"Since the left is now in histrionics over President Trump's perfectly legal use of the US tax code to avoid paying taxes for 10 out of the last 15 years, perhaps they'll give as much attention to Joe Biden – who used another perfectly legal tax 'loophole' to avoid approximately $500,000 in payroll taxes on $15 million in income."
"Of course, they ignored it in July when the Wall Street Journal reported that Joe and Jill Biden took advantage of the "S corporation" payroll tax loophole that the Obama-Biden administration unsuccessfully attempted to close.
According to the report, the Bidens routed income from book sales and speeches through S corporations – avoiding the 3.8% self-employment tax they would have paid if they had been compensated directly, and avoiding as much as $500,000 in taxes."
"There’s no reason for these to be in an S corp—none, other than to save on self-employment tax," accountant Tony Nitti told the WSJ at the time.
And as the Journal's Chris Jacobs wrote last month, "According to the Urban Institute, a couple featuring one high earner and one average earner, retiring this year, will have paid a total of $209,000 in Medicare taxes during their working lives."
"The Bidens avoided paying nearly twice that much in Medicare taxes during two years."
Meanwhile, the Las Vegas Review-Journal suggests Biden is a hypocrite – as the former Vice President has been an outspoken opponent of such loopholes since Ronald Reagan was in office.
Per current tax law, S-corporation owners can legally avoid paying the 3.8 percent self-employment tax on their profits as long as they pay themselves “reasonable compensation” that is subject to regular payroll taxes. The IRS definition of “reasonable compensation” is a tad fuzzy, however, which led to the Bidens reporting less than $800,000 salary on their reported $13 million in combined profits. –Las Vegas Review-Journal
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"Reported less than $800k on an income of $13 million." pl
https://www.zerohedge.com/political/biden-dodged-500k-taxes-exploiting-loophole
Just how does a member of the Senate (public servant!) married to a school teacher generate a $13 million in profit?
Fred — “Income from book sales . . .”
Maybe that’s been the practice for longer than I’m aware of, that people in high political position become authors. Many are ghost-written.
Not sure how many genuine sales are made, or whether such books are a scheme between publishers, “candidate”, and taxpayer-funded entities to boost or exploit a public figure.
It’s bothersome that public libraries are so often major customers for these revenue-generators that make little contribution to history or culture.
Fred,
Book sales and speaking engagements are ostensibly the source of much profit. I have long thought that the book sales and speaking payments these people enjoy are some kind of money laundering schemes. If only we had investigative reporters with cojones.
Since leaving office the Bidens made $15.6 million in book sales and speaking engagements. They reported earning $11 million immediately after leaving the White House in 2017 and $4.5 million in 2018. Their tax returns showed they paid $5.2 million in federal taxes between those two years. These are the figures from Biden’s 2018 return:
Adjusted gross income: $4,580,437
Taxes paid: $1,528,208, or 33% rate
Charity: $275,796, or 6%
Biden wasn’t a Senator or VP when he made that kind of money. His school teacher wife made $90,000 a year teaching English at a Northern Virginia Community College. She also made money on book deals and speaking engagements, though it wasn’t quite as lucrative as Joe’s deals.
Establishing an S-corp was a widespread and important move by near every self-employed business person I knew over a seven year period. It was far more common than going full incorporation or LLC for both tax and legal liability reasons. I thought the idea was to pay as little in taxes as the law allows. What this does mean is that Joe shouldn’t be passing himself off as a regular working stiff. He’s most likely part of the top 1%, at least in the top 5%.
TTG
Nobody said it was illegal. It is grand to know that a “union guy” like him and the lovely Dr. Jill have done so well. Someone pointed out to me that plain old Jill (at that time) let Joe drive her husband’s Corvette when they were newly he-ing and she-ing and Joe wrecked it. I hope he paid the man for the damage.
Does anyone find it fascinating that with all this media sanctimony on the wealthy taking advantage of the complex tax code with benefits & loopholes designed for them, that none of the spokesmodels are calling for a dramatic simplification? What happened to the flat tax with no deductions that had at least tiny momentum couple decades back?
