The U.S. Tax and Transfer System and Black-White Inequality in Poverty Reduction: Decentralized Policy, Racialized Disparities

• In Event: Challenging Inequality through Federal, State, and Local Policy Partnerships

Abstract

Recent social policy research has increasingly highlighted the racialized nature of the U.S. tax and transfer system by demonstrating how policy design features, including decentralization, administrative practices, and administrative burdens, are shaped by racial logics (Soss et al. 2011; Michener 2020; Fusaro 2021). Building on this research and extending our prior work (Bruch et al. 2023), we ask how the decentralization of the U.S. tax and transfer system has shaped racial inequities in poverty alleviation over time. While earlier studies have linked cross-state policy variation to disparities in socioeconomic wellbeing (Laird et al. 2018; Schaefer et al. 2020; Daiger von Gleichen and Parolin 2020), in this paper we operationalize decentralization by classifying non-market income into four mechanisms, federal (centralized) transfers and taxes, and state (decentralized) transfers and taxes, and assess their distinct contributions to poverty reduction. Our analysis proceeds in three stages. Using 1994–2019 Current Population Survey ASEC data and the Supplemental Poverty Measure, we first chart Black-White disparities in poverty and poverty reduction over time. Second, we use a sequence-independent decomposition (Azevedo, Sanfelice, and Nguyen 2012) to estimate the shifting impact of each policy mechanism on poverty reduction for Black and White families. Third, we apply a second decomposition method to isolate the drivers of changes in Black and White families’ poverty reduction over time (DiNardo, Fortin, and Lemieux 1996; Parolin and Gornick 2021). This three-part approach allows us to identify patterns in racialized poverty reduction and then disentangle the influence of policy decentralization from demographic and labor market dynamics.

REFERENCES

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Authors

• Joseph Reynolds van der Naald, CUNY Graduate Center
  Presenting Author

• Sarah Bruch, University of Delaware
  Non-Presenting Co-Author

• Janet Carol Gornick
  Non-Presenting Co-Author