William & Mary Journal of Race, Gender, and Social Justice
Abstract
Rehabilitative reparation remedies advance the important normative goals of intergenerational restorative justice and racial reconciliation. This Article fills a gap in the reparations literature by exploring a critical missing piece of reparations—nontaxation of reparation remedies. Historical examples of reparation remedies show how, in the past, a patchwork of tax rules prevented taxation of reparations and advanced the rehabilitative goals of reparation remedies and procedural fairness in tax administration. Conversely, contemporary examples show how current tax law taxes the receipt of reparation remedies, thereby undermining the rehabilitative goals of reparations and procedural fairness.
This Article proposes a new statutory tax exclusion for reparation remedies to advance the rehabilitative goals of reparations, to promote procedural justice in tax administration, and to ameliorate racial wealth disparities attributable to long-standing systemic subordination. Part I provides background and a normative framework for reparations. Part II provides background on competing substantive normative frameworks for the income tax and procedural justice in tax administration. Part III discusses the evolution of specific tax exclusions that, in the past, applied to reparations and prevented taxation of the reparation remedies. This Part incorporates historical examples of reparation remedies received by members of Native American Indian tribes, Holocaust survivors, and Japanese Americans interned during World War II.
Part IV analyzes the tax consequences of contemporary reparation examples, illustrating deficiencies in the current law. The contemporary examples include payments to wrongfully incarcerated exonerees and women forcibly sterilized while incarcerated, the return of real property wrongfully taken from the Black owner of the property a century earlier, and the cancellation of government debt owed by over 15,000 Black farmers who were harmed by systemic U.S. Department of Agriculture discrimination. The tax rules applicable to reparation remedies should be part of the solution, not part of the problem that the reparations are intended to redress. Part V proposes a new comprehensive statutory tax exclusion for the receipt of reparations.
This abstract has been taken from the author's introduction.