Eight years ago, I joined my longtime friend and grad school classmate Justin Schein on a project that had been his passion for decades: a feature documentary about his late father Harvey and his obsession with the estate tax. What attracted me was the idea that this was at once an intimate portrait of an American family and a rigorous examination of wealth inequality and its impact on our democracy, and a clever way to use the former to illuminate the latter.  

Justin and I worked through the pandemic and beyond to bring this film to the screen; it was my honor to be part of that effort as a producer and his co-director. After having its world premiere at the DOCNYC film festival last fall, Death & Taxes is now about to roll out theatrically across the country beginning this coming week. In New York, it will open at the IFC Center on Thursday July 17—featuring a Q&A with Justin—and run through the 24th. I’ll be doing the Q&As on July 21 and 22, with other special guests appearing throughout the week. (See end of blog for other cities and dates.)

In interweaving the personal story of the Schein family and the complex issue of tax policy (exciting, right?), Death & Taxes uses a brisk mélange of cinema verité, interview, archival, stills and home movies going back fifty years, and animation by the amazing Italian artist Robert Biadi, all set to the fantastic Mingus-influenced score of composer Bobby Johnston. Among the interviewees in the film are Nobel Prize-winning economist Paul Krugman; former Secretary of Labor Robert Reich; conservative anti-tax guru Grover Norquist; progressive activist Chuck Collins; executive director of the Institute on Taxation on Economic Policy Amy Hanauer; Republican pollster and strategist Frank Luntz; Princeton sociologist and MacArthur “Genius” Fellow Matt Desmond; journalist James Bandler of ProPublica; former CEO of the Roosevelt Institute Felicia Wong; economist Anne Price of the Maven Collaborative; former Reagan Budget Director David Stockman; Trump economic advisor Stephen Moore; and authors Alissa Quart and Anand Giridharadas. Besides Justin, Johnston, Biadi, and me, the Death & Taxes team included our editors Purcell Carson and Brian Redondo, and producer Yael Melamede, with additional editing by David Mester and additional cinematography by Scott Sinkler. We were also fortunate to have as a consultant the brilliant Alan Berliner, one of the most accomplished and lauded documentarians in the history of the form, and a master of the personal film.

Come see the film if you can—you won’t be disappointed.

“ACQUAINT YOURSELF WITH THE FACTS”

Harvey Schein was born in the Bronx in 1927, the fourth child of immigrant garment workers, and raised in the dire economic circumstances of Depression-era Brooklyn. But Harvey was an inherently brilliant and charismatic young man (also: movie star handsome). After serving in the Navy at the end of World War II, he went to NYU Uptown in the Bronx—now Bronx Community College—and then Harvard Law School, both on the GI Bill, becoming first a lawyer at the famous Rosenman firm and then an executive at CBS/Columbia Records in the late 1950s. How long ago was that? So long ago that it was Harvey who recruited his friend and Rosenman colleague Clive Davis—who to that point had never had anything to do with show business—to come join him at CBS. (Clive, for you youngsters, would go on to become one of the most famous music industry executives ever.)

Harvey had a meteoric rise in the record business in his own right, but his abrasive style inevitably wore thin everywhere he went. After CBS he was a top executive at Warner Brothers, Polygram, and Sony, where he was the first American to head a division of that Japanese company, recruited by its founder Akio Morita himself. Though he was a brilliant businessman, and could be eminently charming, in each case he eventually wore out his welcome despite making the companies millions through his trademark cost-cutting. Recognizing the pattern, Harvey was one of the first CEOs to build a severance clause into his contract. As Frederic Dannen writes in Hit Men, his history of the record business, “At one point Harvey Schein was collecting six figure paychecks from three different record companies not to come into work.”

“Was I aware that your dad was a tough negotiator?” Clive Davis tells us in Death & Taxes. “Sure. He had one Achilles heel in his tendency to be argumentative.”

That was an understatement.

Harvey’s infamous combativeness wasn’t limited to the job. As Justin says in the film, “My dad never let anyone take advantage of him: Not a CEO, not a police officer, not a supermarket cashier. And definitely not the IRS.”

