The Tax Code America Needs for the Next 250 Years

The history of taxation reveals how the nation has defined belonging—and how a fairer system could help repair the fractures of American democracy.

As the United States approaches its 250th anniversary, the Trump Administration is poised to push a story of America that is one of patriotism, strong militarism, and economic prosperity. Retellings of familiar stories of the Revolution are back in circulation: tea chests pitched into Boston Harbor, defiant pamphlets, the enduring refrain of “no taxation without representation.” Yet these stories are being told amid renewed tax cuts for corporations and the wealthy, extreme and persistent inequality, and debates over the role of government. The history of taxation reveals that the question was never simply who gets taxed, but who counts.

Contrary to popular belief, the Boston Tea Party was less an anti-tax protest than a reaction to preferential treatment for British East India Company, highlighting a longstanding tension between public welfare and corporate interests. That this historical event has been co-opted by conservatives into an anti-tax origin story obscures a deeper truth about the longstanding tensions between the good of the people and corporate interests—a tension that still resonates today.

Taxation, in turn, became one of the ways that partial democracy was structured and enforced. By design, the system they built did not extend meaningful representation to women, enslaved people, Indigenous peoples, or even many white men without property, neither contemplating their needs or accounting for their contributions.

In many ways, as our nation aged our democracy did not mature. This is mostly due to America’s particular brand of capitalism that prioritizes corporations over people and profits over public goods.

As we approach this anniversary, the history of American taxation offers something more than a civics lesson. It reveals how fiscal policy has long been used to draw lines around belonging—and how it might be used, differently, to redraw them.

The Cost of Exclusion

In the early republic, federal revenue depended largely on tariffs and excise taxes—forms of taxation that fall hardest on those with the least. Women and enslaved people were largely excluded from economic and political power even as their labor helped sustain households, communities, and the broader economy.

“The racial wealth divide exists because our economy was and is built on racial hierarchy and exclusion,” states Taifa Smith Butler, president of Demos, a nonprofit think tank dedicated to building a just, multiracial democracy. “[Stolen] wealth compound[ed] over generations,” she continued, “and this inequality is present to this day.”

Taxation did not simply ignore these inequalities; it helped structure them. A system that relies heavily on consumption taxes assumes a level playing field that has never existed. It asks more, proportionally, from those who already have less—and it does so while rendering much of their labor – and fiscal contributions – invisible.

Reconstruction, Retrenchment, and the Racialized State

The Civil War and Reconstruction briefly opened the door to a more expansive vision of democracy, and, with it, a more equitable approach to taxation. According to Jeremie Greer, co-founder of the movement support organization Liberation in a Generation, our nation’s approach to taxation has always been tied to the role and status of Black people, with the first income tax being introduced during the war to support Union efforts. This tax reflected a growing recognition that those with greater resources could contribute more.

But Reconstruction’s promise was short-lived. As federal commitment to racial equality waned, so too did efforts to build a more just fiscal state. “In times of crisis the wealthy pay, but as you move away from crisis, folks with the least – Black folks, working folks – end up footing the bill, and that’s kind of where we are today,” said Greer.

By the late 19th century, regressive tax structures remained firmly in place, while Black Americans in the South faced not only economic exploitation but also targeted financial barriers, including poll taxes that effectively disenfranchised them.

Poll taxes linked political participation to the ability to pay, reinforcing a system that denied Black Americans both political voice and economic opportunity. Taxation has also been used as a tool to facilitate the dispossession of land from Black farmers, curtailing the wealth-building possibilities for families for generations.

Taxation functioned as a mechanism of governance that determined who was entitled to participate in our democracy and to build wealth. Thus, it was unsurprising when the income tax was repealed in 1872 amidst significant backlash and retrenchment from federal government-supported efforts to address racial inequality.

Progressive Taxation—and Its Limits

Changes in law and the rise of progressive taxation in the 20th century are often framed as triumphs of fairness. And in important ways, they were. The 16th Amendment was a direct response to an 1895 Supreme Court ruling that restricted the government’s ability to collect income taxes. The ability to tax income—particularly at higher rates for the wealthy—created new possibilities for redistribution and public investment.

New Deal and postwar tax revenues funded programs that expanded economic security and built the middle class: Social Security, public education, infrastructure, and more. But that prosperity was not equally shared. Policies such as redlining and employment discrimination excluded many Black families from wealth-building opportunities. Tax benefits tied to homeownership, for example, disproportionately favored white households, compounding and reinforcing racial wealth gaps that persist today.

Women, too, were marginalized within this system, as tax policy often assumed a male breadwinner model. But for Black women, even when they were married many couples experienced a penalty, not a benefit. And as public programs expanded, they did so within a framework that treated certain forms of labor—and certain lives—as more valuable than others.

Taxation and the Politics of Resentment

By the late 20th century, a new narrative began to dominate American politics: that taxes were an undue burden, and that government redistribution was inherently suspect. This shift was not race-neutral or gender-neutral. It was deeply intertwined with backlash against the gains of the civil rights movement and the expansion of social programs.

