[Obama’s former acting Solicitor General and a
senator-turned-lobbyist are helping a dark money group pressure the
high court. ]
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TOP DEMS PRESS SUPREME COURT TO BLOCK BILLIONAIRE TAX  
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Julia Rock
September 13, 2023
The Lever
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_ Obama’s former acting Solicitor General and a
senator-turned-lobbyist are helping a dark money group pressure the
high court. _

President Obama’s former acting Solicitor General Neal Katyal
speaking outside the U.S. Supreme Court , AP Photo/Andrew Harnik

 

The former Supreme Court lawyer for the Obama administration and a
Democratic senator-turned-lobbyist are pressuring justices to block
Congress from ever instituting a wealth tax on the superrich,
according to court filings reviewed by _The Lever_.

Former Obama acting Solicitor General Neal Katyal recently submitted
an amicus brief
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in the Supreme Court case _Moore v. United States _on behalf of the
group Saving America’s Family Enterprises (SAFE). That anonymously
funded group — whose board includes corporate lobbyists — has
spearheaded campaigns against Democrats’ efforts to tax the
inheritances and wealth of millionaires and billionaires. 

Now the group is aiming to use the seemingly obscure corporate
taxation case to elicit a broad ruling that outlaws all wealth
taxes. 

Katyal is an MSNBC mainstay who came to prominence as a liberal
defender of Republican President Donald Trump’s Supreme Court
nominees, all of whom will now rule on the case. In recent years,
Katyal has helped
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Nestlé defend itself in a child slavery case before the Supreme Court
and represented
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Johnson & Johnson in its bid to use bankruptcy to block lawsuits from
cancer victims.

Listed on the Katyal-authored amicus brief alongside SAFE is the
group’s senior adviser, former Louisiana Sen. John Breaux (D), who
also lobbies for ExxonMobil
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Norfolk Southern
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and Boeing
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— corporations whose top executives could have a financial interest
in the outcome of the case. Breaux also lobbies for billionaire
financial magnate and Democratic megadonor James Simons
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SAFE is organized as a so-called social welfare nonprofit, which
allows it to hide the identity of its donors and avoid taxes while
spending money to influence policy decisions.

In response to recent ethics scandals at the Supreme Court
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have signed
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onto legislation
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that would require organizations filing amicus briefs to disclose
their donors. But because that bill is stalled, SAFE can pressure the
Supreme Court to block a wealth tax while refusing to disclose its
benefactors.

SAFE did not respond to a _Lever_ request for a list of its donors.

KATYAL V. BILLIONAIRE TAX

Democratic lawmakers and the Biden administration have touted a wealth
tax as a way to tackle record levels of inequality and fund programs
that slash poverty and expand access to healthcare and education.

While there is virtually no chance of a wealth tax passing in the
Republican-led House of Representatives, major corporate lobbying
groups and right-wing think tanks are asking the Supreme Court to
preemptively rule that such a tax would be unconstitutional, in a case
involving an unrelated one-time levy on foreign corporate earnings
imposed in 2017.

The case in question, _Moore v. United States, _deals with a challenge
to the “mandatory repatriation tax,” a $340 billion provision in
the 2017 GOP tax law. The mandatory repatriation tax mostly applied to
major corporations, but also affected the small number of Americans
who have a larger than 10 percent stake in an offshore corporation.

Two such Americans, Charles and Kathleen Moore of Washington state,
sued, arguing that the mandatory repatriation tax was
unconstitutional.

If the Supreme Court strikes down that tax, it could create a
multibillion dollar windfall for major corporations — and eliminate
one of the only revenue-raising provisions in the 2017 law that
otherwise cut taxes for the wealthy and businesses.

But the _Moore _petitioners have another goal
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as well: preempting Congress from ever instituting a federal wealth
tax. They want the court to rule that income must be “realized” in
order for it to be taxable under the Constitution — in other words,
that an asset needs to be sold in order for its value to be taxed. 

In practical terms, if the high court decides that “realization”
is part of the definition of “income” — a radical divergence
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from precedent, but also a real possibility from the right-wing bench
— wealth tax proposals like those opposed by SAFE could be deemed
unconstitutional. 

Though Democrats’ wealth tax proposals have narrowly targeted the
superrich, SAFE’s brief insists that they represent an attack on
mom-and-pop businesses and working families. 

“Although these proposals initially take aim at economic elites,
history teaches that a tax on the unrealized gains of middle-class
Americans is not far behind,” Katyal wrote in the amicus brief
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for SAFE, adding that the existing repatriation levy is “an
unworkable and counterproductive tax scheme that will, in addition to
saddling individual taxpayers with complicated new taxes, unfairly
burden family businesses.” 