 “My dad was proud to be a lawyer, and he did not lose arguments. It didn’t matter if you were four years old or if you were a top lawyer at another firm. One of his favorite lines was, ‘Acquaint yourself with the facts.’ So winning an argument with my dad was not a very realistic possibility. But as I got older, I tried. I began to be interested in politics, and when Reagan came along there was plenty to argue about. It was good training for my brain. Even when I was in film school, he would be like, ‘You should take some law classes; maybe you could go to law school while you’re at film school.’ And my thought was, ’I already went to law school, growing up as your child.’”

Nothing triggered Harvey like financial matters. “My dad had a lot of emotional baggage attached to money,” Justin recalls. “No matter how much money he made, somewhere deep inside, he was still that little boy afraid of not having enough money for lunch. He used that to his benefit in the business world, he also wielded that pain at home.”

“As a kid, I would be sitting at my desk doing my homework and he would burst in with a phone bill with calls circled that had been made before 7pm—when they were five cents a minute instead of three cents. And he’d be like, ‘You know how much we have to pay for this? All you had to do was wait!’ Later, when I was older, I would bring a roll of quarters with me when I went up to Connecticut so that I could call my girlfriend from the payphone a mile away.”

“Many of those things he was fixated on made sense, but it was a combination of his style and just the onslaught that made you scared at times. He could get very angry, but then ten minutes later he’d be loving. So it also had to do with his emotional regulation.”

Despite his combativeness, Harvey was astonishingly reflective and self-aware—particularly for a man born in the 1920s. He understood his own foibles, and if they were hard on his family, no one suffered from them more than he did. As Joy says, “He was tormented by his own personality,” making him an enormously sympathetic figure, even when he’s a bastard.

With his innate frugality (as he liked to call it), Harvey naturally began saving and investing as he climbed the corporate ladder—usually buying very safe, slow-growth stocks in blue chip companies, and holding onto them for very long periods of time, his whole life in many cases. In that regard, he was what today’s crypto investors call a “hodler,” which is their highest praise, one with “diamond hands,” which is to say, someone with the guts to ride out market fluctuations and not panic and sell. (“Hodl” is sometimes said to be an acronym for “hold on for dear life,” but more likely it began as a typo.) Aside from the obvious benefits of accruing wealth, Harvey was specifically aiming to make his children and grandchildren as financially secure as possible so that they would never suffer the privation he had, and could have the financial freedom to do whatever they wanted with their lives. Isn’t that something almost all parents want for their kids?

With that mindset, Harvey was also diligent in avoiding taxes to the full extent that the law allowed, as most people also do. And that’s where the estate tax comes in, and his white-hot loathing of it.

DEATH BE NOT PROUD

The estate tax is a levy placed on the money and assets you leave when you die. For that reason, its foes—mostly in right wing, free market circles—have branded it “the death tax.”

But here’s the thing. A massive portion of every estate is tax-exempt. In fact, the current ET exemption is so high—currently about $30 million for a married couple, or half that for an individual—that only the tiniest fraction of Americans are subject to any estate tax at all: about one tenth of one percent (0.1%.), or 4000 families in a country of 340 million people.

(The exemption was doubled in the 2017 Trump tax bill; before that it was about $14 million for a married couple, already a lot of money. The rise was set to sunset this year, but the most recent GOP budget, the so-called “One Big Beautiful Bill,” made that change permanent, and even raised the exemption a little, with annual increases indexed for inflation.)

Even then, the estate tax applies only to the wealth above the exemption threshold. So if you die with $30 million and one dollar, you pay estate tax only on that one dollar—for a tax of about 40 cents. Moreover, the wealthy families in that bracket almost always have armies of accountants and lawyers to help them take advantage of the many arcane legal loopholes and avoid the estate tax altogether. That’s why Trump economic advisorGary Cohn infamously quipped back in 2017, “Only morons pay the estate tax.”

So why talk about the estate tax at all, especially when even its opponents have pretty much stopped trying to kill it, because they’ve already succeeded in rendering it moot?

Well, the ET is still worth talking about because it represents a pointed case study in our ongoing national debate about who we are as a country and who we want to be. It goes to our most basic core values, including the possibility of social mobility, the vaunted American Dream, and the viability of the United States as a democracy and not a plutocracy or an oligarchy.

Ironically, conservatives also have reasons to continue attacking the estate tax. For some, the number of people affected or the dollar amount is not the issue; it’s the principle. Frank Luntz, the Republican pollster who is often credited with (or blamed for) coining the term “death tax,” told us: “If it’s immoral to tax someone simply for dying, then that should apply whether the estate is a hundred thousand or a hundred million.” Except, as we will see, that is a mischaracterization of what is happening.

