Heidi Heitkamp was once a democratic senator in a republican state and is therefore forever referred to as the epitome of sensible moderation and political divination. The North Dakota official, who stepped down in 2019, was a frequent CNBC commentator and a fellow at the University of Chicago’s Institute of Politics teaching a seminar on non-partisanship. She was considered Joe Biden’s possible Secretary of Agriculture before the position was awarded to Tom Vilsack.
After being passed over for a job in the Biden administration, Heitkamp tries to undermine the president’s agenda. As the Democrats in Congress seek to create a fairer tax system to pay for spending priorities and revamp part of the legacy of the Trump tax cuts, they lead a new effort to fight a proposed change: the abolition of the increase in the base , which is currently erasing capital gains tax obligations on inherited investments. It’s just one proposal among many to close loopholes that unduly benefit the very wealthy, but it’s an important proposal that could generate hundreds of billions of dollars in revenue over the next decade.
In addition to her academic and media commitments, Heitkamp chairs a new nonprofit called Save America’s Family Enterprises (SAFE), a 501 (c) (4) company that doesn’t have to disclose its donors. The group has committed to a six-figure media purchase to oppose this effective method of combating intergenerational dynastic wealth, along with an inheritance tax, the top rate of which has fallen from 55 percent to 40 percent in the past two decades alone.
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The end of the step-up in the base is hardly controversial. Left-wing politicians and groups of all kinds have advocated its revision; even Larry Summers has called for its abolition.
But Heitkamp himself would have made the strongest argument for the end of the step-up in the base in an appearance at ABC almost six months ago. In an April segment of the network’s newscast this week, former Republican Governor of New Jersey Chris Christie opined that increased taxes on capital gains were “double taxation” and warned that “if Joe Biden receives 39.6 percent capital gains”. [tax rate], wait and see what happens to the market. “
Heitkamp replied:
This is one of the biggest scams in the history of perpetual income redistribution. When you have a tax – when you have a stock you can pass it on to your children on an increased base and it will never be taxed. They know that undeserved income reform is needed.
And demonizing it and saying it’ll hurt the little guy, yeah, that’s just not factual Chris. And you know it. (Emphasis mine)
That feeling is clearly correct. Currently, capital gains from all inherited assets – stocks, real estate, and more – are completely wiped out after death, which means that all gains from those assets can be inherited tax-free. Of course, very few multimillionaires and billionaires keep their fortunes in cash. It is held almost entirely in capital appreciation assets. And when they pass those assets on, they’ll be revalued at current market value with no tax payable. All of this adds up to one of the biggest tax breaks in the entire federal tax code, with the joint tax committee estimated to be worth $ 41.9 billion in 2021 alone. Combined with the Trump Tax Act, which raises the cap on tax-free estates to over $ 11 million per person, dynastic assets can travel virtually unhindered.
Heitkamp’s ABC statement does not contradict its political track record. Although Heitkamp is the always vulnerable dem in a red state, a condition for which all sins are forgiven, Heitkamp is known to vote against Trump’s tax cuts. As North Dakota Tax Commissioner, a role she held prior to her appointment to the U.S. Senate, she sued Quill Corporation in a case that eventually went to the Supreme Court, arguing that states were bringing online merchants to it could collect taxes from customers. This case eventually became a fundamental decision in American tax law with profound implications for e-commerce. After initially taking the side of corporations in its 1992 decision, the Supreme Court overturned Quill v North Dakota in the 2018 South Dakota v Wayfair ruling, a triumph for taxation that literally bears Heitkamp’s name.
Heitkamp has now made a complete U-turn at the head of a black money organization and rejected the same tax reform for which she advocated common sense only months ago. “I think it is wrong economically to look at middle class families, but I also think that this is a path for the Democratic Party that should not be taken politically,” she told The Hill. SAFE has produced its own poll on the proposal, which, not surprisingly, is unpopular according to the group. A bevy of independent polls shows that Americans overwhelmingly support tax increases for the rich of all makes and models, including wealth, inheritance and income.
The end of the step-up in the base is hardly controversial. Left-wing politicians and groups of all kinds have advocated its revision.
Of course, raising the base is hardly a concern of the middle class. Thanks to the increased base, 55 percent of the assets in estates valued at more than $ 100 million were never and will never be subject to income tax. Opponents like Heitkamp pick sensational stories about inherited businesses, farms and holiday homes that have to be liquidated. But the Biden proposal exempts the first $ 1 million in capital gains and puts taxes on farms and businesses as long as they stay in the family. Heitkamp’s horror stories are completely unfounded.
The proposal, which was codified in the STEP Act in March, has widespread support among Senate Democrats, including Sens. Chris Van Hollen (D-MD), Cory Booker (D-NJ), Bernie Sanders (I-VT), Sheldon Whitehouse ( D-RI) and Elizabeth Warren (D-MA). Given the excessive benefit to the super-rich, this is one of the most sensible proposals in a series of low-hanging tax reforms known to be a priority for the White House. Two years ago, while campaigning at the Iowa State Fair, Biden promised a tax reform that would “target a simple little thing called a” step-up base “. This clip was recently re-surfaced by the infamous Tax Reform Americans from Reaganite Grover Norquist, another 501 (c) (4) who makes an uninspired social media effort to spark outrage over the proposal.
The bill it may be included in does not require Republican votes, which makes objections from Republican outfits functionally moot. But these tax reforms are endangered by centrist, Red State Senate Democrats, whom Heitkamp can call her brothers in arms. By one count, three-quarters of the proposed $ 3.5 trillion tax cuts have gone, although negotiations are still fairly early. The moderate Democrats are proving inexhaustible in their campaign to overcome the legislative priorities of the President, a moderate Democrat.
As 501 (c) (4), SAFE is not required to disclose its donors. But the group will be on the airwaves in Washington, DC and other major media outlets as part of a lobby blitzkrieg that has broken into the Capitol of money interests and big corporations to forestall possible tax hikes. But unlike the battalion of lobbyists, Heitkamp is unique in that she’s a former Democrat trying to undermine the democratic agenda and a former tax attorney trying to undermine her own legacy as an advocate for fairer tax legislation.