Tag: taxes

Death & Taxes: A Documentary Film (Part 2)

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Last week in these pages, we began looking at Death & Taxes, a new feature documentary being released in theaters this week. The film tells the story of director Justin Schein and his father Harvey, a record company executive obsessed with passing his wealth on to his children, and in particular, with the estate tax as a barrier to that. The documentary is both a poignant personal film about a charismatic—if combative—father and his relationship with his younger son, and a piercing look at wealth inequality in the United States today.

Death & Taxes tells this nuanced story through a brisk mélange of cinema verité, interview, archival footage, and stills and home movies going back fifty years, along with animation by the amazing Italian artist Robert Biadi, all set to the fantastic Mingus-influenced score of composer Bobby Johnston. Among the interviewees 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; ProPublica journalist James Bandler; former CEO of the Roosevelt Institute Felicia Wong; Maven Collaborative economist Anne Price; former Reagan Budget Director David Stockman; Trump economic advisor Stephen Moore; and authors Alissa Quart and Anand Giridharadas.

I was honored to be invited into this project and spent eight years working on it as a producer and co-director. I signed on because it sounded fascinating, and above all, because it struck me as an important topic for the whole country and a clever way to dig into it. How else do you get people to watch a documentary about tax policy?

After having its world premiere at the DOCNYC film festival last fall, Death & Taxes is now about to roll out theatrically across the country. 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 the evenings of July 21 and 22, with other special guests appearing throughout the week. (See end of blog for other cities and dates.)

We are up against the Smurfs movie, which opens that same day, so let’s show those blue bastards who’s number one at the box office.

DECLARE THE PENNIES ON YOUR EYES

The estate tax is a levy placed on the money and assets you leave when you die. For that reason, its foes (led by the Republican Party) have branded it “the death tax,” and over the past several decades, mounted an aggressive campaign to demonize it. That campaign has worked, as those foes have succeeded in convincing the bulk of ordinary Americans to oppose the tax, even though it affects only a tiny percentage of our richest countrymen—about 0.1%, those with fortunes more than $30 million dollars. And those uber-wealthy Americans almost always have accountants and lawyers overseeing complex financial plans to help them avoid the estate tax altogether.

Broadly speaking, the ET is a form of inheritance tax. But what distinguishes it is that it’s paid by the estate of the deceased before any money is disbursed, not by the heirs—hence its vulnerability to being mischaracterized as a “tax on dying,” another popular conservative talking point. A straight tax on inheritance, which the heir would pay as if it were any other form of income, no different than wages or stock dividends or gambling winnings, would be an easy-to-understand system that would feel implicitly fair and not carry the stigma of that very effective slur. Even some of the conservative economists we interviewed for the film, like the Heritage Foundation’s Stephen Moore, conceded that they would be fine with that. (Or so they say now, in the abstract.)

But however it is configured, the estate tax serves a crucial purpose, both in taxing as-yet-unrealized capital gains that have thus far gone untouched by the IRS, and in acting as a brake on dynastic wealth and its toxic effect on our democracy. (For details on both, see part one of this essay.) There are some wealthy people who strongly support the estate tax, like the progressive activist group known as the Patriotic Millionaires, and tycoons like the late Bill Gates Sr. and Warren Buffett, who famously spoke about how unfair it was that he paid a lower effective income tax rate than his secretary. Ironically, because its foes have been so successful in attacking the estate tax, and the uber-rich so successful in avoiding paying it, the tax itself is almost moot. However, what the debate around it reveals remains profound.

It’s not news that the relentless, decades-long shifting of wealth upward to the top 1% has created an alarming, Gilded Era-degree of wealth inequality in the United States, and an attendant number of social, political, and economic ills. Chief among these is the vast power of the wealthy to influence our political system, allowing them to institute still more tax and economic policies shifting wealth even further into their coffers, creating a vicious circle that threatens American democracy itself.

That’s why Harvey Schein’s story is so pertinent to our present moment.

A FILM WITH A MIND OF ITS OWN

Justin’s father rose from poverty in Depression-era Brooklyn to become an enormously successful record company CEO beginning in the ‘50s and continuing into the ‘80s. Driven by the privation of his youth, he was also diligent in investing his money and building his wealth. To that end, he felt the estate tax was inherently un-American, interfering with his rightful ability to pass that accumulated wealth along to his children and grandchildren. As Harvey often told Justin and his older brother Mark, he wanted them to have the financial freedom to do whatever they wanted with their lives….and thanks to his hard work and diligence in saving and investing, he succeeded. Ironically, what Justin wanted to do with his life was to be a documentary filmmaker and question the broader implications of what his father had done.

