Topic: United States Congress

bicameral legislature of the United States

  • A Conversation about History, Race and the Meaning of True Diversity with Ja’Ron Smith

    Editor’s Note: Philanthropy Roundtable’s True Diversity initiative offers an equality-based, holistic framework for embracing diversity. We support efforts that value every person as a unique individual and empower charitable organizations with the freedom and flexibility to advance their missions. Learn more at TrueDiversity.org. 

    Cleveland, Ohio native Ja’Ron Smith and Washington, D.C.-raised Chris Pilkerton are two men of different races and backgrounds united by their faith and purpose to help the underserved. They both rose to become policy advisors to President Trump, where they advanced solutions for economic mobility of Black, white and all Americans. In a new book titled “Underserved: Harnessing the Principles of Lincoln’s Vision for Reconstruction for Today’s Forgotten Communities,” they offer a prescription for rebuilding underserved communities by drawing upon President Abraham Lincoln’s vision for reconstructing the nation after the Civil War. 

    I spoke with Smith, a policy expert on regulatory affairs, economic mobility, social justice, finance, banking and housing and urban development about his personal experience, new book and how he views true diversity.  

    The interview below has been edited for length and clarity.    


    Q. Tell us about your background and how it shaped your approach to work and life. 

    Smith: I grew up in Cleveland, Ohio, in a lower middle-class community. My early years were similar to that of many people: parents struggling with drug addiction and alcoholism. My parents were both blue-collar workers and their parents were poor. They did what they needed to do to survive.  

    My dad sent me to a Catholic high school. That education gave me my first experience with religion and created an environment to help me. I wasn’t a good student until age 14 or 15. Despite their addiction, I was anchored with two parents that loved me and a grandparent that loved me, which made me a resilient person and gave me the courage to be curious. As I set out to be my best self, I had to do service projects to graduate and that’s where the passion developed for helping people. 

    My generation was the first generation to start going to college. 

    My background planted the seed of wanting to help change our community and empower people. From that experience you learn that people go into drugs and self-destructive behavior based off trauma or traumatic experiences. It can be hard to try to figure out how to become your best self and put food on the table.  

    I attended Howard University and during college interned in Washington, D.C. on Capitol Hill, which got me interested in politics and policy as a way to positively impact people. 


    Q. Coming out of your background and work at the highest levels of government, why did you decide to write this book? 

    Smith: I wrote this book along with my colleague, Chris Pilkerton, because working together in the White House, we realized there were so many challenges in underserved communities. Because of the pandemic, we weren’t able to finish some of the work we had begun on issues ranging from criminal justice reforms to workforce development. It became apparent that the work we were trying to accomplish was more important than ever. Some communities will be set back even further because of COVID. 

    My north star and mission has been figuring out solutions for underserved communities. When I came back to D.C. in 2008, I gave my life to God and He has positioned me through relationships to accomplish this mission. We talk about our faith journeys in this book, but this book provides a blueprint to complete our unfinished work.   


    Q. “Underserved” focuses on the post-reconstruction era in the United States. There was so much opportunity for Black folks: in politics by becoming legislators, starting businesses and creating economic centers, creating a new middle class and creating greater Black wealth. What didn’t happen following Reconstruction that led to issues we’re still dealing with today?  

    Smith: Abraham Lincoln grew up on a prairie, he grew up poor, was self-educated and he learned the importance of earning a living for yourself and being able to leverage that to empower oneself through economic empowerment.  

    Lincoln’s vision for Reconstruction highlights that economic empowerment … is a core part of America. America is a capitalist country; the whole notion of capitalism is based on the concept of mutuality and mutual benefit. It has lifted so many underserved communities around the world in ways that other systems haven’t. The challenge is that slavery raised the question of whether capitalism was exploitative. Capitalism doesn’t have to be.  

    Unfortunately, Andrew Johnson worked with the privileged class of the South (former plantation owners) and the creation of Black Codes created a dual system that Black Americans lived in for about 60 years until the Civil Rights Movement. Despite all of that, Black Americans in segregated communities were still able to foster economic empowerment and build robust communities. But the government and racist factions tore that apart. That has happened several times. In our book, we mention the Freedman’s Bureau, race riots and Black Wall Street. 

