers including Grover Norquist, representatives of PACs funded by Charles Koch, and an aide to Senator Mitch McConnell. The subject was the voting-rights bill H.R. 1, and the mood was anxious. The bill (which we discussed in last week’s episode) would broadly make voting more accessible, which tends to benefit Democratic candidates, and it would raise the curtain on “dark money” in elections with stringent disclosure requirements. The problem for this group, a political strategist says, is that the bill is popular among voters of both parties, but H.R. 1, they insist, must die. As we hear the participants tick through options to tarnish the bill’s public appeal, Mayer notes how the political winds have shifted in Washington, leaving the Republican coalition newly fragile. Plus, Dorothy Brown, a professor of tax law, uncovers how the seemingly race-neutral tax code compounds many inequalities in American life, and prevents Black people from building wealth. She talks with Sheelah Kolhatkar about her new book, “The Whiteness of Wealth.” New Yorker Radio Hour listeners, we want to hear from you.  We have a few questions about the show and how you listen to it. The survey takes about twenty minutes, and your feedback will help us make our podcast better.  Take the survey here.

This is The New Yorker Radio Hour, a co-production of WNYC Studios and The New Yorker. Welcome to The New Yorker Radio Hour. I'm David Remnick. Thank you as well to everyone who's joined us this morning and for your interest in HR1, free speech, and citizen privacy. Last week on the show, we talked about a bill before Congress, known as HR1. It's far from routine legislation. HR1 is probably the most important voting rights law since 1965. and if it's passed, and that's a very big if, HR1 would bring automatic voter registration across the country.

It would take on gerrymandering, and it would restore voting rights to felons who have served their time. But there's another aspect of HR1 that we didn't talk about last week, and that's campaign financing. So-called dark money could be dark no more. Political groups would have to make their big donors public. And for those people behind dark money packs, people like conservative super donor Charles Koch,

that provision of HR1 is very bad news. Back in January, before the inauguration, a group of political strategists had a meeting to discuss HR1. Staff writer Jane Mayer got her hands on a leaked recording of that meeting. When I first heard this recording, I nearly fell off my chair, I have to admit. Gathered together on this call were the leaders of a number of powerful conservative groups.

They included a group that was run by Charles Koch, who happens to be one of the very biggest donors of dark money in American history. And with them were representatives from the office of a couple of Republican members of Congress, including Mitch McConnell's office. And one of the people who was on the call was Grover Norquist, who is a longtime crusader against taxes and the founder of a group called Americans for Tax Reform? The left is not stupid. They're evil. They know what they're doing. And we need to take part of our day, whether we're focused on taxes or spending or whatever piece of the freedom

movement we work on, understand that the donor privacy issue is our fight too. What they're focusing on is the legislation known as HR1, because what it does is provide for disclosure for the first time of donors that are giving more than $10,000 to non-profit groups if their money is going towards electoral politics. It also requires much more disclosure of ads on television and digital platforms, and for the first time, it requires that people who are giving more than $10,000 to affect judicial nominees that they, too, explain to the who they are so that the public can judge what they might want. Now this kind of disclosure is a problem for one group of people,

which is secret donors who don't want to be known, who for the last decade, for the most part, have funded right-wing organizations and causes. Now, not all the dark money goes only to the Republican side. For the first time in 2020, interestingly, there was more dark money. was more dark money that was being spent by Democratic groups in the presidential election than the Republican ones. For Koch, however, this is really a paramount concern because he's really

got an entire political machine that is funded by dark money. But when it comes to donor privacy, I can't stress enough how quickly things could get out of hand. Steve Donaldson is a policy advisor to Mitch McConnell. Grover mentioned earlier how the left has already identified that they want to punish anybody that was involved in the last four years. So, well, we have to hold our people together. And this is not just a rhetorical exercise anymore of countering their arguments, but you guys have to actively work to highlight these issues to two members of Congress so that we don't lose people on these issues. It's not uncommon in Washington politics for these kinds of conversations to take place.

