How the Bidens Dodged the Payroll Tax
Joe Biden responded to President Trump’s partial suspension of payroll-tax collections with a statement calling it the “first shot in a new, reckless war on Social Security.” He continued: “Our seniors and millions of Americans with disabilities are under enough stress without Trump putting their hard-earned Social Security benefits in doubt.”
Mr. Biden’s objections might be more persuasive had he and his wife, Jill, not gone out of their way to avoid funding seniors’ entitlement benefits. According to their tax returns, in 2017 and 2018 the Bidens and his wife Jill avoided payroll taxes on nearly $13.3 million in income from book royalties and speaking fees. They did so by classifying the income as S-corporation profits rather than taxable wages.
The Bidens did pay themselves “salaries” from their corporations—CelticCapri Corp. and Giacoppa Corp.—of nearly $750,000 between them over two years, and they paid full taxes on that income. But they circumvented the payroll tax on the nearly 95% of their income that remained. A tax expert interviewed by the Journal in 2019 called the Bidens’ scheme “pretty aggressive”; another told the paper it served solely to avoid the payroll taxes.
Of the taxes the Bidens avoided, 2.9% of their income, around $385,000, would have funded Medicare. The other 0.9%, nearly $120,000, was part of Obamacare and fund that law.
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. The maximum payroll tax affected by Mr. Trump’s suspension is $1,984—less than 1/250th of the amount the Bidens avoided in 2017-18.
The Bidens didn’t avoid any Social Security tax, which applied only to the first $127,200 of income in 2017 and $128,400 in 2018. But they would under Mr. Biden’s tax plan, which would impose the 12.4% Social Security tax on income over $400,000; the same loophole he used in 2017-18 would shield him from his own tax. And how can Mr. Biden claim to protect Medicare and Obamacare when he avoided more than $500,000 in taxes that fund the two programs?
The media have largely ignored the Bidens’ accounting legerdemain, fixating on Mr. Trump’s tax returns instead. But at least the president isn’t looking to raise taxes on everyone else.
This post was originally published at The Wall Street Journal.