    Ultimately, you still did not have a breakthrough with those communities. Laws from the ‘30s created redlining and concentrated poverty and race. Then the presence of Great Society programs at the same time as the post-Integration movement led to Black flight. Upper class and middle-class Blacks left those communities. When affluent people–doctors and lawyers–left the community, those left behind were left with no real role models or high earners which led to concentrated impoverished communities. It’s similar in some white communities too. The reason we called the book “Underserved” is because we talk about poverty in white communities as well.  

    Lincoln saw the importance of investing in poor white communities as well as Black communities. His assassination cut short this work which could have helped in the Jim Crow South where poor whites were pitted against poor Blacks. A century later, the race and class warfare was something Dr. Martin Luther King, Jr. talked about during the Civil Rights era. 


    Q: Can you talk about the role of the church, particularly of the Black church, then and also today in driving outcomes that go toward economic opportunities?  

    Smith: First of all, the movement to free the slaves was undergirded by the Great Awakening, which created the abolitionist movement. The emergence of the Republican Party was anchored in religion. When we went into Reconstruction, many of the HBCUs (Historically Black Colleges and Universities) that were launched were financed by religious organizations and invested in training preachers. The early leaders who went to Congress, like Hiram Revels, were ministers and the church became a safe place for individuals in the Black community to mobilize, organize and educate themselves.  

    New Black churches emerged out of that. Different denominations undergirded the Civil Rights Movement. The church has historically for the Black community been an anchor for change in our communities. However, over the last 40 years—and not just in the Black community—institutions overall including the church have lost the trust of the community. 

    Throughout America, people are less religious. Some people on the right blame taking prayer out of public schools, but it goes back to the methodology of trust. Some churches–not all of them–haven’t been the anchor that they used to be because trust is not there in the community. You might have a number of different churches in any underserved community. They are not all places that people go to or frequent. After being in seminary, I learned that in many cases churches have become more of a social club rather than an anchoring or change agent for society.  

    We need that anchoring because the church and faith community’s help in figuring out who you are as a person is extremely important in behavioral health. So many communities have dealt with the trauma of the pandemic and historic trauma. Being able to navigate the nuances of life is hard when you come from broken families. That’s a mission I have been on. We need the church and civil society more than ever.   

    Aside from the Black households, in which you see 70% are single-parent households, 50% of white households are single parent or divorced households.  


    Q: How can True Diversity or other equality-based, holistic frameworks for embracing diversity contribute to economic mobility?  

    Smith: Different perspectives help you to be competitive. Many other countries don’t necessarily have the model of diversity that America has and if we’re in a global competition of ideas, we are far ahead of people by celebrating our shared diversity. Celebrating that we are a melting pot is in the American DNA. We became a place where people came from all different walks of life to be able to participate in the American experience, which is based on individuality, ideas, freedom and liberty. That undergirds everything.  

    Companies and organizations that decide not to be intentional about thought diversity are losing the opportunity to benefit from that market share. But it has to be genuine, it has to be intentional. It cannot be virtue signaling. What the workplace is  trying to do is to harness our best asset which is the diversity of opinions and backgrounds. No one has the same experience. We celebrate that uniqueness that you can bring to the table and that uniqueness drives different ideas that an organization would never have thought about.  

    I’m not sure that designating a role for Diversity Equity and Inclusion (DEI) is right. If you have a C-suite, a better approach is having more COOs from different perspectives, more CFOs and CEOs. If you lean into being intentional about bringing in the best talent from diverse perspectives, you will get individuals in leadership roles who will commit to bringing other individuals with diverse perspectives along. For me working at the White House (and every organization I’ve been in), I’ve been able to identify individuals with different backgrounds that other leaders may have overlooked and they’ve ended up adding value.  