The other reason is that for the ultra, ultra-rich, even with all their dodges and loopholes, the ET still poses a threat. That’s why some of those most angrily opposing it, and quietly funding the aggressive PR campaign against it, are the richest families in America, like the Mars family of candy-making fame; the Waltons of Walmart; the Gallo wine family; and the Mellon Scaife family, led by the late Richard Mellon Scaife, a Nixon crony. (For that matter, the Trump family itself could be the poster child for tax avoidance and the corrosive influence of dynastic wealth.) Those people not only want to keep their money, they also want to maintain the obscenely outsized voice it gives them in shaping American politics.

Even though the ET affects only the most infinitesimal slice of the American population, the right wing has managed to get a huge chunk of ordinary Americans to fiercely oppose it and support its abolition. Mostly that support is on the premise that, hey, someday I might be rich too, even though that has never been less true than it is today. But as we know, right wing gaslighting is very effective. The success of the conservative movement in pulling off this scam is a perfect example of how it develops wedge issues—guns, abortion, LGBTQ matters—to generate passion among its base. But unlike those issues, the estate tax (and tax policy and economics in general) is even worse, as it’s an area where the right actually gets people to agitate—and vote—directly against their own self-interest, and boost the power of the rich at their own expense.

STEP RIGHT UP

The chief criticism of the estate tax by its opponents is that it is, allegedly, double taxation. “If I’ve worked and earned money and paid taxes on it, why do I have to pay taxes on it again when I die?” Harvey asks Justin in one of the film’s most pointed exchanges between father and son. “Can you answer that?”

Well, we can, in fact. The truth is, much inherited wealth has never been taxed before it’s passed on to heirs, because frequently it is derived from long term capital gains, such as appreciation on stocks and real estate. Those capital gains are not taxed until they are “realized,” in economic parlance—cashed in, in other words. But thanks to a provision called the stepped up basis, very often those gains are never taxed at all when they are passed on to heirs.

Didn’t know that? Neither did I before I worked on this movie.

Here’s how it works:

If I buy a stock for a dollar and it goes up to a $101 in value, I would owe tax on the hundred dollar gain if I cashed it in. But if I hold it, and never cash it in, when I bequeath that stock to my heirs, that hundred dollar gain is erased in the eyes of the IRS. My children or other heirs get the stock at its new $101 dollar per share value with no tax owed. And since the fortunes of most wealthy people in America are largely comprised of capital gains, we’re talking about the bulk of the accumulated wealth in America. As ProPublica’s James Bandler says in the film, it’s an outrageous rule that allows dynastic wealth to be built and passed along for generations without any taxation at all.

So yes, Harvey paid tax on his income as a record company executive—a lot of tax, as he also points out to Justin. But when he spent a portion of that income buying stocks and bonds, the profits from those investments were not taxed until they were sold, if they were ever sold at all. In other words, they had not been taxed even once, let alone twice. So contra Frank Luntz, no one is being taxed just for dying, and contra Harvey Schein, it’s not double taxation. It would be exceedingly rare for anyone with enough wealth to be subject to the estate tax—that is, above the $15 million personal exemption—that did not include unrealized capital gains, unless that person’s wealth consisted entirely of money that had been kept stuffed in a mattress for decades. (Or less floridly, consisting only of a saving account, the interest on which is taxed annually, with no stocks, real estate, or other as-yet-untaxed investments.) That’s why we have the exemption in the first place, even if the level can be debated.

Whether double taxation is inherently unjust is a separate question; Paul Krugman, for one, argues that it’s not. An annual property tax is a form of double taxation, as is the proposed wealth tax. Then again, both are angrily opposed by many of the same people who loathe the ET.  That may still not justify an estate tax in the eyes of its critics, but it certainly argues for some mechanism to collect tax on those capital gains. The elimination of the stepped up basis would do so…..more effectively even that the ET, in many ways.