“The film started in a different place with a different idea, as often documentaries do,” Justin told me for this blog.

“In the ‘’90s I was interested in making a film about my parents. I came home from grad school in California and saw that their relationship had really shifted as my dad had retired. They had always had their separate spheres of influence, but now he was home all the time. So I started documenting them, partly because I document things obsessively anyway. And part of their conflict ended up being around taxes, in that my dad had insisted that they move to Florida for more than half the year so that they could take advantage of the lower taxes there. My mom, being as generous as she is, put up with it for a long time, even though she was a dancer and wanted to be in New York. That was a real conflict, because for them to come to a compromise would threaten their lower tax status. And that brought out a lot of anger in my dad and resentment of her dancing.”

“Things came to a head in 2001 when my mom decided that she wasn’t going to go down to Florida for the winter. Dad refused to compromise: he thought she was just bluffing. But she wasn’t, and they separated. So I filmed him driving down to Florida alone, and her starting a new life in New York, and it was fascinating to see how they were dealing with that. But after about a year of filming it became clear that, while a good film needs conflict, this was too much conflict; my family was kind of in chaos, and my brother and I really wanted to help our parents reconcile. So I put the film aside for more than a decade.”

“My dad and I often fought about politics and about taxes. Then in 2017, about a year after he died, when the Republicans had control of the House and the Senate and the White House, there was a real possibility that the estate tax might be repealed altogether, and I wanted to explore that. So I went out asking people I knew—people who had wealth—what they thought about it. But nobody wanted to talk on camera, or even off camera. And I realized that this footage that I had with my parents about their marriage and my dad’s life also really intersected with the tax story, so I decided to try to use that as a foundation for this film. Which was very scary. But that’s why I found a partner in you, because I don’t think I would have had the courage to do it by myself. “

In the process of making the film, I had tremendous respect for Justin’s willingness to open up about this very personal and almost taboo topic. (Most Americans will tell you about their sex lives more readily than they’ll talk about money.) Those readers of this blog who know Justin personally know that he is as self-effacing, as modest, and as private as humanly possible: the last person you would ever expect to make a personal film, though somehow many of his films (Down on Polk Street, No Impact Man, Left on Purpose, and this one) somehow wind up there. As filmgoers, we are the better for it.

“I spent many sleepless nights staring at the ceiling wondering what I had gotten myself into,” Justin told me. “But I’ve spent so much time making films about other people, many of them in precarious situations, people who didn’t have resources and kind of relied on the filmmakers to get their story out. I felt like this was an opportunity to talk about this off-limits subject of privilege and wealth that often doesn’t get spoken about.”

“Even before 2017, it was clear that the ability for people to work hard and succeed in America was becoming harder and harder, and the question was, what was causing that? This huge wealth disparity is growing, and we’re cutting social programs, while this tiny group of people, including me, are becoming wealthier and wealthier. So how do we fix that? I think taxes are a big part of it, and the estate tax in particular, just because it’s symbolic, and because it is specifically about the passing on of wealth. The modern estate tax in America was created to deal with a very similar situation to what we have now: it was created to address the robber barons at the turn of the last century. And we’re back right in that same place.”

GREEKS BEARING GIFTS

Death & Taxes was a complicated film to make in so many ways: as an intimate family story, as a first person essay film, as a film about the Sahara-dry topic of taxes, and as a film that sought to weave that social justice narrative (what in the editing room we called “the term paper”) with the personal one. That’s why it took eight years to make, following the decades of filming—and thinking about it—that Justin had done.

In some ways, it was two films, each stylistically at odds with the other. Some people even advised us to break it in half, though we felt strongly that the interweaving was what made each half stronger, the whole-is-greater-than-the sum-of-its-parts wise. Even then we struggled with it for a long time, trying to strike the right balance, and to manage the pace and the crosscutting. Was it an issue-oriented Frontline-style documentary with a family story rolled in, or a family portrait that happened to discuss tax policy along the way? As I like to say (and Justin is surely tired of hearing), we knew that the film was a Trojan horse….but we were never sure which part was the horse and which part was the soldiers.

“It was really challenging,” Justin says. “Just thinking about how to make a film about taxes was daunting, and trying to make it entertaining and watchable was another challenge. That’s why I tried to think a little bit out of the box, to come up with unusual ways of telling the story. That’s where Roberto’s animation came in, and where we decided that we should think about unorthodox ways of using archival footage. Bobby’s music was another important aspect that adds another layer of complexity.”