    It hasn’t been based on race but comparative advantage. Everyone brings different skills to a situation and it’s figuring out what comparative advantages individuals have that can make us more competitive. You want businesses or organizations to be intentional about what their talent needs are and to lean into those, not just check demographic boxes.  

    In the current landscape, DEI has become a talking point instead of looking at the most unique capabilities people bring to the table and what we can learn from them. We put blanket approaches in place that are not effective, when the unique qualities that people have because of their backgrounds is what we should focus on. 

    Click here to learn more about True Diversity.    

  • Celebrating the Legacy of Julius Rosenwald This Juneteenth

    On Monday, the nation will celebrate its newest national holiday, Juneteenth. June 19 commemorates the day in 1865 when the last enslaved people were declared free in America.  

    One way to celebrate Juneteenth is through powerful depictions of freedom fighters and their efforts to achieve equality for all. Julius Rosenwald, who rose to become president of Sears, Roebuck and Company, is one philanthropist who comes to mind. Rosenwald, the son of Jewish immigrants, was committed to seeing Blacks improve their lives through education and self-reliance. He helped finance the construction of over 5,300 schools in 15 southern states between 1912 and 1932. His work contributed to the education of more than 600,000 Black students, including poet Maya Angelou and former Democratic Rep. John Lewis of Georgia. 

    Rosenwald and freed Blacks such as Booker T. Washington, whom Rosenwald partnered with, understood that education would be the key to uplifting Black people. Their new freedom was just the start of a long road to realizing the pathways to opportunity that our Founding Fathers enshrined in the Declaration of Independence. Through education, Rosenwald and others would help Blacks become economically independent.  

    Yet the challenges they had to overcome were great. In 1880, three out of four (76%) Blacks were illiterate in the South. By 1910, that rate had fallen to one out of three (33.3%). Nevertheless, over 40% of Black men were still illiterate. Rosenwald’s schools taught children and adults alike to read and become productive citizens, leading to tremendous outcomes. A Federal Reserve Bank of Chicago analysis in 2009 found that “The Rosenwald program accounts for at least 30% of the sizable educational gains of Blacks during the 1910s and 1920s.” 


    Creating a National Park to Honor Rosenwald 

    To honor Rosenwald’s legacy, in 2020, Congress directed the U.S. Department of the Interior to study the feasibility of designating sites associated with the life of Julius Rosenwald as a part of the National Park Service. This move stemmed from the work of the Rosenwald Park Campaign, an organization of volunteers dedicated to honoring Julius Rosenwald and protecting the Rosenwald schools by creating a National Historic Park. Philanthropy Roundtable joins hundreds of organizations in supporting this campaign. 

    Some of the very people who are now charged with creating the National Historic Park for the Rosenwald Schools understand firsthand the importance of Rosenwald’s legacy. Robert G. Stanton, the first African-American director of the National Park Service, noted:  

    “I personally experienced the pain and stain of segregation under the ‘separate but equal’ doctrine, attending a dilapidated two-room elementary school. With support from the NAACP, my parents and others filed suit in Federal District Court in 1949 to have a new school built in the community and eventually won the case. They were committed to quality education for their children, as were African-American parents throughout the rural south. We children also possessed what Dr. Mary McLeod Bethune called a ‘thirst for education.’ The Rosenwald Schools gave many African-American children access to educational opportunities that they would not otherwise have had.”

    In an effort to further promote and raise funding for this National Historic Park, the board of the Campaign commissioned a film entitled “Rosenwald: Toward A More Perfect Union,” directed and produced by Charles Poe, co-founder of the Parks Channel, a new social media platform for content about national parks. This film tells “The extraordinary story of a forgotten philanthropist, a Jewish son of immigrants from Chicago who became a champion for Black education in the Jim Crow South.” Recently, it received the award for best documentary short at the People’s Film Festival in Harlem, New York. 

    This film will be shown as part of the Fifteenth Film Festival in the Washington, D.C. area on June 18. Showing this film just before Juneteenth sends a powerful message that, as we remember the end of one of our darkest periods of history, there was a period of hope and inspiration that followed.  

