Joe and Jill Biden released their tax returns without fanfare last Friday, perhaps wanting to maintain their ability to claim their returns are public while keeping it quiet that they are not “paying their fair share” yet again.
When Joe left the vice presidency in January 2017, the Bidens set up two subchapter-S-corporations to process their income from books and speaking engagements. That allows them to characterize a significant part of their joint income as profits from the corporations rather than as wages. That bookkeeping has been used by them to avoid paying payroll taxes on more than $13 million of their declared income.
Their 2021 return shows that they declared almost $62,000 in corporate profits last year as being exempt from payroll taxes. The profits are split between Joe Biden’s CelticCapri Corporation and Jill Biden’s Giacoppa Corporation. Joe Biden avoided paying 3.8 percent on his corporation’s profits, 2.9 percent for Medicare and 0.9 percent for Obamacare.
Jill was able to bypass much more in 2021 taxes. She earned around $67,000 as a teacher at Northern Virginia Community College, which is under the Social Security wage cap of $142,800. As she classified her book income of $33,000 as corporate profit rather than her wages, she avoided Social Security costs in addition to Medicare taxes.
Last year’s tax avoidance is relatively small compared to the almost $517,000 the couple avoided in Medicare and Obamacare taxes using the technique in the tax years 2017 through 2020.
Several tax experts have reviewed the Biden returns and believe at least part of their tax scheme may not be legal. Especially in 2017 and 2018, Joe Biden paid himself such a low salary out of his corporation that it could violate IRS guidance on what amounts to “reasonable compensation.”
Whether the first couple’s recent returns violate tax law or not, their actions amount to rank hypocrisy about demanding high-income Americans like themselves “pay their fair share.” In fact, the Treasury has argued for closing the very loophole the Bidens have exploited for years. It said that allowing S-corporations to avoid payroll taxes is “unfair” and “inefficient” while “distorting choice of organizational form” and permits high-income earners to avoid a “fair share” of taxes.