MAKERS AND TAKERS

There are other ways that the tax code is skewed to benefit the well-to-do over regular folks. For example, ordinary wages—which is how the vast majority of Americans get their income—are typically taxed at a higher rate than capital gains. (Wages are taxed at up to 37%, while capital gains are capped at 20%.) That’s howlingly unfair on its very face, giving them-that-has an even bigger leg up. One might argue that deductions can subsequently lower the effective tax rate, but it’s the well-to-do who benefit most from those deductions, and who exploit them most aggressively. We might well ask why that is the starting point for capital gains tax rates in the first place, but it’s actually moving in the opposite direction. Just this week, in the wake of the already egregious GOP budget that makes the 2017 tax cuts for the rich permanent, Grover Norquist was among those pushing Trump to reduce the rate on capital gains even further….and do it via executive order, despite a 1992 DOJ finding that it would require Congressional approval. “Emboldened” does not begin to describe the mood of the American right at the moment.

Defenders of that arrangement argue that the lower rate is designed to spur investment, which theoretically helps everyone. (I’ll get to that in a moment.) But that’s specious. Venture capitalists and other investors hardly need incentives to try to make money, let alone enormous advantages from the federal government handed out to them like Christmas candy. As the economist and New School professor Darrick Hamilton says in the film, “Well beyond revenue collection, taxes are used to strategically direct resources in ways to promote economic activity. The big question is for whom?”

(Another frequent and deceitful attack on the estate has to do with the threat it supposedly poses to family farms. You can read our demolition of that fairy tale here, on the Death & Taxes Substack, which Justin and I also write, and which, ahem, I highly recommend.)

It’s a cruel joke that the wealthy—and their surrogates in the GOP—often argue that the rich pay too much tax, and carry everyone else. For example, you often hear that 47% of Americans don’t pay any federal income tax at all. And that’s true…..because they live hand to mouth and don’t make enough money even to be subject to federal income tax. Meanwhile they pay sales tax, state and local taxes, Social Security and Medicare withholding, and other regressive taxes at rates that are, for them, punishing. (Mitt Romney infamously cited that figure in the 2012 presidential race, albeit caught doing so on hidden camera, while speaking to a bunch of rich Republicans.)

We also hear that the richest 1% of Americans pay 40% of all federal income tax. Again, that’s true….but is wildly misleading. OF COURSE the rich pay most of the federal tax revenue, as calculated in sheer dollars, because they’re the ones with the money. The truly pertinent metric is the per capita tax rate. There the best estimates (which is to say, a 2021 White House report) show that the wealthiest 400 families in America pay an average rate of 8.2%, while the average American pay 13%, thanks once again, largely to differences in the way that wages are taxed versus capital gains, and the number of loopholes that the rich can exploit. As reported by Americans for Tax Fairness, a conservative lobbying group no less (!), Bezos paid zero federal income tax in 2007 and 2011; Musk paid zero in 2018; Bloomberg has paid zero several times; and Soros paid zero three years in a row.

So who exactly is carrying whom?

BUY, BORROW, DIE

Another wrinkle that the very rich use to reduce their tax burden, or eliminate it altogether, is a perfectly legal dodge commonly called “buy borrow die.”

Imagine a billionaire—let’s call him, oh, I dunno, Leon Smuk. Smuk is so rich that he doesn’t need any “income” per se. He’d have to pay tax on that! Instead, he uses his vast wealth as collateral for loans from banks or other lending institutions: billions of dollars in loans annually, even. As loans, those billions are not subject to tax at all. (That’s why a guy like Smuk might pay exactly zero federal income tax in a given year.) He then pays the loans back with profits from his businesses, over time, then takes out more loans whenever necessary. When he dies, because he’s never cashed in the appreciation on his ever-growing personal wealth, no capital gains taxes are due on the assets he passes on to his heirs because of the stepped up basis. And those heirs can continue to use the buy-borrow-die mechanism to do the same thing, in perpetuity.

Diabolically brilliant no? But what do you expect when the richest citizens have the most say in our political decision-making, other than the creation and perennial enhancement of a system that benefits them the most?

To that end, the battle over the estate tax and tax policy at large is part of a much deeper political struggle.

As I wrote in last week’s blog, and elsewhere, at the heart of the outrageous tax cut for the wealthy that the Republicans rammed through last week is the notion of the American Dream—the hallowed idea that, in this country, anyone can achieve anything they want if they just work hard enough. It’s an idea fundamental to the very founding of the United States, in contrast to the hidebound, class-oriented regimes of the Old World. It is also central to the concept of supply side or “trickle down” economics, the Reagan-era claim that lowering taxes on the wealthy will help everyone by stimulating the economy.

