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Heidi Heitkamp's Lobbying Journey

Before she got hired to run a dark-money outfit, she advocated for tax
hikes on dynastic wealth. Now, she's against them.

 

Sen. Heidi Heitkamp (D-ND) speaks during the Senate Democrats' news
conference on tax reform, November 28, 2017, in the Capitol. (Bill
Clark/CQ Roll Call via AP Images)

 

****

**** Heidi Heitkamp was once a Democratic senator in a
Republican state, and thus is forever labeled a paragon of sensible
moderation and political divination. The one-termer from North Dakota
who left office in 2019 has gone on to serve as an oft-appearing CNBC
commentator and a fellow at the University of Chicago's
Institute of
Politics

teaching a seminar on bipartisanship. She was considered as a possible
secretary of agriculture for Joe Biden before the position was given to
Tom Vilsack.

After being passed over for a Biden administration job, Heitkamp is
trying to undermine the president's agenda. As congressional Democrats
look to establish a more equitable tax system to pay for spending
priorities and overhaul some of the legacy of the Trump tax cuts,
she's spearheading a new effort to fight against a proposed change:
the elimination of step-up in basis, which currently wipes out capital
gains tax obligations on inherited investments. It's just one proposal
among many to shut down loopholes that inordinately benefit the very
wealthy, but it's an important one that could generate hundreds of
billions of dollars in revenue over the next decade.

Heitkamp, beyond her academic and media commitments, now chairs a new
nonprofit called Save America's Family Enterprises (SAFE), a 501(c)(4)
dark-money operation that does not have to disclose its donors. The
group has committed to a six-figure media buy to oppose this effective
manner of clamping down on intergenerational dynastic wealth, along with
an inheritance tax whose top rate has plummeted from 55 percent to 40
percent in the last two decades alone.

Ending step-up in basis is hardly controversial. Left-leaning
politicians and groups of all types have advocated for its overhaul;
even Larry Summers has called for

its elimination.

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But Heitkamp herself might have made the most robust case for ending
step-up in basis in an appearance on ABC barely

**six months ago**. On an April segment of the network's news show
This Week
,
former Republican governor of New Jersey Chris Christie opined that
increased taxes on capital gains are "double taxation," and warned that
"if Joe Biden gets a 39.6 percent capital gains [tax rate], wait to see
what happens to the market."

Heitkamp responded:

This is

**one of the biggest scams in the history of forever** on income
redistribution. If you have a tax-if you have a stock, you can pass it
on to your kids with

**stepped-up basis**, and it's never taxed. You know that there needs
to be reform on unearned income.

And so to demonize it and say it's going to hurt the little guy, yes,
that just is not factual, Chris. And you know it. (emphasis mine)

That sentiment is plainly correct. Currently, capital gains on any and
all inherited assets-stocks, properties, and more-are totally wiped
out upon death, meaning that all the gains on those assets can be
inherited tax-free. Of course, exceedingly few multimillionaires and
billionaires maintain their wealth in cash. Nearly all of it is held in
appreciating assets. And when they pass those assets on, they get
reassessed at the current market value, with no tax realized. It all
adds up to one of the largest tax breaks

in the entire federal tax code, with the Joint Committee on Taxation
estimating that it will be worth $41.9 billion
in 2021 alone. That,
combined with the Trump tax law raising the ceiling on tax-free estates
to over $11 million per person, allows dynastic wealth to travel
virtually unimpeded.

Heitkamp's ABC statement is not out of character with her political
track record. Despite being the ever-vulnerable Dem in a red state, a
condition for which all sins are forgiven, Heitkamp famously voted
against the Trump tax cuts. As the tax commissioner of North Dakota, a
role she held before her elevation to the U.S. Senate, she sued the
Quill Corporation in a case that eventually rose all the way to the
Supreme Court ,
arguing that states could make online retailers collect taxes from
customers. That case eventually became a foundational decision in
American state tax law, with a profound impact on e-commerce. After
initially siding with corporations in its 1992 decision, the Supreme
Court reversed

**Quill v. North Dakota** with 2018's

**South Dakota v. Wayfair** ruling, a triumph for taxation that has
Heitkamp's name literally on it.

Now atop a dark-money organization, Heitkamp has done a total
about-face, trashing the very same tax reform she advocated for as
common sense just months ago. "I think it's wrong as a matter of
economics, looking at middle-class families, but I also think that for
the Democratic Party, this is a path that should not be walked
politically," she told The Hill
.
SAFE has produced its own polling on the proposal, which, no surprise,
the group claims is unpopular. A bevy of independent polling

shows that Americans overwhelmingly favor tax increases on the wealthy
of basically every make and model, including on wealth, inheritance, and
income.

[link removed]

Of course, step-up in basis is hardly a middle-class concern. Thanks to
stepped-up basis, 55 percent of the wealth
in
estates worth more than $100 million has never been, and will never be,
subject to any income taxes at all. Opponents like Heitkamp cherry-pick
lurid tales about inherited businesses, farms, and vacation homes that
must be liquidated. But the Biden proposal exempts the first $1 million
in capital gains, and defers taxes on farms and businesses as long as
they remain in the family. Heitkamp's scare stories are completely
unfounded.

The proposal, codified in the STEP

Act in March, has broad 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
inordinate benefit to the super-rich, it's one of the most commonsense
proposals in a cluster of low-hanging tax reforms that are known to be a
priority for the White House. Two years ago, while on the campaign trail
at the Iowa State Fair, Biden pledged

tax reform targeting "one simple little thing called stepped-up basis."
That clip has recently been resurfaced by infamous Reaganite Grover
Norquist's Americans for Tax Reform
,
another 501(c)(4) that is mounting an uninspired social media effort to
induce outrage about the proposal.

The bill into which it will potentially be inserted does not require
Republican votes, which makes objections from Republican outfits
functionally moot. But those tax reforms are imperiled by centrist,
red-state Senate Democrats whom Heitkamp can call her brothers and
sisters in arms. By one count, three-quarters

of the proposed $3.5 trillion in tax cuts has vanished
,
although it's quite early in the negotiations. Moderate Democrats are
proving inexhaustible in their campaign to vanquish the legislative
priorities of the president, a moderate Democrat.

As a 501(c)(4), SAFE does not have to disclose its donors. But the group
will be up on the airwaves in Washington, D.C., and other major media
markets, as part of a lobbying blitzkrieg

that has descended upon the Capitol from moneyed interests and large
corporations to preempt possible tax increases. But unlike the battalion
of lobbyists, Heitkamp is unique in that she is a former Democrat
seeking to undercut the Democratic agenda, and a former tax advocate
seeking to undercut her own legacy as an advocate for a more just tax
code.

To read more about infrastructure and the Build Back Better Act, check
out our series Building Back America
.

 

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