Racial Economic Inequality

New Study Finds Significant Racial Bias in IRS Tax Audits

A new study led by a laboratory at Stanford that found that there is significant racial bias in audits. It founds that Black taxpayers receive IRS audit notices at least 2.9 times (and perhaps as much as 4.7 times) more often than non-Black taxpayers. It was done by staff of the Stanford Law School, Stanford RegLab, Stanford Institute for Human-Centered Artificial Intelligence, Stanford Institute for Economic Policy Research, University of Chicago, and the U.S. Department of the Treasury’s Office of Tax Analysis.

They found that the main source of the disparity is differing audit rates by race among taxpayers claiming the Earned Income Tax Credit (EITC). Also, it is shown that maximizing the detection of underreported taxes would not lead to Black taxpayers being audited at higher rates. In contrast, certain policies tend to increase the audit rate of Black taxpayers: (1) designing audit selection algorithms to minimize the "no-change rate"; (2) targeting erroneously claimed refundable credits rather than total under-reporting; and (3) limiting the share of more complex EITC returns that can be selected for audit. 

Because the IRS does not collect data by race, the authors had to develop a sophisticated model to identify and analyze racial differences. This absence of IRS data is why such an analysis of audits has not been possible before this. Tax policy expert Dorothy A. Brown opposes having a racial identifier on IRS form 1040, because she "believes unconscious and conscious biases on the part of our tax administrators could unfairly target black taxpayers for audits, could subject black Americans to even worse treatment than they're already receiving. So I completely oppose any racial identifier on the face of the tax return, but there's more many ways to collect the information. So, not having it on the 10 40 doesn't mean you can't get it. The IRS statistics of income, um, division, which publishes statistics, they do surveys. They could ask information on their surveys. They could cross check the tax return data with social security race." 

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Sources:

Read the February 14, 2023 Forbes article.

https://siepr.stanford.edu/publications/measuring-and-mitigating-racial-disparities-tax-audits.

https://taxjustice.net/wp-content/uploads/2021/04/TaxcastExtraScript0421.pdf.

Report Finds Big Rise in Global Anti-Semitism in 2021

According to a April 27, 2022 BBC article about the just-released report by the Center for the Study of Contemporary European Jewry at Tel Aviv University's Faculty of Humanities, the number of anti-Semitic incidents globally significantly increased last year, particularly in nations with large Jewish populations. The study, based on dozens of studies around the world, found that the US, Canada, the UK, Germany, and Australia were among the countries with a significant rise. The major identified causal factors were radical left- and right-wing political movements and incitement on social media. The release of the report is on the same day - April 27, 2022 - as Israel's Holocaust Remembrance Day, which begins on this Wednesday night. Yom HaShoah commemorates the 6 million Jews murdered by Nazi Germany in Europe during World War II.

The Anti-Semitism Worldwide Report 2021 analyzed information from law enforcement entities, mass media, and Jewish organisations as well as literally dozens of studies from many countries. It found that:

• In the US, which has the largest Jewish population other than Israel, the number of anti-Jewish hate crimes recorded in New York and Los Angeles were about double that of 2020.
• In the UK, recorded physical assaults against Jews increased by 78% compared with the previous year.
• German police-recorded anti-Semitic incidents increased 29% from 2020, and by 49% compared with 2019.
• French recorded anti-Semitic incidents increased by roughly 75% compared with 2020.
• A leading Canadian Jewish group reported that August, 2021, set a 40-year high in the number and extent of anti-Semitic physical violence.
• Australia had a significant increase in recorded anti-Semitic incidents, with 88 in May, 2021, which was the highest ever monthly amount.

The report also said the increases were partially because of negative reactions to May 2021's fighting between Israel and Palestinian militants in the Gaza Strip. During that time, Israel and the militants fought for 11 days, killing 261 people in Gaza and 14 in Israel

In the report, social media was especially blamed for pervasively "spreading lies and incitement" leading to increased anti-Semitic incidents: "The data raise concerns regarding the utility of legislation and agreements reached with social media companies on banning anti-Semitic expressions from their platforms. The gravest concern is the dark web, which shelters extremists and where anti-Semitic content is freely and openly spread." The dark web is only accessible with special browsing software.

Also cited as a factor in the increases were the great increases and spread of conspiracy theories about the Covid-19 pandemic. "Right at the outset of the pandemic in 2020, conspiracy theories began to sprout around the world, blaming the Jews and Israel for spreading the virus," the report said, adding "The lockdowns, which glued people to their screens at home, contributed significantly to popularising toxic anti-Semitic discourse on social networks. In 2021, when the lockdowns were gradually eased, anti-Semites returned to the streets."

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Source: BBC Middle East News. April 27, 2022. "Anti-Semitism: Dramatic rise in 2021, Israeli report says." https://www.bbc.com/news/world-middle-east-61228552.