Refund delay further burdens poor, blacks

By Courtney Thomas-Dusing

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Millions of Americans are scrambling to finish their 1040s before Monday's filing deadline, but for millions of others, April 15 is way too late.

For those taxpayers - mostly poor, many of them black - the important date is Jan. 15. In most years, that's the first date the IRS accepts returns and sets in motion the process to get the tax refund so many need to pay the rent or the electric bill before they're past due.

But that date was changed this year to Jan. 30 because Congress waited so long to finalize a deal to avoid the fiscal cliff. As a result, many low-income citizens have been feeling the stresses of tax season for weeks because they have all had to wait at least two weeks longer to receive their refunds.

As the Huffington Post reported in 2010, half of the 143 million tax returns filed that year came from individuals who earned less than $30,000, and most of their tax returns were filed before Feb. 15. Many low-income taxpayers rely on their tax refunds to pay bills on time and avoid late charges, so waiting two more weeks for that money can be a real hardship.

Some low-income families - like mine - do have options. My spouse and I can borrow money from my parents to tide us over until her tax refund or my student loan money arrives. But many Americans do not have this luxury, particularly black Americans, because of stark disparities in assets caused the by great disparities in intergenerational wealth transfer.

In their book “Black Wealth/White Wealth,” professors Melvin Oliver and Thomas Shapiro examined history to study the difference between low-income black Americans and low-income white Americans. They found that, even when black and white families made the same amount of money, white Americans were still financially better off, because they tend to have more wealth, largely because of intergenerational transfers that blacks simply never had access to because of this country's ugly history of racism.

The two scholars found that white families have 10 times the net financial assets as black families.

Additionally, 65 percent of white middle-class families have enough financial assets to live at their current standard for one month and only 27 percent of black middle-class families can say the same.

Many white Americans of all socioeconomic statuses come from families that already have wealth such as homes, cars and stocks, and they pass along not just that tangible wealth through the generations, but the knowledge of these financial tools. My family has been passing on wealth for many generations, with stocks and bonds bought at every individual's birth.

But many middle and lower-class black Americans grew up in families who were living paycheck to paycheck and were unable to stash $1,000 into a CD to pass on to their children. And, when one's family has struggled to obtain and keep decent-paying jobs and is forced to live in rundown, high-rent property because of their race, it is no wonder why there is no wealth to pass on to one's children.

Many black Americans are going to be disproportionately affected by this year's tax delay, which will only continue to affect their wealth status. After all, if an individual must wait to pay a bill and lets the late fees accumulate, those expenses further lower the likelihood that taxpayer can save money and build wealth for future generations.

We need policies and safeguards on standardized payments such as tax refunds to protect them from congressional action.

l Courtney Thomas-Dusing is a student at the University of Iowa College of Law. Comments: courtney.dusing@gmail.com