Besides Justin, Roberto, Bobby, and myself, the Death & Taxes team included our brilliant editors Purcell Carson and Brian Redondo, and our intrepid producer Yael Melamede, with additional editing by David Mester and additional cinematography by Scott Sinkler and Richard Chisholm. We were also fortunate to have as a consultant Alan Berliner, one of the most accomplished and lauded documentarians in the history of the form, and a master of the personal film.

Justin again: “Interweaving the story of my dad’s life and the history of the estate tax in a way that was interesting and made sense was hard, and I think that’s where having great editors like Purcell and Brian and other collaborators that aren’t so personally attached to the material comes in, and trusted people who can look at cuts. We also leaned on the style of Alan Berliner, who was a great influence on me, because he tells intimate stories in really entertaining ways. So it was a collage of people and of talents. But I do think that my dad’s life really did parallel things happening in America at large, and we had a clear throughline between his life and his choices—starting with the Depression and the New Deal and the GI Bill and moving into trickle down and Reagan—that mirrored a lot of what went on with wealth and taxes in America. So in some ways, that made it a little easier, I think.”

For me as Justin’s collaborator, the process of making this film was so organic and pleasurable, particularly compared to some other films I’ve worked on over the past thirty years, which were more corporate or rigid, sometimes understandably so, because of time or budgetary constraints or commercial dictates. But Death & Taxes was made exactly the way Justin and I had been taught to make films in the Graduate Program in Documentary at Stanford, by mentors like Kris Samuelson, Jan Krawitz, Jon Else, the late Henry Breitrose, and others. It was a pure creative experience to have the time and the freedom to think and to try things and then to throw them out if they didn’t work and then try something else until the film found its final form. That is rare, in my experience, and I think it shows in the quality of the finished film.

“Well, it was so personal,” Justin told me, “so the idea of compromise or putting out into the world something that I felt unsure about, or that we didn’t give its due, was not feasible for me. We really did try to be patient, and a huge aspect of that is the fact that we had the money to do it. So Harvey had his hand in that as well.”

All of us who worked on the film appreciated that irony. But at the same time, people should understand that this wasn’t a film with an enormous budget, and certainly not an unlimited one. When Justin says that we had the money to do it, so much of that was in-kind on his part: as a director and producer and cinematographer, he worked pro-bono, which was the only thing that made it do-able. So yes, we had resources, but it was still a lean, efficient, economical production.

I think Harvey would have appreciated that.

BOUQUETS AND ONE BRICKBAT

Thus far, reaction to Death & Taxes has been vigorous and positive. Film Threat’s Kent Hill called it a “probing, intimate, and politically charged documentary” in which the two forces in the title “collide with tragicomic precision.” 

Death & Taxes doesn’t just examine America’s estate tax; it begins an uncomfortable dialogue about wealth, legacy, ideology, and the price of chasing immortality through money. At the core of this film is the complicated relationship between Justin Schein and his father, Harvey Schein, a self-made millionaire whose obsession with the so-called “death tax” drives the narrative forward like a family thriller. What begins as a son’s attempt to understand his father’s worldview becomes a multi-generational reckoning with the American Dream itself.

Calling Justin “our reluctant guide through a minefield of inherited trauma, both emotional and financial,” Hill opines that the film shows “that this isn’t just about billionaires and spreadsheets, it’s about how society defines fairness, merit, and responsibility.” He also praises the film’s “willingness to show contradictions.”

As the story reaches its revelations, we, the viewer, are presented with the most haunting of questions. What are we really leaving behind? Death & Taxes is about more than inheritance. It’s about the cost of building walls around wealth, even when it means keeping out your own family. If anything can crush humanity to dust, it will be our frantic pursuit of the all-mighty dollar.

(You can see more rave reviews here, here, and here.)

But it hasn’t all been plaudits. The right wing, pro-Trump American Spectator recently ran a savage piece that barely mentioned the filmmaking, only its outrage at the economic arguments that Death & Taxes makes…..and without even bothering to try to refute them. Hmmm, very telling.

Per above, in the film Justin explicitly notes the irony that it was Harvey’s generosity that allowed him to have this career as a filmmaker, and even to make this very film. But that has not stopped right wing critics from attacking him over it, as if they were the ones to spot the irony. You just can’t please some people. Republicans especially.

To the issue of Justin’s willful vulnerability in making this film, thus far our fears that people will reject a film by a rich white guy who thinks his taxes are too low—a fear that is also openly articulated in the film—have proven unfounded, at least from the left. I am biased, of course, but my surmise is that viewers pick up on Justin’s good faith and his positive intentions. It’s only the right—the same people who are perfectly fine with wealthy people using their resources to advance conservative political causes—that wants to attack him on that front. Hmmm, very telling. Oh, wait—I said that before, didn’t I?

