There are few words that elicit a similar level of dread in average people as taxes. Simply mentioning the word often results in immediate not-so-subtle groans and sighs.
While taxes are associated with pain and confusion for most, taxes can actually be a tool for empowerment. The tax code is very closely intertwined with increasing equity and has historically been the engine of social justice movements. However, the overly complex language and confusing rules can result in many taxpayers not knowing about or receiving the benefits they deserve. Even beyond this, some taxpayers, particularly those who are low-income or are non-English speakers, are manipulated by fraudulent tax filers who steal their refunds. Regardless of whether you hope to use the tax code to support your justice initiatives, to make sure your family has the right resources or to file your own taxes, it is important to learn more about taxes.
The tax code has a unique position in knowing an individual’s financial and familial circumstances and because of this, it has been and can be used to provide support to historically disadvantaged groups. Some salient programs that have had national benefits include the Earned Income Tax Credit, American Opportunity Credit and the Child Tax Credit. The Earned Income Tax Credit, which provides workers with a refund of a certain percentage of their earnings, has been the most effective anti-poverty program for working age people. The American Opportunity Credit, a partially refundable tax credit that can give students a credit of up to $2,500 for qualifying higher educational expenses, has been able to offset the costs of college. The Child Tax Credit offers financial assistance to low-income families with children and has proven to decrease child poverty and increase social mobility for many families. During the pandemic, President Biden used the tax code as an engine to alleviate some monetary burden for low-income families. His monumental expansion of the Child Tax Credit lifted 3.7 million children out of poverty in December and cut child poverty rates by around 30%. When filing taxes, learn whether your community, family or yourself can qualify for these programs because they have been a positive force across the country.
While the tax code has been used in historic ways the past couple of years to uplift many Americans, these changes are not permanent and action needs to be taken to support them. For example, the Build Back Better Act introduced in 2021, which incorporated many of the previously mentioned social tax expansions, is unlikely to pass the Senate with the Advanced Child Tax Credit changes, due to a 50/50 split on party lines. With Democratic Senator Joe Manchin’s public disapproval of the Child Tax Credit, it is more important now than ever to reach out to your senator and advocate for passing this bill. But this is even beyond speaking to elected officials. You can pass a short certificate online on the IRS website to teach you about preparing returns and more generally about the tax code. Then, you can file taxes for yourself, your family or others at a Volunteer Income Tax Assistance (VITA) site. With the tax deadline quickly approaching on April 19 (April 18 for most other states), it is necessary to maximize the potential of the tax code, both by pushing for new reforms and helping everyday Americans access them.
Most importantly, as you continue on even past college, remember that behind the verbose language and excessive rules of taxes are learnable tools that you can use to support yourself and those around you.
Disclaimer: While I discuss the ways in which the tax code can be beneficial to marginalized groups in the US, it is important to note that the tax system, like many institutions, has a history of racial prejudice. To learn more about racial bias in the tax code, read this article or Dorothy Brown’s book entitled “The Whiteness of Wealth.”
Please reach out to Eshika at eshika.kaul@wellesley.edu if you are interested in learning more about taxes or getting involved with volunteering. Stay tuned for a more comprehensive information and resource guide on taxes that Eshika is currently compiling.
