Originally published on Forbes.com.
“On the Basis of Sex” was widely released this weekend and you really should go see it regardless of who you are, but if you have any interest in tax, you really must go.
The Biopic Part
“On the Basis of Sex” is a biopic of Ruth Bader Ginsburg (RBG). It is kind of an origin story of a feminist and liberal icon superhero. It is very good and I would have liked it just from that point of view. I mean I have once been called a Margaret Fuller fanboy and had a one-line role in a theatrical commemoration of the Worcester Women’s Rights Convention of 1850. Besides she was from Brooklyn and was pals with Antonin Scalia, who went to the same high school I did. What’s not to like?
The Legal Drama
There are plenty of film critics who have or will cover the biopic part, but there are probably not too many of them that read every Tax Court decision so I will fill you in on the tax things to watch for.
Besides being a biopic film is also a legal drama, and that is where it goes from good to great because it is a legal drama about an appeal of a Tax Court decision. The “Inherit The Wind” of the 21st century ends up being about the appeal of a three hundred dollar Tax Court decision, where the taxpayer represented himself in Tax Court and then gets possibly the top tax attorney in the country and a future Supreme Court justice to represent him on appeal to the Tenth Circuit.
If the movie had been titled “The Dutiful Son” focusing on Charles Moritz (Chris Mulkey) and Moritz’s Mother (Moira Wylie), I might have liked it even more, but something tells me that it might not have gotten made with Felicity Jones playing RBG in a supporting role. I bet they have the footage to make that film too and I’m sad that it is not likely to happen.
The Issue
Chris Mulkey does do a great job with the principled Charles Moritz. Moritz was denied a deduction that he took for paying for help with the care of his dependent mother. The reason for the denial was that he was a man who had never married. The deduction was only allowed to a woman or a man whose wife was disabled or a widower.
The deduction for dependent care that had the sexist language was modified by the Revenue Act of 1971, before the 10th Circuit decision, but not retroactively. The deduction was eliminated by the Tax Reform Act of 1976, which added the credit which still remains.
The income taxed by the income tax is a very broad concept. Deductions, on the other hand, are a matter of legislative grace. So when you are arguing in court against the IRS on the disallowance of a deduction, you are starting out behind. The presumption is that the IRS is right.
In his appeal to the Tax Court, Moritz wrote that if he had been a dutiful daughter he would have been allowed the deduction, but as a dutiful son, he was denied. To be fair to the Tax Court, my blogging buddy Lew Taishoff who follows the Tax Court with an incredible intensity let me know that the Tax Court cannot overturn a statute on Constitutional grounds. The mantra of the Tax Court is that it is a court of limited jurisdiction. When it comes to the Code it follows Reilly’s First Law of Tax Planning – It is what it is. Deal with it.
The Other Lawyers
There are six lawyers besides RBG portrayed in the film. I will leave Dorothy Kenyon (1888-1972)(Kathy Bates) and Mel Wulf(1927- )(Justin Theroux), the civil rights attorneys, for others.
The attorneys I find interesting are RBG’s husband, tax attorney superstar and supportive spouse, Martin Ginsburg (1932-2010)(Armie Hammer), Harvard dean and later Solicitor General Erwin Griswold (1904-1994)(Sam Waterston), Ernest Brown(1906-2001)( Stephen Root) who retired as a Harvard professor in his sixties and commenced a twenty year career of government service and James Bozarth (1945+/- – )(Jack Reynor), who has been practicing tax law in the private sector since the late seventies after a brief stint of government service right out of the University of Texas Law School.
Both Brown and Bozarth were in the Appellate Section of the Tax Division of the Department of Justice. The IRS has its own attorneys representing it in Tax Court. DOJ represents the Commissioner in district and appellate courts.
One In A Million
The portrayal of Martin Ginsburg as an unusually supportive husband in an uncommon for the time egalitarian marriage stands up to the limited scrutiny I have been able to give it. Also, his alerting RBG, who didn’t read Tax Court decisions to the Mortiz case, is well attested. This is from a speech he gave not long before he died:
A disproportionate part of my professional life has been devoted to protecting the deservedly rich from the predations of the poor and downtrodden , and it is not easy to see why that deserves a medal.
But it came to me that over a fairly long life I have performed one distinguished service ….
Mr. Moritz was a single man who had never married. “Deductions are a matter of legislative grace,” the Tax Court quoted, and added that if the taxpayer is raising a constitutional objection, forget about it: everyone knows, the Tax Court confidently asserted, that the Internal Revenue Code is immune from constitutional attack.