“I think that the film is not a polemic,” Justin says. “My first and most important criterion for getting it into the world is that I feel like I’m being fair and not trying to push an agenda even while expressing my own opinions. My intent is to raise questions and show the complexity. That’s why my dad was so perfect as the voice of the position that the estate tax and other taxes like it are excessive or ‘un-American,’ because you really see where he’s coming from in a way that gets behind the stereotypes. His own life experience brought him to that view, but it also came from a real place of love and desire to pass on the fruits of his hard work. He was thinking about his children and grandchildren. Now that I have kids myself, I’m beginning to think about inheritance in a different way. But it’s important to me that my kids get more than just financial security, that that they grow up in an environment where their friends and their neighbors and everyone in the country has genuine opportunity to succeed, and where there is economic justice.”

Again, I’m biased, but I think that the film does precisely what we set out to do with it, which is to be informative and thought-provoking and to stimulate debate, in hopes that the audience will come to its own conclusions. The movie has a point of view, and doesn’t purport to offer some sort of faux objectivity, but still presents all sides in a fair way. After all, we have Frank Luntz and Grover Norquist and Stephen Moore and David Stockman in it, and we let them make their arguments without using them as straw men, striving to let viewers make up their own minds. Isn’t that how democracy is supposed be?

The conversation around Death & Taxes would have been very different if November had gone the other way. (“I would have taken it,” as Justin says.) But the film will still be around if and when we can arrest our country’s current decline and the ongoing democratic emergency and get back on a rational path. In fact, in that happy event, the arguments that the documentary makes will be more valuable than ever. 

Please go see it if you can.

********

Photo: Justin and his father Harvey at the former’s graduation from Johns Hopkins, 1990. Courtesy of the Schein family.

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) include:

Los Angeles: Laemmle Royal, July 25-31

Sebastapol: Rialto Sebastapol, August 4

Berkeley: Rialto Elmwood, August 5

San Francisco: Vogue Theater, August 7

Death & Taxes: A Documentary Film (Part 1)

Published on by thekingsnecktieLeave a comment

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.

********

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

The Republicans’ Reverse Robin Hoodery

Published on by thekingsnecktie2 Comments

Hey, remember all those stories about how Republicans, led by President-for-Life Donald Trump, were considering raising taxes on the rich? For the past few months the MSM has been full of them, eagerly pushed by the GOP itself. (You can read three of them here, here and here.)

But anyone with even the brains of Ray Bolger’s Scarecrow could have told you that those stories were utter bullshit, mere misdirection ahead of what we all knew was coming, and just this Thursday, did.

In the wee pre-dawn hours of May 22, when almost no one was watching, the GOP-controlled House rammed through a sweeping piece of legislation called—and as Dave Barry likes to say, I Swear I Am Not Making This Up—the One Big, Beautiful Bill. The vote was a whisker-thin 215-214 with every Democrat voting against, joined by two renegade Republicans (Reps. Thomas Massie of Kentucky and Warren Davidson of Ohio), plus one voting “present” and two AWOL altogether, including one who fell asleep.

Does the bill raise taxes on the rich? Hell no. On the contrary, it makes permanent the massive 2017 tax cuts from Trump’s first administration, which otherwise would have expired this year, and which overwhelmingly benefit the richest Americans and corporations. At the same time, it sadistically guts programs that tens of millions of ordinary Americans rely on, like Medicare, not to mention nutrition programs for poor children, funding for cancer research, FEMA, and many other long-standing and invaluable government services.

So the notion that Trump and the Republicans would not do that, and might even raise the share of our collective tax burden that the wealthy bear, has proven to be so much smoke-and-mirrors. (I’m shocked!) Can’t blame them for trying, though: that sort of trick has worked pretty well for them so far.

The other thing that ought to be patently clear is that the Trump-led Republican Party is a truly reprehensible organization, and has just carried out one of the most shameless con jobs in postwar American history, one that represents a fundamental shift in what this country aims to be.

THE PRIME DIRECTIVE

What happened this week—and will be completed when the Republican-controlled Senate inevitably passes some similar version of the “OBBB,” ahead of reconciliation between the two chambers—was the culmination of the entire effort to put Donald Trump back in office. Indeed, it is the whole reason that Donald Trump was elected in the first place. As Jonathan Chait writes in The Atlantic, if enacted, this “massive piece of legislation” would represent “the largest upward transfer of wealth in American history.” And that “is not a side effect of the legislation, but its central purpose.”

From the very start of his political career, this has been the chief goal of the GOP in supporting Turmp™ and represents the only thing that party really stands for: increasing the wealth of its richest members. It’s also a big fat middle finger to the rest of us, including those tens of millions of Americans who believed the GOP propaganda and voted against their own self-interest by supporting Donald and the Republican Party.

