This Article combines three topics--taxes, higher education, and race--to evaluate the tax system's role in exacerbating racial inequalities. Part II frames the discussion with a brief overview of the economics of higher education: how much it costs, how much debt the average student incurs to afford it, and how that debt burden varies by race. Part III describes the major income and wealth transfer tax benefits for higher education, including I.R.C. § 2503(e)'s exclusion of direct tuition payments from gift tax. Part IV demonstrates how this gift tax exclusion disproportionately benefits white families already more likely to avail themselves of other generous tax benefits for higher education while also noting that the exclusion is inconsistent with the overall purpose of wealth transfer taxes. Additionally, Part IV argues that I.R.C. § 2503(e)(2)(A)'s exclusion is inequitable and should be repealed because it exacerbates the racial wealth gap and creates lifetime benefits for the donee while diminishing the donor's tax base. Part V evaluates opportunities for future research at the intersection of race and tax benefits for higher education and beyond. Part VI concludes with a call for an expanded definition of “fairness” when evaluating the tax system.
Bridget J. Crawford & Wendy C. Gerzog, Tax Benefits, Higher Education and Race: A Gift Tax Proposal for Direct Tuition Payments, 72 S.C. L. Rev. 783 (2021), https://digitalcommons.pace.edu/lawfaculty/1217/.