Institutional racism upheld by strong capitalist markets have embedded inequity into the fabric of American society for centuries, disenfranchising entire communities of color; economically disadvantaged communities are therefore largely excluded from mechanisms that would contribute to creating healthier local communities and a more sustainable world. One area in which implementing sustainable practices is of critical importance is the environment – a damaged and worsening environment leads to poor outcomes for everyone, but most prominently poor communities of color. Effective policies must be intersectional, addressing the ecological damage while also offering a remedy to the inequity. Redistributive tax policies are ripe for this exact type of intersectional issue. This paper proposes one solution for communities interested in simultaneously seeking social and environmental justice: the implementation of a municipal 2% mansion tax on the sale of any residential real estate valued at or above 200% of the local mean value of real estate, to be distributed to communities of color to create, manage, and sustain ecological initiatives. These initiatives should be financed, supported, and measured by the municipalities, but they must be community-driven in order to align with the communities’ cultural values and priorities.
As the cataclysmic effects of climate change become decreasingly reversible, ecologically sustainable practices are increasingly becoming a moral imperative. But are eco-sustainable practices a luxury afforded only to the middle and upper classes in the white supremacist society of the United States?
Whether environmentalism is a priority exclusively of the wealthier, educated political left or an issue that everyone can play a part in is the subject of decades of discussion. Some have the perception that low-income communities aren’t even interested in environmental justice but instead opt solely for the most affordable choices; while the latter part of this statement is rational – that people with limited resources will seek the options that fit their budgets – the idea that they are not interested in environmental justice is spurious: Since the consequences of environmental degradation are felt by all, communities of all income levels have a vested stake in creating a cleaner environment (Carey 2018), even if only to make a more hospitable community for themselves (Narain 2016).
Nevertheless, the cost of responsible sustainability practices remains high and out of reach for many people living in working class or impoverished communities. Organic local foods, proper waste disposal & waste reduction (especially of plastics), improvement of energy efficiency & transportation, sourcing of electricity, lower carbon emissions, employment that allows for or promotes greater ecological sustainability, and many other practices that could greatly lessen the impact of human activity on the climate or even help the environment begin to recover, are too costly for low-income and poor families to realistically factor into their budgets. The strategies that are affordable – like moving towards a minimalist lifestyle, growing instead of purchasing food, and carefully planning how to reduce carbon emissions (Nini 2018) – are time-intensive and unrealistic.
This is a problem that is especially true in communities of color due to the extreme income inequity and exacerbated by sustainability policies locally and nationally that neglect racially homogenous minority communities (Jarret 2013). To add to the injustice, it is the very communities that are largely excluded from practicing sustainability that are most impacted by climate change – environmental racism results in people of color living in communities nearby toxic waste (air and water) discharge from industrial plants, in low-lying coastal neighborhoods below the floodplain, and dying from climate-related causes such as heat-related deaths in densely populated urban areas and from vector-borne diseases (Vernon-Jones 2014).
This paper proposes that in low income communities, especially where there are large minority populations, it is vital to develop environmental sustainability projects at the community level, managed from members of the community with support from local government. Municipal governments must prioritize policies that finance, support, and measure these projects. These projects should be funded by a 2% mansion tax on all properties two or more times greater than the average home value in each municipality.
Environmental Sustainability as an Ideology of White Supremacy
Many of the institutions that underpin United States society are inherently and intentionally racist, originally built to favor the protection and expansion of the wealth of white men and maintained intact for centuries for the same reason (Oluo 2019). Historically, among the most malignant of these systems has been capitalism, as “the market was constructed and functions within a white supremacist society, which means that its outcomes uphold white supremacy” (Nguyen 2020). As a result of capitalist institutions and policies, the practice of environmental sustainability has been commodified and made accessible only to those who can afford it. To name a few examples:
- Local, organic, and fair trade products, ranging from clothes & accessories to fruits and meats, are more expensive than their counterparts in other retailers less accessible to low income communities.