As a previous Republican president once said, “Fool me once….shame on….can’t get fooled again.”

Or maybe that was Pete Townshend. The early 21st century is a little fuzzy for me.

Yes, I understand very well that there was and is an unholy alliance between the GOP’s plutocratic faction, which represents its old school base, and the so-called “populist” MAGA wing, which is animated less by stock portfolios than by white nationalist grievance, xenophobia, and a desire to punish everyone they despise, which includes immigrants, Brown and Black people in general, the LGBTQ+ community, liberals, women, Springsteen, etc.

But the plutocrats ultimately are the more important partner in that coalition because they are the ones with the money. It’s true that a some of those plutocrats share those retrograde MAGA opinions on social issues, but many don’t, and many others just don’t care one way or the other. At the end of the day they’re motivated only by the bottom line, and that is precisely what was in play this week with the House budget. As we saw in the H1B visa fight between the Bannonite and Muskovite factions even before Trump was re-inaugurated, the rich guys usually get what they want.

The plutocrat wing of the Republican Party got behind Donald Trump specifically because he would deliver to them the permanent tax cuts for the wealthy that are their prime directive. Everything else—abortion, guns, homophobia, vaccines, deportations—is what apostate GOP staffer Mike Lofgren calls “rube bait.”

MIKE JOHNSON AND HIS MERRY MEN

The other thing worth noting is how this armed robbery flies in the face of Republicans’ longstanding claim to be “the party of fiscal responsibility.”

In the past, this blog has discussed the shameless hypocrisy of the GOP’s so-called “deficit hawks,” who regularly scream bloody murder over what they claim is the impending collapse of these United States because of the deficit…..but only under Democratic administrations. When they are the ones in power, they are as reckless with the taxpayers’ money as a drunken sailor on shore leave in Hamburg.

Non-partisan experts estimate that Trump’s 2017 tax cut added some $7 trillion to the federal deficit; those experts now estimate that this new bill will add another $4 trillion over the next decade. (Some estimates are higher.) In a feeble attempt to pay for these cuts, the new budget bill slashes funding for Medicaid, which provides healthcare for poor and disabled Americans, and adds new work requirements for its remaining recipients (you, lazy cripples!), as well as for people receiving aid from SNAP, the Supplemental Nutrition Assistance Program, commonly known as food stamps. But those requirements are really just a mechanism for booting people off the program. As The Guardian’s Chris Stein writes:

The Urban Institute thinktank, based on an analysis of a similar policy, believes those (requirements) would cost as many as 5.2 million people their health insurance coverage, largely because of enrollees not understanding the requirement or being unable to prove their compliance. People who depend on the Supplemental Nutrition Assistance Program (SNAP), which helps pay for groceries and other essentials, would also face work requirements beginning in October 2027. The left-leaning Center on Budget and Policy Priorities estimates those would put about a quarter of SNAP recipients, or nearly 11 million people, at risk of losing their benefits.

The GOP bill cuts Medicare by about $500 billion, and is expected to cause at least 8.6 million Americans to lose their Medicaid coverage. According to the historian Heather Cox Richardson, “Cuts of about 30% to the Supplemental Nutrition Assistance Program would be ‘the biggest cut in the program’s history,’ Ty Jones Cox, vice president for food assistance policy at the Center on Budget and Policy Priorities, told Lorie Konish of CNBC. They would cut about $300 billion from the program through 2034. More than 40 million people, including children, seniors, and adults with disabilities, receive food assistance.”

This is truly a case of reverse Robin Hoodery. (Watch your lupins, people.)

Carl Davis, research director for the Institute on Taxation and Economic Policy, writes:

The Congressional Budget Office recently predicted that the bill would put the nation on a path toward a future where 13.7 million fewer people would have health coverage. Of that amount, 8.6 million would lose coverage as a direct result of provisions contained in the bill, especially those slashing Medicaid. Another 5.1 million would lose coverage because of the expiration of temporary enhancements to the Affordable Care Act premium tax credits which, contrary to what we have seen in past Congresses, this current Congress appears to have no interest in making room for in its legislation.

The Republicans’ response, Jonathan Chait explains, “is to fall back on wordplay, pretending that their scheme of imposing complex work requirements, which are designed to cull eligible recipients who cannot navigate the paperwork burden, will not throw people off the program—when that is precisely the effect they are counting on to produce the necessary savings.”

