The world’s wealthiest people can add a new person to their Christmas card list: Heidi Heitkamp. The former North Dakota Democratic senator has become the lobbyist patron saint of what some liberal activists like to call the “wealth defense industry.” Time for Bezos to build some warehouses in Bismarck, stat.
Wealth managers I talk to believe that the most threatening part of Joe Biden’s tax plan, from the long-term perspective of their billionaire clients, would be the elimination of the “step-up in basis” enjoyed by heirs to the ultra-rich. That provision—sometimes cheekily referred to among accountants as the “Angel of Death” loophole—would allow, for instance, Bezos’s kids to inherit his Amazon shares when he dies, but not pay capital-gains tax on the extraordinary rise in Bezos’s holdings; if the Bezos kids did eventually sell, the “basis” for the capital-gains tax would be set at the shares’ value at the time of Bezos’s death, essentially allowing the massive capital gains accumulated over a lifetime to be passed on tax-free. (Bezos seems to be in super-hero health; I’m just picking him as a convenient example.) That matters because, as Gary Cohn correctly observed, “only morons pay the estate tax.”
But then Heitkamp was recruited by lobbyists to deploy her powers, reframing the debate to focus on the plight of mom-and-pop heirs to family farms in rural states which—stop me if you’ve heard this before—each get two senators, no matter how small. (Never mind that the original Biden proposal already included a multi-million dollar exemption.) And now suddenly Congress is racing to find the money to pay for their $3.5 trillion plan to expand the social safety net, potentially without as much revenue as expected from closing the Angel of Death loophole.
There may be a compromise afoot that finds a way to go after Bezos and Elon Musk without going after the family farm next door, but for now, Big Tech should thank Big Agriculture for the cover.