- Energy efficient appliances and residential fittings (such as weatherproof windows and proper insulation to keep in the heat or cool) are costly to purchase and maintain.
- Renewable energy would be financially unrealistic to install on a small (residential) scale if the local utility companies do not offer green energy providers.
- The reduction and disposal of waste is encumbered by limited budgets – for instance, composting of organic waste requires outdoor space plus the cost of composting supplies and maintenance time; the use of disposable plastic products and packaging tends to be more budget-friendly; and the availability of recycling programs is sparse. Furthermore, using disposable products (which are harmful to the environment) is compelling for families who do not have time to prepare full meals or wash dishes.
- Fuel efficient, hybrid, or fully electric cars are much more expensive than the older used cars that many low income families are able to purchase, and many people do not have access to consistent or reliable public transportation.
- Carbon offsetting programs designed to bring us closer to the carbon neutral ideal are (at the moment) more of a novelty for wealthier consumers, as they cost hundreds of dollars per year per person for an average American’s carbon output, and the palpable return on investment is simply the consumer’s satisfaction that they have lessened their negative impact on the environment.
It is past time to take greater strides in making the United States a more ecologically conscious country and every resident must do their part, but as long as environmentally sustainable practices are reserved for the economically empowered, it is unrealistic to expect that we will ever be able to meet necessarily ambitious climate goals. And as long as economic empowerment is built in favor of White America, then the expectation that minority groups should share equally in the responsibility of environmental stewardship despite the clear economic disadvantages supports a white supremacist ideology.
That sustainability is currently an ideological tool of a white supremacist society does not imply that well-designed policy cannot help make it more accessible for communities of color and consequently more egalitarian. In fact, environmental regulatory policies in different areas have consistently proven to be a valuable tool for the public health initiatives in impoverished communities deprived of access to clean water or air (usually because of their proximity to industrial plants that put toxins into the water and air all in favor of capitalist gains).
Decision Making in Poor Communities
A strong policy will give agency to the communities themselves to determine how best to design and implement sustainability projects. This type of community-driven campaign guarantees that the solutions proposed and funded are tailored precisely to the cultural capacity of the communities in which they are being deployed, rather than having “solutions” designed by majority White lawmakers and awkwardly retrofitted to communities of color; while the latter would actually strengthen the White supremacy ingrained in the system, the former would be fundamental in deconstructing it.
Studies in behavioral economics do confirm that people living in poverty tend to make more mistakes with how they use their money than those with more financial resources (Thaler and Sunstein 2009). In other words, a person in poverty is more likely to spend any surplus money in their budget on impulse or unnecessary purchases rather than saving it because the short term reward usually supersedes the long-term gains of saving in their minds. This begs the question of whether the communities can be counted on to implement the resources effectively; however, while individuals do tend to make more mistakes with their financial resources, small groups of people in poor communities are actually quite reliable with responsibly utilizing community funding. In many of the most impoverished informal settlements around the world, studies have repeatedly shown that aid funding achieves its goals and empowers the community much more effectively when the use of that funding is determined by community members themselves rather than those who are providing the aid.
Communication & Information Sharing
Before even attempting to answer the question of which sustainability projects to recommend, it is necessary to first help educate the communities on what environmental sustainability is, why it is important, and how a participative structure would be most conducive to optimal community-driven outcomes.
- In communities of color, especially in Black and Brown communities, long-standing institutional racism has sewn distrust in government agencies & actors, and policy devised, implemented, and evaluated by White decision-makers is aptly received with high levels of skepticism. This is quite true in the deployment of health programs, which provides a fair parallel to sustainability programs by which we can predict engagement. Chavez-Dueñas and Adames (2015) outline three vital domains for establishing trust in communication in communities of color:
- Building Empathy
- Nurturing Self-Awareness
- Developing Skills
(Chavez-Dueñas and Adames 2015)
- In immigrant communities of color, nonprofits emphasize the importance of delivering educational material and community information in the community’s native language. When immigrant communities do not have access to local information in their native language, they will seek other sources that may have lower quality or less accurate/ relevant information (Latino Community Center of Pittsburgh 2020).