  • The Return of the Wealth Tax Debate

    Can the government tax charitable assets? A court case put before the U.S. Supreme Court may hold the answer to this question. By considering whether unrealized assets can be taxed, the courts could open the door for a new wealth tax covering assets within private foundations or charitable trusts.

    The U.S. Court of Appeals for the Ninth Circuit recently sidestepped the equal apportionment clause of the 16th amendment by becoming the first court in the country to state that an “income tax” doesn’t require that a “taxpayer has realized income.” In other words, this opens the door to the possibility that you can be taxed on income you didn’t receive (yes, you read that right).

    Last week, Competitive Enterprise Institute petitioned the U.S. Supreme Court to take up the issue in Moore v. United States.

    To understand what is at stake, we begin with investments. When the value of stocks and investments rise but are yet to be sold, they are called unrealized investment gains. These gains are not taxed according to current tax regulations until the investment is sold and the capital gains are realized.

    To illustrate, let’s say you purchased a painting for $1,000, and after a year, its market value rose to $1,500. As long as you haven’t sold the painting, the $500 increase in value is considered an unrealized gain, and you don’t need to pay taxes on it.

    The decision by the Ninth Circuit, if not overturned, could usher in a new era of federal taxes being imposed on properties, stocks, appreciating assets, possibly even jewelry, artwork, vehicles and household furniture.

    What’s more, opening the door to the possibility of imposing federal taxes on wealth would have profound implications for the charitable sector.

    Emmanuel Saez and Gabriel Zucman, two well-known French economists who have provided advice to Senators Elizabeth Warren and Bernie Sanders regarding their proposed wealth tax plans, have suggested a new approach to calculating tax bills for wealthy Americans. This new approach would consider not only the personal assets of these individuals, but also the assets of their charitable foundations.

    The change would be significant, given that American charitable foundations provided  $91 billion to nonprofit organizations in the previous year. If wealthy individuals’ foundations were to see a reduction in assets, the communities currently benefiting from those donations would experience a substantial (negative) impact.

    In 2019, the National Taxpayers Union Foundation conducted an analysis of Warren’s proposed wealth tax on charitable foundation assets and found the tax would consume between 6% and 25% of the annual disbursements of five selected foundations, including the Dell Foundation, the Omidyar Network and Dalio Philanthropies.

    The history of wealth taxes suggests they are not effective and are frequently abandoned due to the economic damage they cause. Fifteen European countries have introduced wealth taxes over the last century, but only three still enforce them.

    In 2017, France eliminated its wealth tax after the prime minister acknowledged it was prompting the departure of 10,000 to 12,000 millionaires each year. This tax impeded economic growth and contributed to just over 1% of overall tax revenue, which is an inadequate return for the cost.

    Sweden, which is often cited as a progressive policy model, had a wealth tax for almost 100 years before abandoning it in 2007. The tax had virtually no effect on government finances while being blamed for significant capital flight. Germany also had a wealth tax, but it was deemed unconstitutional and abolished in 1996. Wealth taxes have not proven successful worldwide, and it remains uncertain whether the U.S. Constitution grants Congress the authority to impose such a tax.

    The 16th Amendment says “taxes on income” do not need to be apportioned among the states. This likely means that other federal taxes, such as a tax on unrealized capital gains and other wealth taxes, must be applied equally to all 50 states, according to population.

    Alabama, which makes up roughly 1.5% of the nation’s population, would have to produce roughly 1.5% of the revenue raised by the tax. But Alabama and seven other states have no billionaires, and California and New York combined have 43% of them, so equally apportioning the tax among the states would be impossible.

    As the decision by the Ninth Circuit Court is petitioned, the Supreme Court may issue a decision on this matter — it could have profound implications on the possibility of federal wealth taxes being imposed on the unrealized assets of Americans.

    Whether we consider the economic costs of a tax on unrealized capital gains, the historical precedent of nations abandoning wealth taxes or the question of constitutionality, the result would be less economic growth, fewer jobs and a significant reduction in philanthropic giving.

    To learn more about the impact of wealth taxes on charitable giving, read our policy primer here.