I went next door, handed the advance sheets to my wife, and said, “Read this.” Ruth replied with a warm and friendly snarl, “I don’t read tax cases.” I said, “Read this one,” and returned to my room. …
So Mr. Moritz’s case mattered a lot. First, it fueled Ruth’s early 1970s career shift from diligent academic to enormously skilled and successful appellate advocate – which in turn led to her next career on the higher side of the bench. Second, with Dean Griswold’s help, Moritz furnished the litigation agenda Ruth actively pursued until she joined the D.C. Circuit in 1980.
All in all, great achievements from a tax case with an amount in controversy that totaled exactly $296.70. In bringing those Tax Court advance sheets to Ruth 36 years ago, I changed history. For the better.
It is a testament to Martin’s thoroughness that he read the Mortiz case. He must have read every Tax Court decision since it is improbable that a deduction limited to $600 had any relevance to his practice. And seeing the relevance to RBG’s civil rights efforts is also a reflection of a flexible mind.
What the movie leaves out is what a giant Martin Ginsburg was among tax professionals.
There are somewhere around a million people whose livelihood depends on some familiarity with the Internal Revenue Code. The prestige of their particular roles varies. Least respected are unenrolled prepares, something which is probably unfair.
If I (CPA) or most tax attorneys were to face off against a good unenrolled preparer in a match of Tax Jeopardy and the categories were dependent deduction, child care credit, combat pay exclusion and earned income credit, we would get our asses kicked.
Fair or unfair, at the top of the ladder would be a very high priced tax attorney who was also a professor and the lead author of an important treatise. That’s where Martin Ginsburg fit in, but there is more. Jack Townsend, a DOJ veteran and himself an author of an important treatise wrote me that Martin Ginsburg was the smartest tax lawyer in the United States and you can find similar testimony elsewhere.
That makes him one in a million among tax pros, but of course among attorneys not quite as he modestly notes our field is kind of a zero-sum game. So he notes as his great achievement helping RBG on a tax case that became a civil rights non-discrimination case.
Settle Down McCoy
Sam Waterston, as we all know, played a lawyer on TV, the determined Jack McCoy, who would always straighten out the mistake the detectives made in the first in the first half hour of Law and Order. “Inevitable discovery” often seemed to detoxify the fruit of the poisoned tree. Everything I know about the Fourth Amendment I learned from watching Law and Order. The line – “For God’s sake! Where does it end? Gender equality as a civil right?”-is just what McCoy would have said.
That makes Waterston perfect for the role of RBG nemesis both at Harvard and in the Moritz appeal. I realize that I may have been a little harsh on screenwriter Daniel Stiepleman, because of the liberties he took with Team USA (Griswold, Brown and Bozarth). Using the “inspired by a true story” license he could have had Griswold making the oral arguments rather than playing a behind the scenes sort of adversary. By not taking that easy way out Stiepleman shows us some of the inner workings of the DOJ Tax Division (with a good bit of “inspired by” license).
A sidelight that was in the screenplay, but did not make it into the film was that Griswold was carrying the burden of having his wife, paralyzed by polio, cared for,
All in, I think it may have been unfortunate that a sort of villain was required and Griswold was it. He fought for the admission of women to Harvard at a time when professional opportunities for women were going backwards, the period of the “Feminine Mystique” chronicled by Betty Friedan.
Griswold had many other notable things in his career, but he started in tax. According to his New York Times obituary, he argued more cases in the Supreme Court than any other lawyer. They were mostly tax cases, where he was representing the government in the early thirties.
Ernest Brown
Brown had an amazing career spending decades at DOJ after retiring from Harvard. During World War II, when he was over draft age, he served in the OSS in China. Stiepleman has it right that he would have reviewed Bozarth’s brief (possibly rewriting it entirely). Brown was considered a giant in tax law.
Last Man Standing
James Bozarth is still alive and still practicing law in Roswell NM. You would think after being portrayed in a major motion picture facing off against the Ginsburgs in the Tenth Circuit, he is being hounded by journalists for his view on the picture. Not so much as it turns out. So far he has only heard from me.
Stiepleman had spoken with him years ago, but the events he is portrayed in leading up to the trial are pretty much entirely fictitious. Bozarth has not seen the film yet and won’t go unless it plays in Roswell. I did send him excerpts from the script and he didn’t recognize himself at all.
Overall
As “inspired by a true story” films go, I think this one hewed pretty close to what really happened. The portrayal of the government attorneys is probably what is furthest off. I feel particularly bad for Griswold who probably deserves to be membered more favorably.
Other Coverage
Jack Townsend, who was at DOJ tax during the period has posted a bit in response to my previous posts and is also reaching out to other DOJ alumni. No reports in as yet.
Paul Caron ran my first post, with some commentary and it has generated a few comments from people who knew Martin Ginsburg.
There are, of course, numerous reviews, but I could not find any others that are tax geeky .