Anti-tax sentiment is often framed in the language of individual freedom. But they also reflect—and reinforce—racialized fears about who benefits from public spending. As scholar-activists have long argued, opposition to taxation has often been linked to opposition to programs perceived as helping Black and other marginalized communities. Narratives such as Ronald Reagan’s “welfare queen” stereotype helped racialize public assistance and fuel opposition to redistributive programs. The result has been a steady erosion of progressive taxation.

Simultaneously, the rise of conservative anti-tax sentiment has resulted in a seismic shift in corporate taxation. Chye-Ching Huang, the executive director at the Tax Law Center at New York University, argues that this shift has left the U.S. significantly behind in both its ability to raise revenue and the ability to invest in public goods and services. “Tax revenue [from corporations] as a share of the economy have declined over the last century, from a peak of 7.1 percent in 1945 to just 1.5 percent in 2025,” notes Huang, and attributes that drop to Trump’s tax cuts in 2017 and 2025’s H.R.1 “One Big Beautiful Bill” which, not so beautifully, slashed taxes for corporations even more.

Corporate tax cuts and excessive loopholes, combined with cuts to top marginal income tax rates, have created an overreliance on regressive taxes. These taxes, like payroll and consumption taxes, disproportionately affect working-class people, and particularly women and people of color. Regressive taxes also generate less revenue than taxes on corporations and the ultra-wealthy, which means a smaller ‘pie’ for the provision of public goods and services.

But, Brown notes that we must avoid the pitfall of assuming that poor tax policy is solely a result of conservative, Republican policies. “We’ve seen Republicans do it lately, but it is not like Republicans corner the market on unfair tax reform.”

Tax Policy is a Racial and Gender Justice Issue

Just as we need to rethink how we got here as a bipartisan story of policy failure, we must also resist the temptation of thinking about tax policy as separate from issues of gender and racial justice, but the two are deeply intertwined. Every tax credit, deduction, and rate structure reflects choices about what—and who—matters.

Consider the child tax credit. When expanded in recent years, it significantly reduced child poverty, with particularly large benefits for Black and Latino families. Its partial rollback reversed many of those gains. The enactment of H.R.1 (2025) further reduced the impact of the credit by placing social security number requirements on tax filers (i.e., parents) instead of just the eligible children. This is not incidental; it is the direct result of policy decisions about how resources are allocated, and intentional decisions to divert resources from immigrant mixed-status families.

Or consider the preferential tax treatment of capital gains, which overwhelmingly benefits wealthy households—disproportionately white and male—who are more likely to own significant financial assets. Even the structure of payroll taxes has implications for racial and gender equity, placing.

These policies do not just reflect existing inequalities; they amplify them. But it doesn’t have to be this way.

The 250th Anniversary as a Turning Point

Anniversaries are often used to celebrate, but they can also be used to reckon. At 250 years, the United States faces a choice: whether to continue treating taxation as an immutable, technical issue, or to confront it as a central question of justice needing to be addressed through a new social contract, including the written rules of money and power: the tax code.

An intersectional approach to tax policy would start by asking different questions. Not just “How much revenue do we need?” but “Who has been excluded from prosperity, and why?” Not just “What is efficient?” but “What is fair, given our history?” and “What do we want to be true in terms of opportunity for families in future generations?”

This could take many forms, but Brown, Huang, Greer, and Smith Butler all argue that a fairer tax system would require greater contributions from corporations and the ultra-wealthy alongside stronger public investment. Brown suggests taxing wealth at a higher rate than work, especially in the burgeoning era of trillionaires.

But policies don’t administer themselves, and Huang also emphasized the importance of designing a system that can collect the money needed to pay for these much-needed investments.

Importantly, it also requires addressing representation itself. Who is at the table when tax policy is made? Whose experiences are reflected in those decisions? A more inclusive policymaking process is not just a matter of fairness; it leads to better outcomes.

Reimagining “We the People”

“No taxation without representation” was a demand rooted in an experience of exclusion. Today, the challenge is to make that demand meaningful in a far more diverse and unequal society.

Representation cannot simply mean formal political rights; it must include substantive influence over the policies that shape our lives. And taxation should not be understood only as an obligation; it must be seen as a collective investment in a shared future. According to Smith Butler, “Public goods, when implemented properly, can expand freedom, dignity, and opportunity for all. Paying taxes becomes an act of care for our community.”

“What would the world look like if billionaires paid their fair share?,” Brown rhetorically posed, then answering, “It would look like guaranteed income…, the working class paying a lower rate than Jeff Bezos…, poverty eradicated, no more unhoused…and it would include reparations. We’d see a society where everyone can thrive and Black Americans [be] as equally likely to succeed as everyone else.”

Reimagining the tax system through an intersectional feminist lens means recognizing that the current outcomes are not incidental—they are structured. And structures can be changed. “There are many things we would do to make the tax system more equitable from a race, class, and gender perspective,” Brown notes. “It starts with billionaires [paying their fair share], but it doesn’t end there.”

At 250 years, the United States has an opportunity to rethink not only how it taxes, but why. Tax policy is not merely a technical exercise; it reflects decisions about power, belonging, and collective responsibility. The enduring question is whether the nation will continue to use the tax code to reinforce existing inequalities or to build a more inclusive economy and democracy.