President Joe Biden bluntly announced that the “wealthiest 1 percent of Americans saw their net worth increase by $4 trillion,” in announcing his infrastructure plan while going on to rant about tax loopholes used by companies “so they’d pay not a single solitary penny in federal income tax.” Republicans Accuse Biden of Tax Avoidance.
Despite Biden’s tirade against tax avoidance, House Republicans revealed that the president himself used those same tax loopholes to evade paying taxes on income in excess of $500,000 during 2017 and 2019, making use of two front companies for such evasion.
As the letter sent to the President by Republican members of the House reveals, “Over the past several years, you and the First Lady, through a legally dubious tax strategy, appear to have avoided payments of over $500,000 in payroll taxes.”
While tax avoidance by the president is controversial enough, it is even more so considering that payroll taxes go to fund Medicare for seniors, whose payments were also increased following the enactment of the Affordable Care Act in the Barack Obama administration.
During 2017, 2018 and 2019 President Biden and First Lady Jill Biden recorded income in excess of $13 million in two S corporations – CelticCapri Corporation and Giacoppa Corporation.
A corporation registered as an S corporation allows business income, losses, deductions and credits to be passed through to shareholders. Shareholders report income and losses on individual tax returns and pay taxes at ordinary tax rates.
While there is nothing illegal about S corporations, apparently President Biden and his wife’s income could not have been reported under this mode, as accounting expert Tony Nitty of RubinBorwn LLP explains in an interview with The Wall Street Journal, “There’s no reason for these to be in an S corp—none, other than to save on self-employment tax..”
Congressional Republicans in their letter to President Biden call him a hypocrite for his evasion as currently “Medicare faces significant funding shortfalls.” Indeed, Medicare along with Social Security is the most underfunded programs in the federal government’s budget.
Even as the President seeks to expand the Obamacare budget, Republican lawmakers are quick to remind Biden that: “You and your wife avoided paying over $121,000 in Obamacare payroll taxes.”
It should be remembered that President Biden plans an across-the-board income tax hike for individuals with incomes above $400,000 annually, as well as increasing to 28% the corporate tax set by former President Donald Trump at 21%.
For high-income individuals there would also be a 12.4 % increase for Social Security payments.
President Biden also plans to increase capital gains taxes, as well as to establish new rules to avoid tax loopholes, including repealing the use of S corporations, which he himself apparently used to avoid paying taxes.