Perhaps this will help.
Joe and Jill Biden used questionable tax maneuvers to avoid paying over half a million dollars in payroll taxes. According to their 2017, 2018, and 2019 tax returns, the Bidens characterized most of their book and speech income as profits from two corporations, CelticCapri Corporation and Giacoppa Corporation, rather than wages.
The Bidens paid income taxes on all of their earnings. But under current law, the Bidens did not pay payroll taxes—a 2.9% Medicare tax, and a 0.9% payroll tax imposed by Obamacare—on the money declared as corporate profits. As a result, the Bidens avoided paying $513,540 in Medicare and Obamacare taxes on over $13.5 million in income.
Tax experts interviewed by the Wall Street Journal in 2019 raised questions about the validity of this scheme. For one, Biden’s income came from his own intellectual property—writing a book and making personal appearances—raising questions about why he characterized much of his income as corporate profits and not wages. Moreover, Biden took a very low salary compared to the size of those corporate profits, making it look like he understated his wage income solely to avoid payroll taxes.
Impact at Confirmation Hearings
For a party focused heavily on raising taxes on the rich and expanding entitlements, Biden’s actions contradict much of his economic agenda. His tax scheme could help define the next four years, beginning with nominees’ confirmation hearings. Nominees for key health care positions—including Health and Human Services Secretary-designee Xavier Becerra—may have to answer questions from Senate Republicans about how and why the Biden Administration wants to expand Obamacare when Joe Biden himself failed to pay the taxes that fund the program.
Other nominees will face more specific queries. For instance, the liberal Center for American Progress, headed by Office of Management and Budget Director-designee Neera Tanden, called the maneuver the Bidens used a “loophole that enable[s] high-income individuals to avoid Medicare contributions.” Does Tanden approve of Biden using what her own organization called a tax loophole—and if not, why did she accept a position in his administration?
Republicans can ask Treasury Secretary-designee Janet Yellen what she thinks of Biden declaring only $145,833 in wage income in 2017, while reporting nearly $9.5 million in corporate profits. How does Biden paying himself such a low salary—in a year when he received a reported $8 million book advance—comport with IRS regulations on “reasonable compensation” designed to prevent individuals from using the corporate profit loophole to circumvent payroll taxes?
Will Yellen request an audit of Biden’s returns, given that tax experts have called his behavior into question?