Not surprisingly, this is not what the American people want. Gallup reports that a large majority of Americans—58%, an all-time high—believe lower-income people pay too much in federal tax. By coincidence, the exact same share of respondents, 58%, believe rich people pay too little. (70% also believe corporations pay too little.)

Right wingers also want to cut those programs out of sheer cruelty, because the Horatio Alger myth on which their economic ideology depends requires a willfully blind adherence to the fantasy of bootstrapsism to rationalize it. This has always been the GOP’s ur-con, and with the OBBB they are trying to pull it yet again.

Some believe that the dynamic works this way round: that cutting taxes is a deliberate ploy to necessitate cutting spending—on social services; not on the Pentagon of course!—which is what really thrills the far right zealots. Personally I think that the plutocratic impulse for tax cuts for their own sake is the true driving factor, but in a way, it’s a chicken or the egg argument. The relationship within the right wing ecosystem is symbiotic irrespective of which way it flows.

Gifting the rich yet again while cutting crucial social services to the mass of Americans at large is plenty despicable even without taking the deficit into account, but Republican caterwauling about the deficit under Democratic administrations just adds to the outrage. This shit is so far beyond simple hypocrisy that the term no longer even applies.

But the point is that even those draconian cuts will not begin to make up for the lost tax revenue. In fact, as reported by Richardson, the GOP’s proposed budget is so egregious and damaging to the long-term interests of America’s economic health that in anticipation of it, Moody’s stripped the US of its coveted triple A rating, downgrading “US credit for the first time since 1917, following Fitch, which downgraded the US rating in 2023, and Standard & Poor’s, which did so back in 2011,” after Republican brinksmanship over the debt ceiling nearly triggered a default. In explaining its decision, Moody’s noted that if the 2017 tax cuts are extended, the federal deficit will widen, “reaching nearly 9% of GDP by 2035, up from 6.4% in 2024, driven mainly by increased interest payments on debt, rising entitlement spending and relatively low revenue generation.”

So much for Republicans’ self-proclaimed “fiscal responsibility,” so much for the lie that they won’t cut Medicaid, so much for everything except the stark reality that the Trumpist GOP is nothing more than a gang of rapacious assholes who intend to rob this country blind for their own benefit and that of their deep-pocketed patrons.

BAD TO THE BONE

So just how bad is this bill?

Using information on revenue cost and distribution by income level published by Congress’s Joint Committee on Taxation (JCT), ITEP’s Davis reports that the bill “would offer larger tax cuts as a share of income to high-income taxpayers than to either middle-class or working-class families. It also makes clear that most of the tax cuts would go to families with above-average incomes.”

What does that mean in hard numbers? According to Heather Cox Richardson, the nonpartisan Congressional Budget Office reported that Americans “in the top five percent of earners will see a tax cut of $117.2 billion, more than 20% of the tax cuts in the bill.” The highest earners, the top 0.1 percent of Americans, stand to save roughly $390,000 per year. By contrast, when both losses in benefits and  tax cuts are factored in, Americans making between $17,000 and $51,000 will lose about $700 a year. And the poorest Americans, those with annual incomes less than $17,000, will lose more than $1,000 per year on average.

Put another way, The Guardian’s Stein reports:

Taxpayers with the highest incomes will see their household resources increase by 4% in 2027 and 2% in 2033, largely due to the extended tax cuts. The poorest tax payers would see their resources drop by 4% in 2033, largely due to the downsized benefit programs, the (the non-partisan Congressional Budget Office) forecast.

If all that sounds to you like something its perpetrators might want to, you know, hide, you’d be right. (Taking food out of the mouths of hungry children so fat cats can deduct the cost of their yachts and vacation homes is usually bad politics, except in certain parts of ruby red America.)

“Most Americans are strongly opposed to all of these things, according to polls,” writes former Treasury Secretary Robert Reich, now a professor of public policy at UC Berkeley. But many Americans don’t know what’s in the bill.

That’s because of (1) distortions and cover-ups emanating from Trump and magnified by Fox News and other right-wing outlets; (2) a public that’s overwhelmed with the blitzkrieg of everything Trump is doing and can’t focus on this; (3) outright silencing of many in the media who fear retaliation from the Trump regime if they reveal things that Trump doesn’t want revealed.

The bill is so bad that even Obama weighed in on Facebook, saying:

Right now, Republicans in Congress are trying to push through a bill that would put millions of Americans at risk of losing their healthcare. They want to cut federal funding for Medicaid, take away tax credits that help more people afford coverage and raise costs for working-class families. That means some of the most vulnerable Americans—families, the elderly, folks with disabilities—won’t be able to get the lifesaving treatment, medication, or care they need. These are people you know. So let your voice be heard and reach out to your senators now to let them know how much this will impact you.

