We Have Taxes to Thank for Star Wars

Nostalgia has overwhelmed Star Wars fans as they anticipate the release of the new trilogy in the middle of December—for epic space battles, dramatic light saber duels, mythic overtones, familiar musical scores and beloved characters. Lost in this yearning is just how the whole epic story began. Before there could be a clone war, a Skywalker losing some limbs in a light saber duel, a Death Star, a Death Star blowing up, another Skywalker losing a limb in a light saber duel and another Death Star blowing up, there was—and, believe me, the Star Wars fan in me wishes I was making this up—a tax controversy.

To answer just how this was so, and also perhaps why Disney quietly declined to incorporate any new George Lucas ideas into the upcoming new trilogy, we need to go back in time to the last time a new Star Wars trilogy was upon us, in 1999. The debut of “The Phantom Menace,” which was the first episode of this “prequel” to the original Star Wars trilogy, was as much a cultural phenomenon as it was a movie release. Fans had waited an entire generation for this day. They’d spent thousands of dollars on R2D2 cereal boxes and Death Star-themed waffle makers. They’d put actual jobs and personal lives on hold so they could camp out in lines for the first midnight showings. When the lights dimmed, they literally cheered like they were at a sporting event. When the 20th Century Fox logo appeared on the screen, they cheered even louder. When the iconic phrase, “A Long Time Ago, in a Galaxy Far, Far Away” spread across the screen, we—I mean, “they”—entered a state of nerded bliss. And then, finally, the opening crawl appeared that would introduce them to the story of how this Star Wars saga to which they had devoted so much had all begun. The galactic republic, this text said, was engulfed in turmoil… 

… “The taxation of trade routes to outlying star systems was in dispute.”


To summarize briefly: This first episode of Star Wars started with a tax dispute. The “trade federation” did not like the fact that the republic had imposed a tax on its trade routes, and protested the tax by staging a blockade, and ultimately an invasion, of the peaceful planet of Naboo. Dissatisfied with the Republic’s inability to defend the planet, Naboo’s queen—at the urging of the planet’s then-Senator Palpatine—moved for a vote of no confidence in the Galactic Senate’s Chancellor. Palpatine then exploited the sense of sympathy for Naboo to get himself elected as Chancellor. Over the course of the next movies, Palpatine would then, essentially, transform the republic into a dictatorship, declare himself Emperor, convince Anakin Skywalker to become Darth Vader, build a couple Death Stars, and, evidently, abolish the galactic yellowpages, because it otherwise surely would have occurred to Darth Vader to streamline his epic quest to find his son, the “young Skywalker,” by looking under “S.” Peace was restored when Vader turned against Palpatine so he could save his son, or so we thought until the eve before the long-term capital gains rates jumped from 15% to 20% in 2012, when Lucas suddenly decided to sell Lucasfilm to Disney for a little over $4 billion and Disney promptly announced that it was making a new sequel trilogy.

None of which would have been possible if it wasn’t for a tax dispute. What Joseph Campbell* was to the original Star Wars, H & R Block was to the Phantom Menace.

* whose “The Hero with a Thousand Faces” was Lucas’ inspiration.