By imposing financial burdens, fines and fees compromise the capacity of low-income families and individuals to meet their immediate financial needs. In addition to increasing short-term stress, fines and fees also stagnate long-term wealth-building opportunities.
In a new report by Kindred Futures, author Alex Camardelle characterizes fines and fees as a “tax” on Black wealth, within a longer history of deliberate wealth-stripping policies that have drained resources from Black communities across the South. Prominent examples such as the war on drugs and the prison boom from the 1970s through the 2000s hit Southern states particularly hard, costing Black Americans billions in lost income and assets.
The author also highlights how Black households carry a disproportionate burden of medical and student debt, which like fines and fees , continues to hold back wealth accumulation across all Southern states. High debt feeds into lower credit scores and lower savings opportunities, which in turn perpetuates a cycle of financial barriers towards wealth accumulation.
The author proposes several policy reforms to strengthen financial infrastructure and inclusion in Black communities. You can read the full text of the report here.
Key findings/Highlights
- White households in Southern states hold 24 times more median wealth than Black households ($146,000 vs. $6,000).
- More than half of Black households in every Southern state carry delinquent debt, compared to roughly one-third of white households.
Recommendations
- Target the underlying structures that create and sustain wealth inequality, instead of placing the onus of individuals alone.
- Invest in debt relief: forgive both medical and educational debt.
- Crack down on predatory lending: bap payday and title loan interest rates, expand access to low-cost small-dollar loans through CDFIs and credit unions,
- Expand Black homeownership: fund down payment assistance for first-generation homebuyers.
- Invest in baby bonds and children’s savings accounts: seed capital programs for children from low-wealth families could provide $25,000 to$30,000 by age 18.