Yeah, the oligarchy and the bought & paid for politicians who write the legislation didn’t want any of that. When it comes to economics, both the conservatives and the liberals while screaming marxism and racist to each other are busy enacting socialism for the Top 0.1%. Stripping the working & middle classes is what both sides have successfully accomplished over the past 40+ years. And so has Trumpism!
TTG,
So while a member of the US Senate Holy Joe was also a “self-employed business person…”. Yep, I agree, and access is why all those ‘fine people’ bought many, many, times $15,000,000 dollars worth of books, $15mil only being the profit that had to be off-set with that eeeevil tax shelter. And to think that Rube Rostenkowski got driven from office for a stamp scandal.
Fred,
You’re having serious trouble grasping the chronology. Those book deals and speaking engagements came after he was done being VP and long after he was a member of the Senate. It couldn’t have been that eeeevil a tax shelter if it still left his paying a 33% rate. As far as I know Joe didn’t claim $70,000 in haircuts as a write off or over $700K in consulting fees to Ivanka while she was simultaneously a salaried employee of the Trump organization. No wonder Trump’s under audit.
However, on the plus side, Trump can point out he donates his salary back to the USG. That two million over four years. That’s not close to what Biden paid in taxes over that same period, but it’s a lot better than that $750 figure.
TTG
Enlighten me on the subject of Trump’s AMT payments. I have looked in the article and not seen the subject. https://www.theguardian.com/us-news/2017/mar/14/donald-trump-tax-return-leaked-alternative-minimum
pl,
Trump paid 31 million in AMT in 2005 for a 25% tax rate. That a huge chunk of the $95 million he paid in taxes over 18 years. In 11 of those years, he paid no taxes. That a real estate guy like Trump pays little taxes isn’t that big a surprise. It fits with Leona Helmsley’s mantra of “taxes are for little people.” What is a revelation is how hollow the Trump organization is and in debt Trump is. He’s a lousy businessman, but a first rate con man.
TTG,
I’ld never say he’s getting bribed in advance or paid for services rendered. I have enough enemies, even if I am a nobody.
TTG
That’s for ONE YEAR. What about the others? IMO you know nothing about business. You remind me of Obama or Colonel Marc Powe, another scholarship boy all the way, a deluded idealist. Money is not free. You would have learned that if you had ever been in business, as opposed to cover. It does not depend in the real world on justifying appropriations to Congress. Although, God knows, I have done my share of that.
pl,
His total taxes paid over 18 years was $95 million. The $31 million AMT payment for 2005, that one year, accounts for a third of his total taxes over that 18 year period. If the IRS audits and the NYAG investigation of the Trump organization both come up empty, good for him. Maybe he’ll fare better than he did with his Trump Foundation now under court ordered dissolution. He had to pay $2 million for misuse of foundation funds, but got out with no criminal conviction… so far. There’s hard hearted businessmen and there are crooked con men.
I have two brothers who did quite well in their own businesses, one in industrial machine repair and the other in forest management/logging. I know how the real business world works,
TTG
No. You are not your brothers any more than Gingrich is his step father. You have no idea of the differences between government, business and the church. You are an other worldly soldier. You should have been a priest. Pray for our brothers long dead in Palestine.
pl,
I almost was. For years I thought I would become a Maryknoll missionary priest. I am aware that period made a significant impression on my personality. Very astute of you to sense that.
TTG,
The IRS is auditing Trump. What are they going to dispute, depreciation expenses on billion dollar pieces of real estate and how that should be amortized to offset operating expenses of the same properties? Are the NYT reporters tax accountants, as I don’t see any quoted in any of the related stories?
TTG,
My understanding is that Trump was carrying forward substantial losses from his casino biz; losses that offset taxes owed on profits made in future years. Standard stuff if that is what is was.
You may call Trump a lousy business man, or whatever you want. All I know is that the business I work in and my personal finances improved greatly in the Trump economy. I couldn’t care less what he did with his taxes or women. I merely want a pro-American set of policies that includes removal of onerous regulations that stifle business. Obama told me to get used to anemic economic growth and continued the sell-out of our country to China and others while fomenting expensive stupid wars. Trump said the hell with all of that and forged ahead to a record breaking economy. That’s what many of us want from govt; less of it screwing things up and less of it generally.
Last I checked the President is not a religious figure nor is sainthood a requirement for the job.