Engaging the community in the policy development from the start undoubtedly leads to better outcomes. Jarret (2013) explains:
“In order to increase participation by those peoples who have heretofore been marginalized, openness and transparency on the part of government is one of several prerequisites for successful citizen involvement. Many citizens, whether they are people of color or economically challenged, face the extra hurdles of education, and a lack of professional or political contacts and knowledge of the complex decision making and legislative processes. It has been suggested by Ghai (2003), that a crucial form of participation is one in which the disenfranchised have open access to decision-makers, be they legislative or executive, at the planning stage. By involving these valuable citizens before decisions are made and policies implemented, we experience the essence of participative and inclusive government.”
Since environmental justice is an issue that disproportionately impacts communities of color, a progressive environmental policy to combat the negative effects of climate change, pollution, and environmental degradation must serve a dual purpose of addressing the environmental issue and dismantling the White supremacist power structures that have led to the issue. These policies should be implemented at the county level in consideration of the specific issues that impact their communities of color and the systems of power that have instigated the inequity locally.
Proposal: 2% “Mansion tax” on all home real estate sales 200+ percent greater than municipal average; all proceeds of the tax directly benefit sustainability projects identified by local communities.
Any city with concrete goals of reducing inequality through diversity initiatives must prioritize intersectional policies that 1) deconstruct institutional wealth that has led to the existing inequities; and 2) address related issues that continue to disenfranchise communities of color. Since capitalism in the form of land ownership has been one of the chief drivers of inequality in this country, overwhelmingly empowering white people (Waxman 2019), a well-crafted environmental policy must target that wealth in its ultimate goal of environmental justice for communities of color.
The first facet of this policy is a 2% mansion tax (a type of residential real estate transfer tax) levied against properties two or more times greater than the municipal average home price. For example, if the average price of a home is $200,000 in a given municipality, a home sold at a price of $400,000 would also bear an additional $8,000 mansion tax.
The second facet of this policy will create a fund managed by the municipality and distributed to communities of color, earmarked for sustainability initiatives. In order for communities to apply, they must establish and maintain a voluntary Neighborhood Sustainability Coalition that will determine which projects will be of greatest impact and feasibility for their community and how best to implement them. All funding will come directly from the mansion tax. The decision-makers responsible for the distribution of funding should seek out and engage stakeholders from minority communities, including individuals, small businesses, and organizations working in the community.
The ecological sustainability projects that communities could undertake are fairly open, including, for example*:
- Community solar projects
- Composting & waste reduction programs
- Energy efficiency initiatives
- Public transportation improvements
- Construction of parks or community centers
- Community education workshops
- Installation and management of farmers markets
*This is not an exhaustive list.
While luxury taxes are not a new concept, their application in the United States is relatively sparse. The subcategory of mansion taxes, however, has been picking up momentum: Washington & New York have implemented more aggressive mansion taxes within the last 14 months, joining Connecticut, Vermont, New Jersey, and Hawaii (Bahney 2019). In most cases, the tax is progressive – the higher the price of the home, the higher the tax.
New York’s recent update to their mansion tax is a model case study: it ranges from a “1% tax on homes valued from $1 to $2 million and tops out at 3.9% for homes valued at $25 million or more.” These taxes are then allocated for the Metropolitan Transit Authority for improvement and maintenance (Plitt 2019). The revised tax schedule follows:
- 1.00% for purchases $1,000,000 to $1,999,999
- 1.25% for purchases $2,000,000 to $2,999,999
- 1.50% for purchases $3,000,000 to $4,999,999
- 2.25% for purchases $5,000,000 to $9,999,999
- 3.25% for purchases $10,000,000 to $14,999,999
- 3.50% for purchases $15,000,000 to $19,999,999
- 3.75% for purchases $20,000,000 to $24,999,999
- 3.90% for purchases $25,000,000 or greater
This paper’s suggestion – using a mansion tax to fund intersectional environmental justice initiatives in communities of color – does appear to be a novel approach.