But over the past 45 years, supply side has been thoroughly discredited as (at best) wrong and (at worst) an outrageous con. All the Reagan-era tax cuts for the rich did was massively shift wealth upward. “Twenty percent of all wealth in America is owned by the top 0.1%,” notes former Roosevelt Institute CEO Felicia Wong in the film. “That’s close to four times as much as when Reagan took office. So wealth has not trickled down. Wealth has been vacuumed up to the top.”

Yet the myth of supply side still endures because it is such a useful tool for the plutocracy to deploy.

Meanwhile, social mobility in America has radically declined. AsAlissa Quart, the author of Bootstrapped: Liberating Ourselves from the American Dream, explains in the film, someone born in the 1940s had a 92% chance of bettering their parents’ circumstances, while a person born in the 1980s had only a 50% chance. “Most of the people who succeed massively in this country started off on second or third base,” Quart says. “If you think you’re self-made, call your mother.” 

And that’s not by accident. Deliberate decisions have been made to make America a more and more hereditary society, ranking far below other advanced democracies in terms of social mobility. On that count, a 2020 study ranked Denmark first, with the US a lowly 27th.

So much for the American Dream.

But supply side is part of a longstanding and appalling attack on the poor in America. Conservatives habitually rail about welfare and other social services for those at the bottom of the economic ladder, whom they accuse of being “takers,” without ever acknowledging (or even understanding) the massive assistance the government hands out to middle class and wealthy people and corporations via the tax code.

“When we offer a tax break to a corporation,” Darrick Hamilton explains, “that’s an investment. So on a government ledger, a tax rebate, a tax subsidy, and a tax collection are essentially the same thing.”

“I think so many of us have a hard time just recognizing how we’re all on the dole, in a way,” says Princeton sociologist Matt Desmond, author of Poverty: Made in America. “How we’re all supported by the government. Sometimes that comes in a social insurance program—Social Security. Sometimes it comes in the form of some food stamps. But sometimes it comes in the form of a tax break. Tax breaks take about $1.8 trillion a year from the government. That is more than double everything we spend on the poor.”

HELP YOURSELF

The question of who benefits most from government assistance spirals out in many relevant directions.

Harvey Schein was very proud of being the classic “self-made man,” but that elides the structural advantages that helped his rise: what the progressive activist Chuck Collins calls “the wind at one’s back.” (Chuck’s personal story, as an heir to the Oscar Meyer meatpacking fortune who gave his entire inheritance away when he was in his early 20s, would make a helluva documentary in its own right.)

Harvey had plenty of headwinds, being born poor and Jewish, reared during the Depression no less, and much of his success was indeed due to talent and very hard work. But he also had some advantages that others did not, both generally speaking (as a white male, his Jewishness notwithstanding), and structurally, like the GI Bill that sent him to college and law school. The GI Bill was a massive taxpayer-funded social welfare program that boosted the lives of millions of veterans, but is often disregarded when these “self-made men” describe how they succeeded purely by the sweat of their own brows. As Justin says in the film, “I realized that when my dad griped about the government giving a handouts to poor people, it already had—to him and millions like him. And that assistance and the whole post-war economic boom was paid for in part by increased taxation.”

As Justin told me when we spoke this week: “This idea of the self-made man is so ingrained into our lore. But if you look past that myth, my dad’s rise was part of a generational and societal rise in postwar America. In addition to education, the GI Bill also gave millions of mostly white veterans low interest loans to buy homes, which grew in value and served as the foundation for generational wealth.” (To that point, Death & Taxes also delves into the egregious racial wealth gap in America, including its historical sources and contemporary implications.) “And beyond that, postwar America invested in infrastructure, and in the middle class, and created this amazing economic opportunity—what Krugman calls the Great Compression.”

As Chuck Collins says, “We don’t see the public investments that make individual wealth creation possible. We think that individuals just land on the earth and come up with a really good idea and next thing you know they have built this wealth.” In contrast to self-made man narrative, Collins offers an alternative tale from a wealthy person:

“Well, I was born in this circumstance, I was able to get access to these resources. I was able to go to educational institutions built with public money. I operate in a property rights system protected by taxpayer funded institutions that protect my property rights. I transport my product on publicly funded infrastructure and on the Internet which was larger funded by public investments and enhances the value of my company.”