It’s curious that in this tax battle we haven’t heard much of the old argument that “these cuts will pay for themselves,” which may be a hopeful sign that that tedious canard has been put to rest at last. The fairy tale of trickle down (aka supply side) economics has been essential to the Republican project, as it presents a justification for the implicitly irrational idea that cutting taxes on the rich will help everyone—the claim that “a rising tide lifts all boats,” as yacht-friendly Republicans like to say. Sadly for those sailors, decades of evidence exposes trickle down as an absolute hoax, albeit an enduring one. In reality, the implementation of supply side economics that began with the Reagan administration has vastly exacerbated wealth inequality in the United States, and with it, had a deep perverting effect on our democracy.

Central to this comforting vision is the parallel right wing myth of “makers and takers,” with its undercurrent of racism, even though the American economic system is vastly skewed to perpetuate wealth rather than fostering social mobility. (As Pete Buttigieg quipped in 2020, if you want the much vaunted “American Dream” that we are consistently promised, move to Denmark. The US is a lowly 14th when it comes to social mobility.) Yet it is central to the world view of the wealthy that they earned everything they have, with no government assistance, when in fact the system is designed to benefit them and disadvantage others. No surprise: they run it.

But whether they try to explain it away with what George H.W. Bush once called “voodoo economics,” or by claiming that making poor children go hungry will do the trick, the fact is that the deficit is going to balloon—again—in order to give America’s richest citizens this early Christmas present. (Actually, for extra nauseating symbolism, Republicans are aiming to have the legislation on Trump’s desk for him to sign on the 4th of July.)

THIEVES IN THE NIGHT

It is madness that the Trump administration is ramming through this legislation, which a large majority of Americans oppose, including even its own supporters when presented with the idea in a blind taste test. But it’s not a surprise—it was right there in Project 2025, albeit presented in heavily camouflaged form during the presidential campaign, disguised as something that would benefit the mass of Americans.

Here’s a little insight into how well that gaslighting worked, from ITEP’s Carl Davis:

One of the more remarkable takeaways from the JCT’s revenue estimates is just how insignificant the tax provisions discussed most during the last presidential campaign—especially tax breaks for tips, overtime, car loan interest, and senior citizens—are in the broader context of this very large bill. These core features of the Trump campaign’s platform, which continue to dominate much of the debate over taxes today, come at a total cost of $293 billion. While that amount is not trivial, it equals just 3.8 percent of the $7.7 trillion gross tax cut being offered under this bill. The tax cuts being offered to businesses, by contrast, are more than four times larger.

The surreptitious way the GOP went about passing this bill betrays the party’s bad faith. Jonathan Chait again:

The minority party always complains that the majority is “jamming through” major legislation, however deliberate the process may be. (During the year-long debate over the Affordable Care Act, Republicans farcically bemoaned the “rushed” process that consumed months of public hearings.) In this case, however, the indictment is undeniable. The House cemented the bill’s majority support with a series of last-minute changes whose effects have not been digested. The Congressional Budget Office has not even had time to calculate how many millions of Americans would lose health insurance, nor by how many trillions of dollars the deficit would increase.

Just as Republicans know that the spending cuts in the new bill won’t offset the loss of revenue from these tax cuts for the wealthiest, they also know that once these cuts to Medicaid and other much very popular programs become known, it runs serious risk of ruining them at the ballot box come 2026 and 2028, no matter how hard they try to make people believe the Democrats are to blame. (Spoiler alert: they’re not.) That is why they have pushed the most painful repercussions of those cuts until after the 2028 election.

The members of the Republican majority, Chait writes, “are behaving not like traditional conservatives but like revolutionaries who, having seized power, believe they must smash up the old order as quickly as possible before the country recognizes what is happening.”

But as I’ve noted in previous blogs, it may not matter because the GOP doesn’t really intend to hold any free fair elections ever again. The fact that the Republican Party is taking pains to protect itself against well-deserved electoral blowback is actually a good sign, even as it’s despicable.

Then again, maybe it’s just that Congressional Republicans are not inside the central autocratic planning cell. Hopefully Mike Waltz can loop them into the Signal chat.

AND NOW A WORD FROM THE DEAR LEADER

With characteristic restraint and understatement, Trump wrote on Truth Social: “This is arguably the most significant piece of Legislation that will ever be signed in the History of our Country! Now, it’s time for our friends in the United States Senate to get to work, and send this Bill to my desk AS SOON AS POSSIBLE! There is no time to waste.”

(NB: The ALL CAPS are on brand, but you will never convince me that he used the word “arguably.”)

