Why is Xbox LIVE so racist?

I'm going to switch to the pc soon, once I'm done building my rig. I've been on Xbox LIVE for 3 1/2 years and it hasn't changed one bit. There's cool people, smart people, but then 60% of the people online are low life 12-25 year olds that are racist and ignorant. I'm okay with trash talkers, but when I play with my friend who is black, everyone calls him the N-bomb, they call me a because I have some Hispanic heritage (I'm white), and call my other friends slurs as well. I understand it's a part of the internet, but change needs to come. And I'm talking extreme moderators and a BAN hammer like on Halo.