As a financial consultant, Shawn Rochester helped his clients develop plans to dramatically increase their household cash flow, eliminate their debt, and set aside enough resources to maximize their income-generating assets during retirement. He also started Good Steward University, where he developed online courses to help Black Americans manage their resources based on a mindset and a set of actions focused on stewardship, ownership, and legacy. Within Good Steward University, Shawn developed a course called The Black Tax: The Incremental Cost of Being Black in America. The course was created based on reviewing 25 years of research on the cost of implicit bias on African-Americans.
In The Black Tax: The Cost of Being Black in America, founder of Good Steward LLC, Shawn Rochester, examines the various costs associated with being Black in America. He describes The Black Tax (which is the financial cost of conscious and unconscious anti-black discrimination), creates a massive financial burden on Black American households that dramatically reduces their ability to leave a substantial legacy for future generations.
The Current Black Tax
Black tax is an additional financial strain or heavy burden placed on Black Americans by people and institutions that have conscious and/or unconscious anti-Black biases. The key words here are conscious and unconscious. This tax is placed on Black Americans because of who their fellow citizens “think” they are, (which is dominated by a host of well-documented and unfounded negative stereotypes) not who they actually are.
This tax greatly reduces Black America’s ability to invest in new business development, education, housing, employment, and other activities that lead to wealth accumulation. Very often, the focus is placed on the moral implications of, or the discomfort associated with, discrimination as opposed to the financial costs associated with it. Because the financial impact of a Black tax affects the wealth of Black Americans, it must occupy a place of primary importance.
Explicit vs Implicit Bias
Explicit means that something has been clearly expressed with no room for confusion, and you are fully aware of what was said or done. Bias is a systematic error in judgment.
An implicit bias
An implicit bias refers to attitudes and/or stereotypes that affect our understanding, actions, and decisions in an unconscious manner. It is bias you harbor in your unconscious mind that is not accessible to you through introspection and reflection. Because people are not aware of their implicit biases, re-searchers have developed clever ways to get an understanding of the presence of those biases.
SOUL: Stewardship leads to Ownership and ownership ultimately leads to Legacy.
- Stewardship is utilizing the limited resources that we have, to their highest and best use, to maximize household cash flow
- Ownership is paying off all debt to ensure that all assets in your possession are owned by you, free and clear of all claims.
- Legacy is about three things: the first is being able to retire with enough income-generating assets so you can live with dignity. The second is being able to set aside resources so that you can give freely to those who are in need. And the third is being able to leave a sizable inheritance for your children’s children.
Getting Your PHD – Purchase, Hire, and Deposit.
The fundamental building block of economic development is based on our ability to provide for ourselves and our families, which is in turn based on our ability to earn a decent income.
PHD enables economic development because it drives more business with Black enterprises and financial institutions, which in turn increases employment and new business development within the Black community and increases the cost of anti-Black discrimination.
Black Tax in the Real Estate Market
if you’re Black
(1) during the pro-cess of looking for a home you’re more likely be told about fewer homes and shown fewer homes.
(2) When you inquire about getting a loan and have an African-American-sound-ing name you’re more likely to be treated as if your cred-it worthiness is substantially lower than it is.
(3) After you have submitted your application, you are 60% more likely to be turned down than Whites with similar characteristics.
(4) You’re three times more likely to receive a higher-priced loan than your White counterpart with the same credit risk.
The Appreciation Gap
If you purchased your home in a neighborhood with a Black population above 10%, (and most Black Americans live in such neighborhoods) you could end up with your home being worth 18% less than it otherwise would be, due to the appreciation gap.
Black Tax – Auto Insurance Market
Given that Black Americans purchase or lease about 5 million cars per year, the aggregate cost could be substantial.
- $1,100: average increase in purchase price could cost Black Americans up to $5.5 billion per year
- An additional $500 of interest per year could cost up to $2.5 billion per year of incremental interest cost
- An additional $500 of insurance premium per year could cost up to $2.5 billion per year of incremental insurance cost
Taken as a whole, this could cost African Americans up to $10 billion per year in incremental automotive costs. Think about the discriminatory financial fees being levied against African Americans through higher purchase prices, higher financing costs and higher insurance costs. This is a Black tax of epic proportions, which significantly reduces Black America’s ability to leave a legacy for our children’s children.
All the best in your quest to get better. Don’t Settle: Live with Passion.