Joe Biden and his fellow Democrats are pushing for a $3.5 trillion bill to subsidize childcare, education, and health care. To pay for at least part of this, they want to curtail tax avoidance and raise taxes on the wealthy so that the rich pay their “fair share.”
But is Biden paying his legally required share of taxes? According to the New York Post, a new report drafted by the Congressional Research Service (CRS) suggests that he isn’t. It may well be that Biden owes somewhere around $500,000 in taxes.
Biden and his wife “Dr. Jill” routed more than $13 million through S corporations and counted less than $800,000 of it as salary eligible for the Medicare tax. They thereby exempted the remainder from what would have been a 3.8 percent rate.
The CRS report, which doesn’t name Biden, does not definitively show that he failed to pay the tax amount he owes. However, it strongly suggests that this is the case.
The CRS based its analysis on cases in which taxpayers did what Biden and his wife did — pay themselves suspiciously low salaries from S corporations and count most of the revenue as “distributions” exempt from the Medicare tax. In these cases, the IRS won judgments against the taxpayers and courts upheld the judgments.
Maybe an argument can be made that, on the facts of his case, Biden’s attribution of such a small percentage of his earnings to salary was reasonable. That seems implausible, but I’m anything but a tax law expert.
Unfortunately, it’s quite unlikely that the IRS will review Biden’s maneuver. The CRS report explains that presidential tax returns are subject to automatic audit only for years when a president is in office. The White House says that this year the Biden S corporations are dormant, meaning the IRS won’t automatically review their use.
The legislation Biden and the Democrats are pushing via reconciliation would preclude Biden’s dubious tax maneuver altogether. But even under existing law, it looks like Biden’s used the loophole improperly.
It takes more than a little chutzpah to berate the rich for not paying their fair share of taxes, and to do so in the context of a debate over the funding of health care, when you yourself have tricked your way out of paying the required share of Medicare taxes.
I’m sure there have been bigger phonies than “Middle Class Joe” in American politics. None comes immediately to mind, though.
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