Thread by @eisingerj

What's going on with @HeidiHeitkamp & taxes now is an incredible story of how Washington works.

At once, shocking but also entirely normal.

It's about a seemingly complicated tax gift for the ultrawealthy that isn't complicated at all. Here's how it works:

Say you buy shares of Amazon at $100 and they go up to $200 after a year. You sell. You have to pay capital gains tax on that $100.

But let's say you are so rich that you don't need to sell...

If you wait until you die, then that cap gains tax obligation just... disappears! For passing onto your heirs, you get to pretend you bought it at $200. The value of your purchase is called your "basis" and it "steps up" at death: $100 magically becomes $200.

This is a massive loophole. It came about in first few years of the income tax 100 years ago and wasn't intended at all to result in this.

Also, who has lots and lots of capital gains? Disproportionately the very wealthy. It's not close.

americanprogress.org/issues/economy…

Don't just take it from me. One expert very recently called this step-up in basis: "One of the biggest scams in the history of forever."

Biden has a proposal to eliminate this loophole. (Lobbyists for the rich say: Don't call it a loophole! That hurts "Step Up's" feelings!) Biden's proposal would generate lots and lots of revenue.

Of course there's opposition. Some of the opposition is now coming from Democrats.

One expert assailed those Biden critics, saying recently: To “demonize [Biden’s proposal] and say it’s going to hurt the little guy . . . that just is not factual.”

Enter @HeidiHeitkamp . You may know her from such films as being in the US Senate from North Dakota. She's not in the Senate anymore. She's now on the payroll of Saving America's Family Enterprises.

Catch that? It's called "SAFE." What could be more benign?

Heitkamp says eliminating the "step-up in basis" might jeopardize people who own cabins. Seriously. The invaluable Tax Notes, which is very expensive sadly, is covering this very well.

She's also said that this will hurt Blacks and Latinos especially. Really.

thehill.com/policy/finance…

This is just hogwash. Cap gains overwhelmingly goes to the top 1% and the top 1% is disproportionately white--and not made up of many log cabin owners.

The ultrawealthy take great advantage of this loophole, using a technique called "Buy, Borrow, Die," where they avoid income, avoid selling their assets & borrow against them to live lavish lifestyles. @paulkiel, @JeffErnsthausen & I explained how they avoid taxes in this story:

I hope you have read it, cherished it and wallpapered your bathroom with it. If not, do so now, please: propublica.org/article/the-se…

So will Biden's proposal to tax the ultrawealthy survive? Or will Heitkamp's group and other lobbyists for the rich prevail? And what about that expert who assailed Biden's critics? Can we call on that person to help?

Who was that person anyway?

Oh it was Heidi Heitkamp.

Here's her on ABC News in April, attacking "the step-up in basis."

I guess she got gotten to.

And that's your "Schoolhouse Rock episode for Aug 31, 2021

abcnews.go.com/Politics/week-…