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April 20, 2021

Senate Finance holds hearing on inequality in the tax code

The Senate Finance Committee's April 20 hearing, "Combatting Inequality: The Tax Code and Racial, Ethnic, and Gender Disparities" included discussion of the lower taxes for wealth income versus wage income, Opportunity Zones, the benefits of the TCJA, and the SALT cap, with Republicans noting that repealing the limitation benefits higher income taxpayers. Witness Mihir Desai discouraged the Committee from pursuing corporate tax increases, especially on their global activities, because the idea that there is a lot of revenue to be gained there is not well-founded and doesn't reflect that half the corporate tax is borne by workers. There was also discussion of the tax gap, which some senators are arguing should be a revenue source, especially after recent comments from the IRS commissioner that it may be $1 trillion per year. The Committee has noticed another hearing, "Creating Opportunity Through a Fairer Tax System," in the Fiscal Responsibility and Economic Growth Subcommittee, for next Tuesday, April 27 (2:30 p.m.).

In an opening statement, Chairman Ron Wyden (D-OR) called for more tax data transparency, saying it "makes no sense to blind lawmakers to the key data that would illuminate injustice in our tax laws" and "this committee is going to make sure that happens." Ranking Member Mike Crapo (R-ID) listed beneficial provisions in the TCJA and said, "It will be increasingly challenging to return to an economy as robust as we saw before the pandemic with the endless streams of tax hikes and regulation that the current Administration continues to propose."


  • Dorothy Brown, Professor, Emory University School of Law, Atlanta
  • Mihir Desai, Professor of Finance & Law, Harvard University, Cambridge, MA
  • Himalaya Rao-Potlapally, Managing Director, Black Founders Matter Fund, Salem, OR
  • Shay Hawkins, President & CEO, Opportunity Funds Association, Washington, DC

Testimony in brief:

  • Brown said white Americans benefit disproportionately from the tax code's benefits for marriage and joint filing — she urged a return to individual filing and repeal of joint returns — and from retirement savings incentives because they are more likely to participate in employer-sponsored plans.
  • Desai raised concerns about literature that exaggerates the "purported hidden hundreds of billions in offshore tax havens" and feeds "a common and mistaken narrative today — that somehow responsible fiscal policy is just about getting the rich and corporations to pay their fair share via novel instruments including a wealth tax and multilateral cooperation on corporate tax policy."
  • Rao-Potlapally called for "incentive structures, including tax credits, student loan forgiveness, and stipends/vouchers, as a method of incentivizing non-monetary participation in leadership structures by diverse individuals."
  • Hawkins discussed Opportunity Zone benefits, and a TSP-modeled plan for low-income workers.

Additional information is available in the attached Tax Alert.

Statements and testimony are availabe here.


Contact Information
For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
   • Any member of the group, at (202) 293-7474.


Inequality in the Tax Code