Reporting is useless. No one reviews them and you only get banned once you accumulate enough reports. May sound like a good idea if you're reporting someone with a racist tag, but not quite.
The game doesn't tell you you've been banned and you're only banned for a week (if you don't get reported while in the banned server).
So the racist will continue to be a racist because they never learned their lesson and/or will be even more mean and report others for no reason.
I know no one reviews reports because I've reported three innocent people to test my theory. This was over a month ago and I never got punished for it. I've also been banned for no reason. I don't even taunt for the sake of not being reported. And no, this was before I reported those three, so that wasn't the reason why.
So basically, there's no need to report because:
A. It's not like they'll learn their lesson
B. They only get soft-banned and can keep trolling in the banned server
C. They'll be back and just as racist as before.