Issues & Trends
Reparations Organizations: A Tax-Based Approach to Addressing Injustice
March 04, 2022
At a committee meeting of the American College of Trust and Estate Counsel in 2020, estate planning attorney Sarah Moore Johnson drew an audible gasp from participants when she asked if the federal estate tax could be used to pay for reparations. Following the event, a colleague introduced Johnson, a founding partner at Birchstone Moore LLC, to Raymond C. Odom, senior vice president at Northern Trust. Odom saw within Johnson’s idea the possibility of addressing a critical obstacle to implementing reparations programs.
“When it comes to slavery, just about everyone will agree that it was wrong, but it’s when you start to talk about reparations that people start to get defensive,” Odom says. “‘I didn’t do it.’ ‘It was a long time ago.’ ‘Why should it be my tax dollars?’ ‘Why should it be my money?’ ‘I didn’t do anything wrong.’ That kind of defensiveness is so strong that you can’t really make any substantive progress in reversing racial wealth disparity,” he says.
Johnson and Odom began to consider how the tax system could incentivize the private financing of reparations, circumventing many of the defensive postures that have prevented the broad implementation of reparations. To this end, they are proposing the creation of a new form of charitable organization for reparations, formed and operated by Black Americans. Contributions to reparations organizations would not be subject to the adjusted gross income limitations of other charities, says Johnson, so monetary donations would be 100 percent deductible.
Odom says that there are also opportunities to publicly finance reparations through the tax code, provided that there is a direct connection between the source of the funds and the harms addressed. He points to Evanston, Illinois’s use of a marijuana tax to fund reparations as an example, since the prosecution of drug crimes had a disproportionately negative impact on Black communities. Increasingly, academic work has produced the information that allows for the identification of systems that have harmed Black communities and the quantification of the harm itself, Odom says.
The pair developed a presentation outlining their proposals, “The Forgotten 40 Acres: Repairing Wealth Disparity Using the Estate Tax and New Charitable Incentives,” and in the past year have been invited to share it with audiences of legal professionals across the country. Tax and estate groups have been a receptive audience, in part because the tax and estate codes were established to address wealth imbalances that negatively impact the stability of society.
“Our thesis is that the Founding Fathers of the country believed in an egalitarian society where everybody had an equal starting chance,” Johnson says. “In the 1910s wealth disparities had become so pronounced that we saw the rise of a new aristocracy. The purpose of the estate tax was really implemented to get us back to a more egalitarian society. For much of the estate tax’s history, the rates were much higher than they are today, and the exemptions were much lower. The highest rates ranged from 60 percent to 77 percent from 1934 to 1983, and the exemption was only $60,000 for much of that time. Also during that period, America had a much stronger middle class than it does today. We thought, could we look to estate tax today as a funding source for reparations and to help cure the ever-widening racial wealth gap?”
Odom says that no single solution will be a cure-all because underneath the issue lies the country’s ongoing struggle with the legacy of white supremacy. Discourse about racial inequity is often shut down by a refusal to hear perspectives that make white listeners feel uncomfortable, he says. Odom considers the deeply rooted racial dysfunction a “wicked problem,” referencing the term introduced by design theorists Horst Rittel and Melvin Webber to describe problems that, in their complexity, defy singular attempts at resolution.
“Everything I’ve said to you about reparations, I guarantee you in 50 years will prove to have some fatal flaw in it that we did not foresee. That is the nature of wicked problems,” Odom says. “Reparations is a critical piece to a larger problem; the solution is about much more than money.”
Johnson agrees, saying that even if their proposals gained traction, the nation would still benefit from the passage of H.R. 40 and the establishment of a truth and reconciliation commission. “Our country has been carrying around a huge burden of guilt for 400 years. It’s not impossible to figure out how to make reparations work. The most important thing is that it happens. Part of that process would be a national reckoning and a formal apology,” she says.
Johnson and Odom will present the keynote symposium at the 2022 annual meeting of the American College of Trust and Estate Counsel on March 11. Their article on reparations will be published in the Real Property, Trust & Estate Law Journal.
For a history of reparations in America, check out “Has the Time Come for National Reparations” in the latest issue of Washington Lawyer magazine.
