Not just negative feedback, because all that does is reduce your chance of playing with them in the future.
Actually use the 'file a complaint' option, citing Racial/Hatespeech or whatever they call it on Live, and if the person gets a few of those maybe MS can/will actually do something.
Even better, have the balls to tell the person to STFU, mute them, kick them or vote to have them kicked, etc. If they are just dumbasses looking for some attention, they'll hopefully stop. If not, I guess all you can do is neg feed & file them.
People need to learn the difference between giving an opinion versus reciting BS, biased rheotric pounded in by their ignorant-ass environment, or the difference between talking some healthy trash in chat or just clogging up public gameplay 'airspace' with shit that noone wants to hear. It sucks that sometimes, cyberspace 'anonymity' can remove people from taking responsibility of their actions & the consequences, and the other side of the argument is that if companies/institutions tighten the grip too hard they start impeding on free expression.
I think the only real, valuable thing to do is try to keep the BS to a minimum, as a community of human beings that like to play video games and nothing more. It's up to you (us) to tell them to STFU, report them, or whatever.