KARTCH: VICE Gets History Of The Death Tax Tragically Wrong

(Photo by Christopher Polk/Getty Images for Turner)

John Kartch Americans for Tax Reform
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In its brief portrayal of the death tax, the movie VICE starring Christian Bale as Dick Cheney manages to get pretty much everything wrong.

The film has a scene which appears to be from 2001 where the vice president attended an Americans for Tax Reform “Wednesday Meeting” — the weekly meeting started in 1993 by conservative activist Grover Norquist. As Cheney enters the room and walks down a center aisle, all attendees arise.

The Norquist actor calls the meeting to order: “Let’s go ahead and get started with the estate tax. Now this has been hard to eliminate, because the tax only affects those estates worth over $2 million.”

Norquist introduces “marketing guru Frank Luntz” who proceeds to let the room in on a little secret. You see, he has the ultimate key to convince the public to oppose the tax: Use the term “death tax” instead of “Estate Tax.” Luntz is shown conducting focus groups on the issue where he discovers the “breakthrough” to be shared with the meeting of supposedly unwitting conservatives in 2001.

Yeah, nope. I realize this is a Hollywood production, but let’s review where the film stretched.

First, there was no need to come up with “breakthrough” terminology because most Americans already viewed it as fundamentally wrong to tax people twice on their life savings.

Americans see the tax as morally wrong and this fact has always bothered the envy crowd on the left. How can it be that people of all income levels oppose the tax on principle? Thus the left and the makers of VICE have tried hard to create a mythology to convince themselves that Americans were duped en masse by some slick buzzword cooked up by a PR genius. It helps the left console itself.

But Americans already understood the death tax as double taxation. The assets in an estate were previously subject to income taxes, capital gains taxes, dividend taxes, or the corporate income tax. All the dollars have already been taxed at least once. Homes, land, small business assets, stocks, savings. Washington had no business imposing an additional tax on your life work.

As noted in a Yale research paper, death tax vs. estate tax terminology had minimal impact:

The impact of the term on public opinion seems to have actually been relatively modest. To control for the impact of the ‘death tax’ terminology in question wording, the 2002 National Election Survey asked the question in two parallel forms and reported a difference of barely more than two percentage points; 67.8 percent favored “doing away with the estate tax” and 70.0 percent favored “doing away with the death tax.”

The Yale paper cites further contemporary evidence that support for repeal hinged not on terminology but on fairness:

In a January 2001 McLaughlin poll, even once informed of the exemption level and rate of the estate tax, 86.9 percent of voters agreed that it was “unfair for the government to tax a person’s earnings while it is being earned and then tax it again after a person dies.” Note that this question is not a question about the estate tax itself, but the coupling of the estate tax with double taxation implies that the one is the other.

In an interview for this op-ed, the real Norquist stated: “It is a sign of the health of American society — and the weakness of envy as a political program – that a majority of Americans have supported abolishing the death tax over the decades. Heck, long before the ‘Wednesday Meeting’ and before focus groups the U.S. abolished the death tax in 1802, 1870, and 1902.”

The U.S. had a death tax during three previous periods. The first was to fund a naval buildup for an undeclared war with France, the second was to pay for the Civil War, and the third was to pay for the Spanish-American War. The fourth and current death tax was imposed in 1916 to pay for World War I. Since then, repeal proponents have come within an inch of permanent repeal on several occasions.

VICE also pretends the term “death tax” was not already in wide use by the time George W. Bush and Dick Cheney assumed office.

Throughout the 1900s, a variety of media outlets across the country used the term, organically and independently. Even the New York Times used the term repeatedly. A 1922 NYT piece describes a “Fight Over Death Taxes — New York and Pennsylvania Claim Jurisdiction Over $500,000 Estate.” A 1976 NYT article on a bill in the state legislature notes, “NYS Assembly and Sen leaders have separately drawn up legis to ease death-tax burden on family farms.”

“Death tax” was used by Ronald Reagan in a 1982 speech praising a fellow Republican for his work on state tax reform “so that family farms and businesses wouldn’t have to be sold just to pay that death tax.” The Washington Post used it in a 1984 article about the Howard Hughes estate, pointing out that Nevada is “a state that has no death tax.” The term was used in the 1980s and 1990s in Michigan during a lengthy, high profile state death tax repeal battle. The Boston Herald and Orange County Register editorialized against the “death tax” in 1992 and the Chicago Tribune did the same in 1993. The term was also used in professional tax and finance journals.

Jim Martin founded the 60 Plus Association in 1992 and started using the term “death tax” shortly thereafter. In an interview for this op-ed, Martin said: “While I get credit for coining the phrase, I always say no, I did not. Many used it in years prior, including Reagan, but I did use it on a daily basis and helped solidify the term.”

The Republican wave election of 1994 provided an opening to finally make a move on federal death tax repeal after four decades of Democrat control of the House. Republicans would converge upon a natural and accurate term and a philosophical argument which could now be wielded in a real, national legislative battle. The push would provide further contrast to then-President Clinton, who raised taxes early in his first term. Luntz’s focus groups and research recommended use of “death tax” and Martin said he appreciated Luntz’s “larger bullhorn.”

Norquist also used the term in the 1990s. In a 1997 C-SPAN interview he said: “I think Dick Armey commented that he agrees with Speaker Gingrich on the idea that we need to eliminate the capital gains tax and eliminate the Death Tax.”

George W. Bush vowed to repeal the death tax during the 2000 presidential campaign. To loud applause he stated, “We will abolish the Death Tax.”

This is all to say the term “death tax” was well understood and commonly used by Republicans and the conservative movement by the time Cheney became vice president, so there would have been no such “breakthrough” at the time as portrayed by VICE.

Finally, the film claims that the Death Tax at the time kicked in at $2 million. In reality, in 2001 the death tax kicked in at $675,000 for an individual and $1.35 million for a couple. Any amount above that threshold was walloped with a 55 percent death tax.

The Bush-era GOP House successfully passed permanent death tax repeal legislation. But the Senate repeal push fell just shy of the 60 Senate votes needed. Senate Democrats up for re-election would support repeal only to oppose repeal once safely reelected. Thus Bush was only able to sign a temporarily repeal, gradually phasing out the death tax over a decade, with just one year of repeal: 2010.

By that time, Barack Obama was president. He had zero interest in permanent repeal and allowed the tax to snap back into existence.

State-level death taxes continue to be repealed. To abolish the federal death tax once and for all, the GOP will need to hold onto the White House, retake the House, and given the leftward lurch of Democrats, gain control of 60 Senate seats. Dealing with Hollywood mythology will be the easy part. Meanwhile, Elizabeth Warren has already endorsed a 55 percent death tax.

John Kartch is communications director of Americans for Tax Reform, a nonprofit group advocating for lower taxes and limited government.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.