There is supposed to be a legal line, though, however, these groups, these nonprofit groups under the law are supposed to be nonpartisan. And here you can hear them conferring and coordinating with the Republican leadership in Congress. And what really makes this call unique is that you're hearing them speak candidly in a way the you almost never do. Yep, I'm going to pull up just a few slides as a research person. I'm sure you're looking forward to them. What really grabbed my attention here is the internal research done by Kyle McKenzie of Stand

Together. Now, that's a Coke organization. And what they were looking at is how HR1 was playing with the public. And a little bit of a spoiler, but it's very mixed results on that front. The first thing is simply that you have to understand that most people had never heard of the phrase HR1. So over 60% of people just had no idea what we were talking about when we said, have you ever heard of HR1? However, when presented with a very neutral description of HR1, people were generally supportive. And the most worrisome part, which Grover mentioned at the very beginning of his presentation,

is that conservatives were actually as supportive as the general public was when they read the neutral description of HR1. And so this isn't just a matter of finding conservatives and then activating them on this in a public way. You know, there's a very large chunk of conservatives who are supportive of these types of efforts. It wasn't just liberal Democrats who believe that there should be more campaign finance disclosure about big, money running into politics. What they discovered was that conservatives felt the same way. Their own voters, it turns out, think there should be more transparency and disclosure. So grappling with this, McKenzie is trying to figure out something positive he can say to the other conservatives about how they can handle what for them is a problem.

Don't get into a fight in HR1 where you engage with the other side where they have the talking point, HR1 stops billionaires from buying elections. Unfortunately, we found that that is a winning message. That simple message far and away resonated with people and, you know, riled them up the most. Perhaps most sadly on the don'ts column here, and this is a major reason we undertook this research was just to simply test whether the phrase cancel culture could be attached to HR1 and using that to motivate the right. You know, our phrase was something very akin to HR1 is the less attempt to use cancel culture, to, you know, to cancel conservatives, something like that. And it really ranked in the bottom, obviously for the general public, but even for conservatives as

well. For conservatives specifically, we just tested a AOC message that, you know, she has shared publicly that she wants to hold people in the Trump administration accountable. What she means by that is unclear, and we were honest about that in the message. So this was weird. Now, why were they bringing up the name of Alexandria Ocasio-Cortez? She's only one of zillions of sponsors of HR-1, but, I mean, it seemed pretty clear that they just wanted to try to tie her name to this legislation because she's kind of a boogeyman for the conservative movement, and they were hoping that maybe she'd scare off their voters.

It did move 0% of liberals, as to be expected, and it moved about 31% of Republicans to kind of change their point of view about HR1 when they were showing this kind of story about how AOC wants to hold them accountable, and that HR1 would allow her to do that a lot more easily. So basically they can't find an argument that really kills HR1, at least in the public's view. And that includes among conservatives. So then what are they going to do? They're going to give up on the voters' will. And instead, what they're going to do is pursue what they describe as under the dome-type strategies, which are those under the congressional rotunda's roof, meaning inside. backroom strategies where they can put the fix in with Republican members of Congress.

Steve Donaldson, though, who works for McConnell, sounds a cautionary note, though. My big ass to a lot of the groups that are on this call is do not just look at individual component parts and think this doesn't apply to us or we're okay with this or we can live with this. He warns that it's possible that the Democrats, even if they can't get the whole bill, might try to break it up into pieces. He's basically saying, kill any single piece of this bill that looks like it might survive. Just because one of these bills may seem reasonable to you does not mean that it is not part of a grand scheme to undermine the privacy of your donors and to inhibit the ability of you guys to do what you do. So what does this all mean? I mean, basically, when you think about it, these old powers in the establishment

Republican Party, what they're grappling with is there's change of foot. There's a new mood out in the country. And even conservative voters have gotten to the point where they too think there's too much money in American politics, whether they're on the left or the right. They're disgusted with the idea that billionaires are buying elections. and there's a kind of a rebellion. And what you can see here is that the powers in the Republican Party, that is people like Mitch McConnell and Charles Koch and Grover Norquist,

they really don't care what the public thinks. They don't even necessarily care what their own voters think. They want to stay in power, and they're going to do whatever they can to stay there. Staff writer Jane Mayer. She's the author of the book Dark Money, and you can find her reporting at New Yorker.com. This is the New Yorker Radio Hour. Stick around. With the IRS filing deadline extended until mid-May, most of us will keep ignoring everything

having to do with taxes for at least a few more weeks. Most of us, but not all. I think of the Internal Revenue Code, which is the document that has all the tax laws in it, as a puzzle. And I like puzzles. Dorothy Brown is a professor of law at Emory University, and she's an expert on the tax code. Brown has just written a book called The Whiteness of Wealth, How the Tax System Impoverishes Black Americans and how we can fix it. What Brown argues is that the racial disparities we see in so many facets of American life,

