Tax Breaks for Being Black

by Greg Forster

from the  Wall Street Journal   November 8, 1995

Other than name recognition, O.J. Simpson and Colin Powell don't appear, at first glance, to have much in common.

But in the eyes of the federal government, both of them are "economically disadvantaged" and in need of special government help, which is exactly what they got.

According to CNN, in 1985 a group of black investors that included Mr. Simpson and Mr. Powell bought a television station in Buffalo, N.Y., and benefitted from a federal minority preference program that gave them a tax break to buy the station.  They sold it in April of this year (1995) at a healthy profit.

A man who can afford to hire a small army of the nation's elite defense attorneys and a national war hero millions of Americans would like to elect president were the federal government's idea of "economically disadvantaged."  The investors also included basketball stars Patrick Ewing and Julius Erving, actor Mr. T, and several members of Michael Jackson's family.  All of them got a tax break for being black. It shouldn't come as a surprise.

Many of the federal government's racial preference programs assume that all minority owned businesses are underfinanced and disadvantaged, although that's clearly not the case.  The track record of the Federal Communications Commission on racial preference programs is a virtual textbook on how such programs primarily benefit people and companies that don't need the help.

In one case, then-mayor of Charlotte, N.C., Harvey Gantt, who is black, and his partners bought a television license from the FCC under a minority-preference bidding system.  They then sold the license to whites four months later, and Mr. Gantt pocketed a $3 million profit.

More largesse for the "economically disadvantaged." Preference programs currently provide special treatment and give away truckloads of tax dollars to countless "disadvantaged" celebrities, millionaires and businesses that are perfectly capable of competing with other companies -- and most of these minority millionaire bonanza programs aren't being re-evaluated.  Since the Clinton administration is determined to protect the status quo, it may well take a lawsuit for each and every program to force any real change.


Mr. Forster is a policy analyst at the Center for Equal Opportunity in Washington.


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