In The Times, Hugh Tomlinson reports Trump saying, “’This is the biggest tax cut in the history of our country … bigger than any Ronald Reagan tax cut.’ Asked what he would tell fiscal hawks in the party who want bigger spending cuts, Trump replied: ‘I’m a bigger fiscal hawk. There’s nobody like me’.”

In The Guardian, Stein has also written of the bizarre provisions that sunset these benefits when Trump leaves office. (If in fact he does.) The deductions meant as sweeteners for working families are “available only through 2028, meaning that when Trump finishes his term in January 2029, his tax relief will have expired.” The bill would “allow taxpayers to write off overtime, tips and the interest paid on loans for cars assembled in the US, in line with Trump’s campaign promises. Parents would see the child tax credit increase by $500, and be given the option of opening ‘Trump accounts’ to save money to help their children afford a home or schooling once they turn 18, into which the government would deposit $1,000……But once the year 2028 ends, so too do these deductions, as well as the government’s deposits into any Trump accounts and the increased child tax credit.”

In short, the OBBB is a poison pill for Trump’s successors, be they Democratic or Republican. Stein:

(T)he temporary deductions combined with the delayed start of the spending cuts will create a “fiscal cliff” for a future Congress and president, who will face pressure to stop or further delay what could be a politically toxic combination of policies….Cancelling the spending cuts and keeping the new deductions in place would cost $4.8tn, the CRFB forecasts—more than the government spent responding to the COVID pandemic.

Trump of course does not care, and his enablers in the GOP are happy with the short term win, and will worry about the future later. Ironically, it might be the only thing that makes he choose retirement over an attempt to serve a third term and deal with this mess.

And there’s some other weird shit in there too.

The bill includes funding for the southern border wall (hey, wasn’t Mexico supposed to pay for that?) and for the mass deportation program, and ends clean energy incentives passed during the Biden administration. Davis again:

The section of the bill titled “Make Rural America and Main Street Grow Again,” for example, includes everything from cutting taxes on multinational corporations’ offshore profits to repealing an excise tax on indoor tanning services. Similarly, the section titled “Make America Win Again” includes provisions as varied as scrapping tax credits that help homeowners purchase more energy efficient furnaces, significantly raising taxes on nonprofit foundations and colleges, and eliminating taxes on firearm silencers.

Another eyepopping provision buried in the bill strips the courts—including the Supreme Court—from enforcing citations of contempt, which effectively strips them of their powers full stop. The Trump administration and its allies never miss a chance to expand their powers, even when in the midst of a scam that would make Bernie Madoff blush.

#Multitasking

THE OLD DEAL

Ever since 1932, the reactionary faction in this country, led by the Grand Old Party, has been desperately trying to roll back the New Deal and return the country to an unregulated, Darwinian state of affairs in which them that have can do pretty much whatever the fuck they please and the rest of us can just suck on it. (That’s not how most historians and economists phrase it, but trust me—I was a history major—that’s the gist of it.)

The Reagan Revolution of 1980-88 and continuing into the Bush 41 administration was one enormous step in that direction. Now Trump has delivered the coup de grâce. The pain for the rest of us, and the transformation of the United States into a right wing shitshow, will play out over the coming decades.

I’m not an economist, but I did spend the last five years with my filmmaking partner Justin Schein working on Death & Taxes, a feature documentary about wealth inequality, which will be in theaters in July. That topic is wrapped in the story of Justin’s late father, who rose from poverty to become a highly successful record company CEO, but also obsessed with building his wealth and (legally) avoiding taxes. The film includes interviews with thinkers across the ideological spectrum, from Robert Reich, Nobel Prize winner Paul Krugman, MacArthur “Genius” Fellow Matthew Desmond, Roosevelt Institute CEO Felicia Wong, author Anand Giridharadas, New School economist Darrick Hamilton, progressive activist Chuck Collins, and ITEP Executive Director Amy Hanauer, among others on the left, to anti-tax maven Grover Norquist, GOP strategist Frank Luntz, and the Heritage Foundation’s Stephen Moore on the right. The battle they collectively describe over taxation makes it clear: taxes are at the very heart of what we conceive the role of government to be, the values we hold dear, how we direct strategic resources to support those values, and even the very core of how we define ourselves as a country.

Reasonable people acting in good faith can have reasonable disagreements about such issues. But that is not what is going on here. The Republican Party’s budget is a new low in Trumpian megalomania, shameless greed on behalf of the richest among us, and bald-faced lies to the American people, including their own supporters.

Is America great again yet?

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Illustration: Errol Flynn in The Adventures of Robin Hood (1938), from Warner Bros., directed by Michael Curtiz (who also helmed Casablanca) and William Keighley.