from higher education to homeownership to employment, all are compounded by the tax code, a system that you might have thought was totally race-blind. I've spent 25 years doing this research, and it's led me to one conclusion that when white Americans and black Americans engage in the same activity, tax law benefits how white Americans engage in it and disadvantage how black Americans engage in it. In other words, we bring out racial identities onto our tax returns. Brown recently spoke with staff writer Sheila Colhatcar, who covers finance and the world of business. One area you talk about a lot is marriage, and we know that policymakers in Washington always say that they're eager to encourage marriage and getting married is supposed to help your tax bill. What did you discover when you looked into this?

What I discovered is it helps you if you're white, but it disadvantages you if you're black. And what do I mean by that? Well, white people do marriage differently than black people in America that is based on an anti-black. labor market. When we look at who makes the highest wages, who makes the lowest wages, we see there's a difference by race. Well, that translates into who can afford to have a spouse to stay at home and work at home and stay out of the labor market, typically white Americans. Well, our tax laws in that instance where you have dramatically different income contributions to the household by spouses, that household, when they get married, gets a tax cut. But take my parents, my father was a plumber, my mother was a

nurse, they made roughly equal amounts. And as a good daughter who got an LLM in tax, I did their tax returns. And I always knew something didn't make sense. My parents made income close together. Our tax laws do not give that couple a tax cut. Our tax laws made my parents pay higher taxes. because they were married to each other. So it turns out that a very wealthy, usually male spouse with a high income who has a stay-at-home wife is going to end up paying lower taxes, even though he makes the same amount of money as your parents combined. That's right. And it's true up the income scale.

Black married couples, even at high income levels, are more likely to be in an equal 50-50 household, whereas white married couples are more likely across the income spectrum to have the stay-at-home spouse. I thought it was really interesting as well the way you talked about the enormous economic benefits that accrue to a family when there's one spouse at home full-time. And I thought about this because I'm part of a dual-working couple. You have to outsource a lot of expenses. And if you have one spouse at home just dedicated to making the family run, then the other spouse can focus on building their career and increasing their income. That's exactly right. That is exactly right. And the tax law looks at the value of those services contributed by that stay-at-home spouse. It's a man, we're not

going to tax it. You write about the role of legacy transfers of wealth and assets in building wealth, how families pass down gifts, tuition payments, inheritances to their kids, and this perpetuates this sort of wealth advantage that white families have. Can you describe what you found when you looked into this? So, you know, it's complicated, but generational wealth begets generational wealth. And tax law helps those with wealth transmitted to the next generation. And what we see is that's how wealth works for white Americans. It's from parent to child, grandparent to grandchild. But because of systemic racism, because of Jim Crow, what you see is the typical black college graduate who gets a good paying job is sending money up. They're sending money to their parents.

They're sending money to their grandparents. So you see that race matters greatly into who has wealth, how the government allows you to build wealth. And then tax policy comes and says, oh, give it away. It's tax free. There's a great quote in your book, increasing access to a system designed to build white wealth will ultimately not work to build black wealth. So why is that? Why can black Americans not use this system to change their situation for the better?

So let's take homeownership, right? because that's like the asset that helps most white Americans become middle class. Well, the homeownership market is racist. It's based on white preferences and white Americans do not want to live in neighborhoods with too many black Americans. As a black homeowner, I'm going to say, I want to buy a home. If I buy a home in an all-white neighborhood, it will be a great financial boon and it will help me build wealth. However, living in an all-white neighborhood for a black person

means our neighbors may call the cops on us because they don't think we belong there. If we have children, we have to do battle with administrators and teachers who see our children as criminals. So it'll be a good financial investment, but you'll have to compensate for living in an all-white neighborhood in other ways. So I have to be defensive. So I have to be defensive. And my advice that I give to black homeowners is, okay, you know this. Then don't be house poor. Do not put all of your money into your house. So we as black Americans, we can't build wealth in the carefree manner that our white peers can.