That dynamic was at the center of the controversy over Barack Obama saying in 2012, “You didn’t build that,” a line conservatives jumped on as an affront to “rugged individualism” and the whole concept of private enterprise. But Obama was referring to the roads on which goods travel, as an example of the public assistance that private business utilizes and usually takes for granted, rather than seeing it as help from the government. (Naturally the GOP was keen to distort his remarks.) Collins again:

I would say, praise the individuals who worked hard, got up early in the morning, and brought their personal talents and gifts to creating wealth. But let’s not forget that that would not happen without this web of public investment and institutions and coaches and mentors and teachers and all these things that are largely paid for by taxes. So part of understanding the case for an estate tax is to see that web of public investments and address this powerful myth of individual wealth creation.

One of the most common reactions to the film from those on the right—usually launched very accusingly—and to the beliefs of wealthy progressives in general, is: “If you think the system is unfair, nothing’s stopping you from paying more tax.” Accordingly, Death & Taxes also touches briefly on philanthropy.

Charitable giving, while admirable, is no substitute for public policy, as it is still a matter of rich people deciding where to spend their money, rather than a democratic decision-making process about what we collectively as a nation value and want to fund. The film also notes the weaponization of charitable giving as another tax avoidance strategy. As James Bandler told us, rich people are even able to preserve their fortunes by making tax deductible donations to think tanks—technically charities, if organized as a non-profit entity—that do nothing but lobby for their right to preserve those very fortunes. How’s that for another neat trick? In other words, charity begins at home—but too often ends there as well.

HOW THE RICH GET RICHER (AND THE POOR GET THE PICTURE)

You may be beginning to get the idea that the very well-to-do have lots of ways to get around paying taxes, both on the money they pass on to their heirs, and in general. And you’d be right. But is that really a problem? Today the richest 1% of Americans hold more wealth than all of America’s middle class combined, but so what? What’s wrong with someone accumulating a fortune—even a massive one—if we had a system where their wealth was adequately taxed and not compounded at the expense of others? (NB: Currently we do not have such a system, contrary to what the GOP would have us believe.)

Well, there’s nothing wrong with that—oh, except one thing. As Robert Reich says in the film, one of the chief functions of the estate tax, far beyond simple revenue collection, is as a brake on the insidious influence of wealth in politics.

Reich notes that over the next few decades we will see the largest intergenerational transfer of wealth in American history: about $124 trillion (quadruple the figure he cited when we interviewed him in 2018), passed from the Baby Boomers to Gen X, the Millennials and Gen Z, through 2048. “If more and more wealth can be accumulated and, and provided to heirs without ever paying any taxes, then we are on the way to a permanent aristocracy in America.” 

That’s why, as Chuck Collins says, supporters of an estate tax are not primarily concerned with “ordinary” rich people, not even multi-millionaires. The real problem is the uber-rich: not the 1% but the 0.1%. Even with all the complex offshore investments, tax shelters, trusts, REITS, GRATS, Roth IRAs, and other perfectly legal financial instruments of the so-called “wealth defense industry,” the estate tax still threatens their fortunes—as it should. Because it’s not as if those folks sit on their piles of cash and don’t use it to influence public life in the ways that they want, even in defiance of the will of the majority.

“I don’t begrudge the wealthy their wealth,” Darrick Hamilton told us. “What is problematic is the political power that their wealth allows them to wield in an undemocratic way.” From Elon Musk to Bill Ackman to the Koch Brothers (and yes, to George Soros and Mike Bloomberg too), the uber-rich are VERY involved in using their wealth, power, and influence to direct the policies of the US government, and to choose the elected officials who lead it. I also feel compelled to note here that their efforts overwhelmingly favor the Republican Party. As the nonpartisan research group Open Secrets reports, conservative groups dominate the dark money game, accounting for 86 percent of outside spending from SuperPACs.” And not surprisingly, “The candidate with more money wins more often than not.”

Amy Hanauer, Executive Director of the Institute for Taxation and Economic Policy says, “It’s hard to have a society when a teeny tiny share of it is just gobbling up the bulk of the wealth. In one recent year, three billionaires had as much in assets as the bottom 50% combined.” Even Frank Luntz acknowledges the inherent dangers to democracy; his issue is only that he believes the estate tax is too extreme a remedy. (“Confiscatory” is one word he uses. “Stealing” is another.)