Katyal did not respond to a request for comment.

Katyal could be a particularly persuasive voice for SAFE at the high
court: He did favors for three of the conservative justices by using
his platform and Obama administration credentials to rally liberal
support for their confirmations. That was especially true for Justice
Neil Gorsuch, who in 2017 faced a roadblock from Democrats who were
angry that Republicans had filibustered Merrick Garland’s nomination
until Trump took office.

Katyal came to Gorsuch’s defense in a _New York Times_ op-ed
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headlined: “Why Liberals Should Back Neil Gorsuch.” 

Katyal reminded readers, “I was an acting solicitor general for
President Barack Obama,” and noted that despite his liberal
bonafides, he endorsed Gorsuch and his “commitment to judicial
independence.” Katyal introduced
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Gorsuch at his subsequent confirmation hearing.

In 2018, after Trump appointed Justice Brett Kavanaugh, Katyal said it
was “very hard for anyone who’s worked with him, appeared before
him to, frankly, say a bad word about him.”  Republicans touted
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Katyal’s praise for Kavanaugh as they moved to confirm him.

Of Justice Amy Coney Barrett, Katyal said
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“I think you’ll hear many Democrats acknowledge she’s a
brilliant person, she’s a lovely person.”

In response to criticisms that Katyal should have disclosed potential
conflicts of interest in his pro-Gorsuch op-ed, since such praise
could curry favor for him in future high court appearances, Katyal
told the_ New York Times_
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_“It is a matter of public record that I am a Supreme Court lawyer
and naturally will have matters pending before that court… it would
be completely speculative to presume what a nominee might do as a
justice in any particular case.”

DEMOCRATS V. BILLIONAIRE TAX

SAFE’s amicus brief is the latest move in a yearslong campaign to
protect the assets of wealthy people from taxation. The group was
launched in 2021 to preserve a tax loophole that the wealthy use when
bequeathing assets worth more than $1 millIon to their children. 

Biden had proposed limiting the tax loophole, known as “stepped-up
basis,” that costs more than $40 billion
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overwhelmingly enriches the wealthy, in order to help fund his
legislative agenda. 

The tax revenue would have partially offset spending in Democrats’
signature Build Back Better legislative package, which proposed
funding universal preschool, making community college free, adding
hearing benefits to Medicare, extending the expanded child tax credit,
and other transformative welfare proposals.

SAFE hired
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former Sen. Heidi Heitkamp (D-N.D.) to defend the tax loophole, just
months after she called it “one of the biggest scams in the history
of forever on income redistribution.”

Democrats did not close that loophole, and they ultimately allowed key
social safety programs that were expanded during the COVID-19 pandemic
to expire, causing the U.S. child poverty rate to more than double
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last year and poverty to spike overall.

This year, SAFE launched a multi-million dollar ad campaign
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opposing Democratic proposals to tax the wealth of people worth more
than $100 million, with Breaux, the former Louisiana senator, serving
as the group’s figurehead. 

“If you want to raise money, there’s a lot of ways to do it but
you don’t want to do something that is bad policy,” Breaux told
_Roll Call_
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about the wealth tax proposals. The new ad campaign, he said, was
aimed at educating people about the proposals that Democrats had
pitched as billionaire taxes: “We can’t let slogans rule the
day.”

One of SAFE’s new ads claims
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government will guess at the increased value of everything you own,
and tax you on that guess every year — your home, savings,
retirement account.”

Breaux, who served in Congress from 1972 to 2005, was a member of the
New Democrat Coalition that had backed Clinton’s neoliberal agenda.
After leaving Congress, he became a corporate lobbyist — as many
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corporate Democrats do. Breaux is now a senior partner and director at
the lobbying firm Crossroads Strategies.

SAFE’s board of directors includes two corporate lobbyists: Missy
Edwards and David Lehman. Edwards lobbies
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for General Motors, the real estate industry, and electric utilities,
while Lehman lobbies
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for defense contractors.

SAFE employs Forbes Tate, a lobbying firm run by
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former officials from President Bill Clinton’s administration that
has coordinated
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the health care industry’s campaign against Medicare for All.

_The Lever_ is a nonpartisan, reader-supported investigative news
outlet that holds accountable the people and corporations manipulating
the levers of power. The organization was founded in 2020 by David
Sirota, an award-winning journalist and Oscar-nominated writer who
served as the presidential campaign speechwriter for Bernie Sanders.

* tax the rich
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* Democrats
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* Tax policy
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