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

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.

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.

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.