It would be very easy to have a fair, equitable system in which people could work hard, save money—even a great deal of money—and pass it on to their children and grandchildren without a crushing tax burden. Almost everyone would support that. Already under the current system, per above, the exemption of the first $30 million that a married couple leaves behind is a hefty amount of money to pass on to one’s heirs, arguably fulfilling the American Dream. The challenge is to create such a system that does not also warp democracy by giving the wealthy a chokehold on it. An estate tax alone—or an end to the stepped up basis, as you don’t need to do both—would not solve this problem: we also need campaign finance reform, and limits on political spending. But it would be a start. I’ll quote myself, from my 2024 book Resisting the Right:

When it comes to making one’s voice heard in politics, the wealthy will almost always be louder than anyone else. But to allow the rich to use their money to influence the electoral system in the most extreme and obscene manner, and to buy the loyalty of the so-called public servants who arise out of it, is a recipe for democratic self-destruction.

Or more pithily, as Supreme Court Justice Louis Brandeis supposedly said way back in 1941, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” (There is some doubt that he ever said that, or at least those exact words, as popularized by Ralph Nader, but it’s inarguably true.)

SUNSHINE STATE OF MIND

In the late 1980s, Harvey Schein retired from the business world—early, in fact. Despite his Type A personality, he was not a guy who wanted to die at his desk. He ended his career working for Rupert Murdoch, whom he found ungrateful and disagreeable. “We thought that Rupert was afraid of him,” Justin’s mother Joy says in the movie. “I went to a party one night and Rupert came over and brought me some wine and said about Harvey, ‘He’s a dangerous man, isn’t he?’ And I smiled. I wanted to say, ‘Not as dangerous as you.’”

All his life, Harvey had been meticulously involved in doing his taxes every year, reveling in it in fact, spending months—by his estimation—doing the paperwork to prepare the returns for his accountants. (“I think I probably know how to do taxes better than they do,” as he proudly tells Justin in the film.) Harvey was once audited, and spent so much time with the IRS auditor that they began going out to lunch and wound up becoming friends. Now, in retirement, he had even more time to devote to managing his investments, and to engineering his taxes to reduce what he owed and build his estate to pass on to his sons.

But in another irony, the wealth Harvey built over a lifetime was nowhere near of the wealth of today’s super-rich. The money he made as a CEO is dwarfed by the astronomical salaries of today’s corporate executives, relative to the rank-and-file workforce…..like an old ballplayer huffing at the salaries that today’s star athletes command, even when they may be of lesser talent. (In the 1970s, the average CEO salary was 20-30 times that of a typical worker in the same company. Today a contemporary CEO makes about 200 times as much.)

After he retired, Harvey and Joy became snowbirds, splitting their time between Manhattan, Connecticut, and Sanibel Island on the Gulf Coast of Florida. “He loved the sun and the tennis,” Justin says in the film, “but most of all, he loved that Florida had no state income or estate tax.” But to get those benefits, Harvey and Joy had to become legal residents of Florida and spend more than half the year there—literally six months and a day, at a minimum, with the IRS going so far as to check daily calendars. (Harvey even tried to get Justin and Mark to relocate to the Sunshine State, to reduce their own taxes.) But Joy—once a professional dancer with Martha Graham, and on Broadway—longed to be in New York City, her hometown, where she continued to study and perform tap. For ten years she put up with the snowbird arrangement, at Harvey’s insistence, until the disagreement eventually caused the two to separate. The master negotiator had blown the biggest deal of his life. As Justin says poignantly in the film, “He chose lower taxes over his wife of 40 years.” 

Come see the movie to find out what happened.

Next week, in part two of this essay, we will dig into the filmmaking process behind Death & Taxes.

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Photo: Harvey and Joy Schein on their wedding day, 1962. Credit: CBS Records.

Death & Taxes opens theatrically at the IFC Center in Lower Manhattan on Thursday July 17—featuring a Q&A with director Justin Schein—and will run through the 24th. Other special guests will appear throughout the week. Other cities and dates (with more to come):

Los Angeles: Laemmle Royal, July 25-31

Sebastapol: Rialto Sebastapol, August 4

Berkeley: Rialto Elmwood, August 5

San Francisco: Vogue Theater, August 7