Biden Exploited Tax Loophole on Book Income
President Obama wanted to end it but his former VP used it to his advantage.
The WSJ (paywalled) and Fox Business think they’ve caught the Democratic front-runner in a bit of hypocrisy:
Former Vice President Joe Biden, who is running for president in 2020, used a tax strategy former President Barack Obama likely would not have approved of.
Biden released additional years’ worth of tax returns this week, revealing that he and his wife funneled profits from their books and speeches through S corporations, as first noted by The Wall Street Journal. The controversial tax savings strategy – which Obama had tried to close – saved the couple as much as $500,000.
The loophole is known as the Gingrich-Edwards loophole, and Obama had called for its end as part of one of his budgets. It essentially allows self-employed people to set up an S corporation in order to avoid payroll taxes – including Social Security and Medicare taxes.
It is legal, and allows people to treat income as company profits instead of a salary. According to research conducted in 2009, closing the loophole would raise $11.2 billion in revenue over the course of the decade.
The Treasury Department estimated that loopholes allowing people to evade Medicare and Social Security taxes have cost about $25 billion each year, as reported by The New York Times.
Former presidential candidates Newt Gingrich and John Edwards drew scrutiny for using the loophole, hence its name.
A spokesperson for Biden’s campaign did not immediately return FOX Business’ request for comment.
I don’t understand the loophole here well enough to have a strong opinion as to whether it should be closed, although I do tend to think we should stop treating Social Security and Medicare taxes as separate line items.
Regardless, the notion that Biden’s accountants shouldn’t use every legal tool available under the existing tax code to minimize their tax liability because, in a perfect world, Biden would prefer that said tool be eliminated for everyone is silly. And that’s assuming he agrees with his former boss on the issue.