Getting Biden's capital gains tax through congress is slim to none: Federated Hermes' Orlando
President Joe Biden’s income fell dramatically to US$607,336 in 2020 as he dropped lucrative speaking engagements to campaign for the White House, but he still earned enough to pay the higher tax rates he’s proposed for wealthy people.
Biden and first lady Jill Biden paid US$157,414 in federal income tax, making their federal income tax rate 25.9 per cent, according to their 2020 tax return, which was obtained by Bloomberg News ahead of its Monday release by the White House. They paid an additional US$28,794 in Delaware state taxes and US$433 to Virginia, where the first lady teaches.
The Bidens reported holding cash and investments totaling between US$1.2 million and US$2.88 million in a financial disclosure filed to the Office of Government Ethics ahead of Monday’s deadline for senior executive branch officials and also obtained by Bloomberg.
Biden was consistently at the bottom of net worth rankings for members of Congress during his years in the Senate, but cashed in after the vice presidency, making more US$16.5 million from 2017 to 2019, according to according to tax returns previously released by his presidential campaign.
Vice President Kamala Harris and her husband Doug Emhoff are also releasing their tax returns and financial disclosures on Monday. In 2020, Harris and Emhoff had a federal adjusted gross income of US$1,695,225, most of which came from Emhoff’s work at law firm DLA Piper, where he was a partner. They paid US$621,893 in federal income tax, a rate of 36.7 per cent.
Both Biden and Harris would end up paying higher tax rates under Biden’s American Family Plan based on their incomes this year. Harris and Emhoff would also be subject to an increase in the capital gains rates since they earned more than US$1 million. Both couples would benefit from efforts among some House Democrats to repeal the US$10,000 limit on deductions for state and local taxes, or SALT. The Bidens paid US$90,289 in SALT while Harris and her husband paid US$280,421, amounts they could fully write off if Democrats succeed in restoring the tax break that was curbed by former President Donald Trump.
In all, Biden will have released tax returns from 23 years, the White House said in a statement touting his continuation of “an almost uninterrupted tradition,” a knock against former President Donald Trump, who bucked tradition -- but not law -- by declining to release his. Ahead of the documents’ release, White House Press Secretary Jen Psaki told reporters their disclosure “should be expected by every president of the United States.”
Trump claimed he couldn’t release his returns because he was under audit by the Internal Revenue Service, but the agency said he was free to do so. During the campaign, Biden played up his voluntary disclosures, releasing his and Harris’s 2020 tax returns just before the first presidential debate in September.
The OGE clashed with Trump over the former president’s labyrinthine business empire, which included a hotel just blocks from the White House in a building leased by the federal government. The OGE hasn’t identified any conflicts of interest with Biden or Harris.
More than US$260,000 of the Bidens’ income came from annuities and pensions, and they received a combined US$45,836 in social security benefits. Much of the rest of their income came from Jill Biden’s work at Northern Virginia Community College.
Giving to charity
The Bidens gave US$30,704 -- 5 per cent of their income -- to charity. The biggest check was US$10,000 to the Beau Biden Foundation, named for their late son. They gave US$5,000 to both the Food Bank of Delaware and the International Association of Fire Fighters Foundation. The IAFF union has been a longtime Biden ally and was first to endorse him after he entered the presidential race in 2019.
The Bidens reported having as much as US$1,780,000 in cash spread across four banks and two credit unions. That’s down from as much as US$3.2 million reported in their disclosure filed in May 2020.
They also had modest holdings in mutual funds worth between US$26,000 and US$215,000. They had liabilities of between US$280,000 and US$600,000, including a mortgage from 2013, when the Bidens refinanced a 30-year loan on their Greenville, Delaware, home at a 3.375 per cent interest rate.
There are between US$53,000 and US$270,000 in mutual fund holdings in the first lady’s name, including three investments in sector funds in health care, technology and utilities that she intends to divest out of an abundance of caution to avoid violating conflict of interest rules, a White House official said. An independent fund manager will put the money into diversified funds, the official said.
The Bidens drew attention during the campaign for running their income from book deals and speaking engagements through their respective S-corporations. The Obama administration tried and failed to close what it saw as a loophole, which helped the Bidens avoid paying the 3.8 per cent self-employment tax, saving them roughly US$500,000 in their peak earning years of 2017 and 2018.
But the president’s S-corporation, CelticCapri Corp., now holds only the intellectual property to his books and between US$1,000 and US$15,000. Biden pledged on his disclosure form that the business will remain dormant during his government service with one exception: if his publishers choose to reissue his books.
The first lady’s S-corporation, Giacoppa Corp., had slightly more activity, paying her US$200,000 in wages and US$90,854 in business profits. Two publishers of her books, Simon & Schuster and Flatiron Books, both paid the S-corporation during 2020. She also reported US$12,681 in W-2 wages from her job teaching English part-time at Northern Virginia Community College, down from previous years when she had a busier teaching schedule.
Like the Bidens, Harris’s and Emhoff’s earnings were substantially down from 2019, when they had US$3,018,127 in taxable income and paid US$1,185,628 in taxes. The decrease in income is due in large part to Emhoff’s departure from DLA Piper -- he took a leave of absence in August after Harris joined the Democratic ticket and left the firm days after November’s election. On their tax return, Harris reported US$293,902 in income from her 2019 book “The Truths We Hold: An American Journey” in addition to her U.S. Senate salary.
The second couple’s reported assets are between US$3.1 million and US$7 million. Two of their largest investments are in Vanguard’s Value Index and Growth Index exchange traded funds, with between US$250,000 and US$500,000 in each.
Emhoff has between US$600,000 and US$1.25 million in accounts tied to DLA Piper and an additional US$250,000 to US$500,000 in a capital account at Venable LLP, another law firm where he was a partner. He holds small amounts of a handful of sector funds well below the US$50,000 threshold for a conflict of interest and will continue to review them, the White House official said.
The couple gave US$27,006 to charity, including US$5,000 each to three of their alma maters, Howard University, the University of Southern California and California State University, Northridge.