NYU Professor at White House Finds Many Wary of Taxing Rich

(Bloomberg) -- The unassuming New York University law professor who’s coordinated President Joe Biden’s sweeping tax proposals is finding that in Washington, many Democrats don’t share his zeal to soak the rich.

David Kamin, a deputy director at the White House National Economic Council, literally wrote the memo on “How to Tax the Rich,” published in 2015. He’s spent the past several weeks participating in negotiations on a plan to pay for a social spending package of up to $3.5 trillion.

The menu of tax hikes that congressional Democratic leaders on Thursday agreed to draw from to pay for a sweeping expansion in social spending showcased the unease in some corners of the party. One of Kamin’s most daring pitches -- to end the practice of letting heirs discount the tax value of inherited assets, called step-up in basis -- isn’t part of the framework of measures Democratic congressional leaders endorsed Thursday, according to House Ways and Means Chairman Richard Neal.

But the list of options does feature what amounts to the biggest tax hike in a generation, with higher levies for the highest-income Americans and for companies. While lawmakers remain weeks if not months away from any final deal, the proposed changes would deliver a partial win for those decrying the current system as worsening American inequality.

“Just the opportunity to be part of one of those moments where we are able to move the ball, I think is energizing -- even while obviously, it is hard,” Brian Deese, Kamin’s boss as director of the NEC, said in an interview. The current stage is one to “actually deliver on what was the president’s vision,” he said.

Deese worked with Kamin at the White House during the Obama administration, and dubbed his colleague a “policy nerd’s policy nerd,” thanks to Kamin’s encyclopedic knowledge of the tax code and budget details.

Kamin declined to comment for this story.

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“We are at the moment where we don’t know what the end outcome will look like,” Deese noted. Even so, the plan by Kamin, 41, to wring more revenue out of dynastic wealth and the uber-rich like Jeff Bezos and Elon Musk, will be abandoned, based on Neal’s description of the framework agreed Thursday between himself, House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer and Senate Finance Committee Chairman Ron Wyden.

Restoring a top marginal income tax rate of 39.6%, boosting the capital gains tax rate and stripping back a coveted tax break for private equity managers known as carried interest have proven less of a fight.

‘Too Far’

Every tax proposal stripped from the legislation -- currently making its way through the House and set for a vote as soon as Sept. 27 -- means the $3.5 trillion price tag must be reduced. Biden has said he wants the plan fully paid for by tax increases or spending cuts elsewhere in the government’s ledger.

“Biden is not getting everything he wants, but he is getting a lot more than I thought he would get six months ago,” said Jason Furman, who also served with Kamin at the White House during the Obama administration and is now a professor of economic policy at Harvard University. Kamin “is the main person on the biggest, most controversial topic right now,” he said of the tax hike initiative.  

Kamin spent more than a decade thinking, teaching and writing articles about the best way to raise money from rich people for government programs before joining the Biden White House. He explored many of those with Lily Batchelder, a fellow NYU professor who won Senate confirmation on Wednesday to become assistant Treasury secretary for tax policy.

The two ran through a menu of options, in a 2019 paper, for extracting more money from America’s richest people, including a wealth tax, taxing capital gains at death, raising the top rate for high-income Americans and a financial transaction tax.

Team Effort

Within liberal tax-wonk circles, a 51-page treatise by Kamin and Batchelder in 2019 showed how far the Democratic Party had moved since the 1990s and 2000s, when the idea of raising taxes on the rich was regarded as a loser at the ballot box. Biden aides now regularly cite polls showing the majority of Americans support higher taxes on the wealthy. 

At the same time, many farm-state and moderate Democrats remain wary, especially with respect to safeguarding family farms and businesses. The House Ways and Means panel set aside the White House capital gains proposal -- which would have raised $322.5 billion by ending step-up in basis and boosting the top capital gains rate to 39.6% -- but did endorse a 3% surtax on those earning $5 million.

“Anything that deals with the set of issues around inherited wealth is challenging, from a policy perspective and from a political perspective as well,” Deese said.

Friends and allies say Kamin’s fascination with tax and budget policy was inherited from his parents, both career public servants. His father served as the assistant attorney general of Arizona and as a judge for the Arizona Superior Court for 20 years, while his mother was the first director of the Arizona Governor’s Office for Children and later ran the Children’s Alliance, a nonprofit advocacy group. 

Dinner Conversation

“Public policy and law would define our conversations around the dining room table,” Kamin said in 2012 to NYU Law Magazine.

After graduating from Swarthmore College, Kamin worked for two left-leaning economic and budget think tanks, attended law school on a scholarship for promising public-policy experts and then landed in President Barack Obama’s administration at the National Economic Council and the Office of Management and Budget. Older, more experienced Obama officials were impressed with his meticulous approach to data and numbers. 

He loved poring over spreadsheets and reading documents from the Congressional Budget Office, Furman said.

“He is not the person who will push his way into the middle of the conversation or try to dominate, but when he does speak up, it will be very thoughtful and generally learned and knowledgeable,” said Bob Greenstein, one of Kamin’s former bosses and the former president of the Center on Budget and Policy Priorities, a liberal research group.

Now, though, is the time for politics. Biden’s economic agenda is at risk of collapse if the president can’t hold the Democratic Party’s sparring factions together. Coming days and weeks will show how much of Kamin’s vision makes it into law.

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