That's really depressing because we've been told for so long that buying a house is sort of the cornerstone of a family. That's how a middle class family is going to build over time and leave something. to their kids. And it's remarkable when you think about how it actually works on the ground. And it's, yes, absolutely, Sheila. And what's really amazing is how many people don't realize this and how many policymakers think, oh, we could fix this racial wealth gap if we just increased the number of black homeowners. And I'm like, hold up, wait a minute. Not really because we're buying into a system that's anti-black. Until we fix it.

the system, you can't build up wealth the exact same way. And one other thing, black homeowners are more likely to sell their home for a loss than white homeowners. And tax law disallows losses on the sale of homes. And yes, it's depressing. I wrote the book. Yeah, the system is obviously broken. It does not take into account the world as it actually is. So what are the solutions? Like what can be done about this, given that the system is so broken? Step one, collect and publish race and tax data. The IRS doesn't collect and publish it. And I had no idea when I embarked on this journey that the IRS didn't do it.

We need IRS data by race so that we can see what I wrote a whole book about. There it is. So that's one thing. Number two, any tax reform out of the Biden administration needs a racial impact analysis. It needs to tell us what is this bill going to do to the racial wealth gap? What is this bill going to do to black Americans? What is this bill going to do to Americans of color? So that's the second thing.

No tax reform without a race analysis. And in terms of specific tax reforms, you know, I've got a whole tax system. which gets us back to our roots, which is basically progressive tax system, no exclusions, no deductions, because those are the things that advantage white Americans and disadvantaged black Americans. And we have a living allowance. Anything you make under that, the government writes you a check. Anything you make over that, that's going to be taxed. And all income, all income is taxed the same. whether it's income from stock or income from labor. To some people, that's going to sound like a radical idea.

Oh, thank you for saying that, especially the latter one. So the reason I love it is because Ronald Reagan, you know, that radical guy, he had at the centerpiece of his 86 tax reform act taxing wages the same way as income from capital. And if it's good enough for the Gipper, it's good enough for us. So one thing you talk about is the fact that white Americans often are not open about the advantages that all these sort of gifts and supports that they get bestowed to them and the way they accumulate. So why is that important? Why is it important for people to really be open about the fact that they're getting these sort of tax-free gifts that their grandparents are paying their kids private school tuition? What effect does it have when they sort of pretend or just don't acknowledge that?

knowledge those sources of income. It's so important because you could imagine a black and white coworker working in the same place and now we're going to suspend disbelief and assume they're paid the same, right? Research those. They're not. But we're going to assume they're paid the same. Black person who has family to support in addition to their immediate family, grandma, parent, is sending money up. Their colleague in the next cubicle is talking about the rich private school their kids are going to. They just moved to a fancy house in an expensive neighborhood. And the black workers going, what on earth is going? Why can't I do? By telling the truth, it helps black Americans see we're not doing anything wrong other than we were born black. And it helps white Americans see

they're not doing anything right other than they were born white. So what white Americans resist and And quite frankly, none of the white Americans interviewed for my book wanted us to use their last name because they didn't want to be associated with this, right? But it burst the bubble of this meritocracy. So it's really important that white Americans are transparent about the myriad of ways their family wealth has helped them to get where they are today. And they don't want to think of themselves as racist. And you don't have to be racist. But you did make the choice to buy in a neighborhood with no black people, and it didn't occur to you until I had this conversation that maybe you're part of the problem, right? So I've gotten some pushback. In fact, it often comes in the form of, well, Dorothy, do you think Congress was racist when they put these laws in the place? And my response is, it is irrelevant to me, whether it was intentional or accidental. The bottom line is black taxpayers are paying more. Now that you know, what are you prepared to do to fix it?

That's Dorothy Brown, a professor at Emory University. Brown's new book is called The Whiteness of Wealth, and she spoke with the New Yorker's Sheila Cole Hotcar. I'm David Remnick, and that's our program. I want to thank you for joining us. See you soon. The New Yorker Radio Hour is a co-production of WNYC Studios and The New Yorker. Our theme music was composed and performed by Merrill Garbus of Tune Arts, with additional music by Alexis Quadrato.

This episode was produced by Alex Barron, Emily Boutin, Ave Cario, Riannon Corby, Calilea, David Krasnow, Gauphin and Putuguele, Louis Mitchell, Michelle Moses, Annabelle Bacon, and Stephen Valentino, with help from Alison McAdam, Mengfei Chen, and Emily May. The New Yorker Radio Hour is supported in part by the Cherina Endowment Fund.