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Bidens paid 26 percent tax on $607K income, 2020 return shows

Vice President Kamala Harris and second gentleman Douglas Emhoff paid a nearly 37 percent rate on nearly $1.7 million in adjusted gross income

President Joe Biden fist bumps Vice President Kamala Harris as Speaker Nancy Pelosi claps at the end of his address to a joint session of Congress on April 28.
President Joe Biden fist bumps Vice President Kamala Harris as Speaker Nancy Pelosi claps at the end of his address to a joint session of Congress on April 28. (Caroline Brehman/CQ Roll Call file photo)

President Joe Biden and first lady Jill Biden jointly paid $157,414 in federal income taxes for 2020, according to their tax return released Monday.

The taxes paid amounted to an effective tax rate of 25.9 percent on $607,336 in adjusted gross income, the return showed.

The Bidens also reported donating about 5.1 percent of their income to 10 charities, totaling $30,704. The largest reported gift was $10,000 to the Beau Biden Foundation, a public charity designed to protect children from abuse.

The release of Biden’s federal and state tax returns stood in contrast to the policy of former President Donald Trump, who declined to release his returns in his four years in office. Trump had said repeatedly that he would release them when he is no longer under audit, although there is no requirement for audited returns to remain confidential.

Vice President Kamala Harris and Douglas Emhoff reported paying $621,893 in federal income taxes. They paid an effective income tax rate of 36.7 percent on adjusted gross income of $1,695,225 in 2020; they donated just over $27,000 to charities.

The tax returns of both the president and the vice president show the impact of a $10,000 cap imposed on state and local tax deductions under a 2017 Republican-written tax code overhaul.

If that cap had not been imposed, the Bidens would have been able to deduct an extra $80,289 from their taxable income. For Harris, the savings would have been ever greater; she and Emhoff were forced to leave $270,421 in potential deductions on the table.

Democrats from high-tax states such as New York and California are pushing to lift the $10,000 cap as part of negotiations on upcoming spending initiatives. Republicans have sought to hold firm, saying raising the cap would mostly benefit upper-income taxpayers in blue states.

As he has done in previous tax filings, the Bidens routed some of their income from book deals and speeches into a type of closely held business known as a subchapter S corporation, called Giacoppa Corp. The Bidens reported Giacoppa Corp. income totaling $90,854, which they didn’t need to pay self-employment taxes on that finance Social Security and Medicare.

Biden has proposed closing what critics call an “S corporation loophole” that allows for such transfers of income to escape payroll taxes, which would hit upper-income taxpayers like himself.

Biden’s $1.8 trillion education and child care proposal would subject all households earning more than $400,000 to a 3.8 percent Medicare tax, which is currently applied unevenly.

For example, some business owners today that make more than $200,000 don’t have to pay either the 1.45 percent Medicare tax assessed on both workers and their employers, or the extra 0.9 percent Medicare tax on workers’ income above that threshold. In addition, S corporation owners and some partnership participants that actively take part in their businesses are exempt from a separate 3.8 percent investment income tax.

While details won’t become available until Biden’s budget release May 27, presumably his plan would apply the combined 3.8 percent rate on all income above $400,000, regardless of what form the money is earned.

“The President’s tax reform would apply the taxes consistently to those making over $400,000, ensuring that all high-income Americans pay the same Medicare taxes,” read the fact sheet released with Biden’s plan on April 28.

Similarly, a big chunk of the $1.4 million Emhoff earned last year through his partnerships at law firms DLA Piper and Venable could have been subject to Medicare tax if Biden’s proposal had been in effect. His and Harris’ tax return showed the $1.4 million deducted from computation of the 3.8 percent investment income tax because of Emhoff’s material participation in the business.

The Bidens also reported paying $28,794 in Delaware income taxes. And Jill Biden, who teaches at Northern Virginia Community College, reported paying $443 in Virginia income taxes.

Harris and her husband also paid $125,004 in California income taxes, and Emhoff paid $56,997 in District of Columbia income taxes.

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