- Equity (Fairness to Taxpayers): Because this tax seeks to rectify the historically inequitable distribution of wealth by targeting only those consumers who are able to purchase high value real estate and allocating that money towards initiatives that increase the health and wellness of historically disempowered communities, this is a highly equitable policy. Those home buyers who are purchasing real estate valued at less than double the local mean value of houses will not bear any portion of this tax.
- Economic Efficiency: At face value, this policy appears to cause a deadweight loss for those who are paying higher taxes on more expensive properties. However, this does not consider the negative externalities that communities of color face due to oppressive institutions that explicitly benefit the economic elite. Since there is no way to eliminate the deadweight loss that accompanies a tax of any type, this cannot be classified as a perfectly efficient policy, but the fact that it addresses unquantifiable externalities in communities of color does ensure that it has at least a moderate degree of economic efficiency.
- Political Feasibility: As a policy that uses taxation as a tool to reallocate resources from the wealthy to those in lower income brackets, this will face resistance in areas where there is a strong conservative presence; although this creates a political hurdle that will be hard to clear, it also serves to further underscore why this kind of policy is necessary, since it has traditionally been conservative policies that have built the modern discriminatory institutions of society.
The 2020 Election demonstrated shifting political tides in traditionally conservative strongholds, especially in many urban areas where there are large populations of color; this shows both that the minority, BIPOC voice is growing stronger and that the groups that support these types of policies are gaining strength.
In its distribution of resources towards environmental sustainability projects in communities of color, this is an innovative policy, however it is not a pioneering attempt to establish a norm of mansion taxes, as these have been instituted in five states.
Overall, this is a highly feasible policy. In municipalities that still have deeply rooted conservativism, the political feasibility will be lower, whereas in progressive municipalities, this policy will enjoy easier acceptance.
- Ecological Preservation: Any political action must also be analyzed through the lens of its impact (positive or negative) on the environment. This policy is designed specifically to foster more sustainable communities. The local impacts of this policy wherever it is instituted will offer high returns to the communities where the funding is channeled and the surrounding communities; its cumulative positive effect on the environment in the United States depends on how widely it is adopted.
- Price bunching: In several markets where there is a mansion tax, studies have found that prices are bunched just below the tax threshold (Kopczuk and Munroe 2015);
- Unraveling markets: Price bunching is related to another challenge that Kopczuk and Munroe (2015) highlight, which is an unraveling market, which may influence buyers and sellers to alter their behavior to avoid the tax altogether – sellers may choose not to sell or to rent instead and buyers may look in areas that are more economically depressed to find real estate that is under the tax threshold. A policy tied to a percentage of local real estate value rather than a concrete price threshold could lessen the impact from these challenges.
- Other costs associated with real estate purchase & financing: In addition to the inspection & down payment, which is greater on houses of higher value, this policy would add a significant additional cost to an already long list of costs associated with buying a house – fees for appraisal, application, credit check, underwriting, title insurance, and title search. On top of this, higher value properties bear higher property tax rates, and if this policy is based on the valuation of the house, then this would inevitably burden those consumers who are already paying high annual taxes for their house (Franklin 2020).
Progressive tax policies that target the wealthiest Americans will always be met with resistance from conservative voices, but these policies also constitute one of the most effective ways to redistribute capital resources towards causes that favor the healthy development of the communities of color that have historically been disenfranchised by the institutional racism built into our capitalist market. A 2% mansion tax on properties exceeding 200% of a municipality’s mean home value will provide a generous stream of income for the municipality to support community-driven environmental campaigns in communities of color. It is paramount that the campaigns developed remain in the hands of the communities themselves so as to align with their cultural priorities and community values. Engaging the communities in each part of the policy development and resource distribution is essential to the policy’s success.
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