The United States has a huge racial wealth gap: The median wealth of white families is almost eight times that of Black families and five times that of Hispanic families. One of the hidden drivers of this gap is tax policy, which has accelerated wealth-building by white families, while excluding most Black families. Congress recently had an opportunity to reform at least one lever of that inequality — only to reject it.

Earlier this year, as part of the American Families Plan, the Biden administration proposed closing a nearly century-old loophole called “step-up in basis,” saying it is “exacerbating inequality.” While many can take advantage of that rule, those who benefit the most are in the top 1% of income earners (earning more than $1 million of income). That group is disproportionately white: While 15% of white Americans are millionaires, only 2% of Black Americans are millionaires. A complete repeal of the stepped-up basis rule would raise an estimated $505 billion over 10 years. This week, though, the House Ways and Means Committee released its tax package, which drops that proposed reform.

How does this loophole work? Imagine your Aunt Ethel buys property when she is 50 years old and pays $25,000. That gives her a “basis” in the property of $25,000, which would be important if she ever sells the property. Now imagine Aunt Ethel passed away last year at 80 years old, and you inherit the property. At her death, the property is worth $250,000, and the day after you receive it, you sell it for its fair market value. Had Aunt Ethel sold it just before her death, she would have had $225,000 of income to report on her tax forms. But because you inherited the property, when you sell it, you have no gain.

That’s because of the “step-up in basis” rule. Instead of taking her basis of $25,000 (as you would be required to, if she gave the property to you as a gift while she was alive), you get a basis equal to the fair market value when she dies: $250,000. A sale shortly after her death likely guarantees that you have no taxable income, even though you have received $250,000 in cash from the sale. (By the way, Aunt Ethel’s gain will never be taxed to her as long as she didn’t own more than $11.58 million of property in 2020 at her death, thanks to the Trump tax cuts.)

Who benefits from this rule? White Americans, who have more wealth and can afford to hold on to their property until death. Research that followed the same set of Black and white families over a 25-year period showed that white Americans were five times as likely as Black Americans to receive an inheritance and they received about 10 times as much wealth as Black Americans. Further, the authors noted, “each inherited dollar contributed 91 cents of wealth for white families compared with 20 cents for African-American families.” Black Americans are far more likely than white Americans to need to support extended family members. White Americans, meanwhile, are freer to use their inheritances to build generational wealth.

There is no good reason to have one rule for gifts, which preserves the government’s ability to tax the gain upon later sale, and a different rule for inheritances, which eliminates it. The “stepped-up” rule only encourages those in the know to hoard property until death. The Biden administration sought to change that by requiring the heir to receive the property with the basis Aunt Ethel had. There were exceptions: The new rule would allow you to use the stepped-up loophole if Aunt Ethel was single and didn’t have more than $1 million of built-in gain ($2.5 million if she was married). Another exception would protect family-owned businesses (including farms) as long as they remain family-owned and operated. Republicans, predictably, pushed back on any change in the loophole. More bafflingly, so did Democrats. “Eliminating the step-up would force family businesses and ranchers to liquidate when an owner dies and to lay off employees while bringing in little revenue for Uncle Sam,” former senator Max Baucus, D-Mon., wrote in the Wall Street Journal.

This argument conveniently ignored the Biden administration’s proposed exemption for family businesses that remain in the family. It also disregarded the reality of the racial demographics of farming in the 21st century. Recent data shows 95% of farmers are white, while 3.3% are Hispanic, and fewer than 2% are Black. (And the federal government has some responsibility for that disparity: In 1920, 14% of farmers were Black. Farming is so white today in part because of the Agriculture Department’s historic and continuing pattern of discrimination: slow to give loans to Black farmers, but quick to foreclose.) The farmers who would benefit from the stepped-up basis would overwhelmingly be white. Indeed, any tax break for farmers is an almost perfect race-based subsidy for white Americans.

Former senator Heidi Heitkamp, D-N.D., explicitly made a racial justice argument in favor of the loophole (though she once supported closing it). “Now that we see an emerging entrepreneurial class within the Hispanic community and within the African American community, they won’t be able to take advantage of these tax rules that will allow them to grow their business and keep capital in their business,” she told the Hill.

Heitkamp, too, elides the reality of the racial wealth gap: Perhaps a few successful entrepreneurs and their families could benefit from the loopholes, but the overwhelming majority of Black and Hispanic Americans cannot. Research from Brookings shows that Black Americans, who represent 14% of the population, constitute only 2.2% of the nation’s 5.7 million employers. Black businesses bring in average revenue of $1,031,021 compared with $6,485,334 for non-Black businesses, and pay their employees an average of $29,882 compared with non-Black average pay of $51,357. Whatever the rhetoric about the “emerging entrepreneurial class,” the typical Black business would not benefit from the stepped-up basis rule.

As I demonstrate in my book, “The Whiteness of Wealth,” the U.S. government has historically designed policies around white Americans’ experiences of homeownership, marriage and paying for college — typically to the detriment of the majority of Black Americans who are ineligible for those same subsidies. This week, as Congress declined to close the stepped-up basis loophole, we got to see that play out in real time.

Dorothy A. Brown is a visiting professor at Georgetown Law and the author of “The Whiteness of Wealth: How The Tax System Impoverishes Black Americans — and How We Can Fix It.”