May the 21st Be With You
Ernie Neve, CPA
May 22, 2019
A long time ago in a galaxy far, far away (okay, on May 21, 1980), The Empire Strikes Backintroduced the world to Yoda, the oldest, most-powerful, and most syntactically-challenged Jedi knight in the universe. Yoda delighted audiences as he trained Luke Skywalker, launched him into battle against Darth Vader, and died peacefully at age 900, his body becoming one with the Force. Today, his fans remember Yoda by celebrating May 21 as National Talk Like Yoda Day. And celebrating we are this year by talking about taxes!
Hard to believe it is, but taxes lie at the heart of the Star Wars universe. In Episode One: The Phantom Menace, in the very first paragraph of the opening crawl, we learned that taxation of trade routes to outlying star systems was in dispute. The Galactic Senate had imposed taxes to fight interplanetary pirates, and in response, the Trade Foundation had blockaded shipping to Naboo to pressure the Senate into repealing those taxes. The Supreme Chancellor dispatched two Jedi Knights to resolve the dispute . . . and the adventure begins!
Yes, more to the story there is than that. The Sith Lord Darth Sidious — masquerading as Senator Palpatine — used the dispute to seize dictatorial powers, declare himself Emperor, lure Anakin Skywalker to the Dark Side, commission a Death Star factory, and proceed to ravage the Galaxy. But really . . . dig down deep enough, past the epic space battles, light saber duels, and colorful aliens inhabiting Mos Eisley's cantina (aka "the bar scene"), and you'll find just another battle over tariffs. Like the American Revolution almost it sounds, hrmmm?
The Galactic Senate isn't the only body levying taxes in the Star Wars universe. On the desert planet of Tatooine, so common it was that Jabba the Hut imposed a tax on murder. The bodies murderers even plotted to cheat the tax by hiding. Smart tax policy on Jabba's part? Possibly . . . although probably not sustainable in the long run, yes? That is, unless the Tatooine Department of Tourism manages to make the desert planet appealing enough to attract future victims to emigrate!
There's even a real-life tax-planning success behind the Star Wars story. Back in 2012, before releasing the final three installments of his saga, creator George Lucas sold his production company Lucasfilm to Disney. Closed the deal he did less than three months before the maximum tax on capital gains was scheduled to jump from 15% to 20%, and the new 3.8% net investment income tax was scheduled to begin. Lucas's timing saved him around $176 million in earthbound taxes, yes?
Lucas with one last challenge success faces. With somewhere north of $5 billion in assets, he's facing an estate tax bill the size of a minor outlying planet. But estate planning moves he has. Lucas has signed Bill Gates' "Giving Pledge," which encourages wealthy people to donate most of their wealth to charity. Signing the pledge accelerates normal charitable giving into hyperdrive and cuts estate taxes with the power of the Millennium Falcon.
When it comes to saving money on taxes, one thing you must remember there is: plan or plan not. There is no try. Jedi tax planning you need. Fortunately, you don't have to fight your way through an army of stormtroopers to slash your bill. You just have to pick up the phone. So call us, and feel the proactive power of the Force!