The top 10 counties for the highest income tax audit rates in the United States are in communities where the average population of people of color is 80 percent. The ten counties for the lowest income tax audit rates in the United States are districts where white residents’ average population is 90 percent. While audit selection is “colorblind,” the impact is patently racist.
Moreover, the selection is antithetically classist as well. All of the top 10 communities are in poverty-stricken neighborhoods in Mississippi, Alabama, or Louisiana. These disproportionate audit rates result from the high quality of participation in the Earned Income Tax Credit (EITC) in these communities, coupled with the EITC’s high audit rate. Given the significant short-term and long-term health, education, and benefits families and their communities enjoy from the EITC, and the adverse health consequences of being audited and denied the EITC, the intersection of these factors not only exacerbates income and wealth inequality but perpetuates the cycle of poverty. This is the exact opposite of the EITC’s purported goal to encourage work and lift families out of poverty. Nevertheless, communities of color are suffering this double-edged sword with little relief or resources.
This presentation builds on existing EITC scholarship, including countless studies demonstrating the broad-based EITC benefits for families, including but not limited to increased work rates, decreased smoking, increased birth weight, higher test scores, better job attainment, and higher household income, etc. Recent scholarships have monetized EITC audits’ adverse impact and benefit denials on families, including the 80% of whom may qualify for EITC benefits. These adverse consequences include reduced future tax filings, tax refunds, and employment. Consistent with Professor Eubanks’ recent book “Automating Inequality: How High-Tech Tools Profile, Police, and Punish the Poor,” Professor Lipman explains how automated EITC correspondence audits are discriminatory even though they are “colorblind.” Given the significant economic hardships and inherent racism of the current system, something must be done. The first step to resolving systems of injustice is shining a bright light of truth on the problem. This panel achieves this goal.
Professor Francine J. Lipman brings to the Boyd School of Law an exceptional record as an accountant, a lawyer, a teacher, and a scholar. After working as a CPA in an international accounting firm and as the Chief Financial Officer for a chain of retail jewelry stores, Professor Lipman turned to the law. She served as the Editor in Chief of the UC Davis Law Review. She was recognized as an outstanding law student and a member of the Order of the Coif.
She was a tax law review scholar in NYU’s graduate tax law program, where she practiced law with O’Melveny & Myers LLP and Irell & Manella LLP. Professor Lipman joined Chapman University’s School of Business and Economics faculties in 2001 and the School of Law in 2003. Professor Lipman is an elected member of the American Law Institute, the American College of Tax Counsel, the American Bar Foundation, and an editor and former committee chair for the American Bar Association’s Tax Section. She has been a visiting professor at UC Hastings College of Law and the University of Nevada, Las Vegas. In 2016, Governor Brian Sandoval was appointed, and in 2020 Governor Steve Sisolak reappointed Professor Lipman to serve as Nevada Tax Commissioner. The Nevada Tax Commission consists of eight Nevadans with various professional and business backgrounds.
The Commissioners supervise the overall administration and operations of the Nevada Department of Taxation. Professor Lipman has written extensively on tax and accounting issues for legal journals, including the Wisconsin Law Review, Florida Tax Review, Virginia Tax Review, SMU Law Review, Nevada Law Journal, American University Law Review, Harvard Environmental Law Review, Harvard Latino Law Review, Harvard Journal on Legislation, The Tax Lawyer, The Practical Tax Lawyer, Taxes and Tax Notes. Professor Lipman is a frequent speaker on tax subjects to law and business groups.