By Richard Rubin and Ken Thomas
Former Vice President Joe Biden released his 2019 tax returns on
Tuesday, showing that he paid nearly $300,000 in federal taxes,
seeking to draw a contrast with President Trump in the hours before
their first debate.
Mr. Biden and his wife, Jill, reported receiving $985,233 in
adjusted gross income in 2019, a year in which he was mostly
running for president.
Mr. Trump, meanwhile, has refused to release any of his tax
returns, breaking a 40-year tradition of major-party candidates and
presidents. The New York Times reported Sunday that Mr. Trump
hasn't paid federal income taxes in many recent years and paid just
$750 for 2016 and the same amount for 2017. Mr. Trump has dismissed
the Times' reporting as inaccurate but has declined to specify any
errors.
The Times report detailed a series of questionable transactions
by Mr. Trump, including deductions for hair styling, claims of
large losses and consulting payments to his daughter, Ivanka Trump.
The president has said he is still being audited by the Internal
Revenue Service.
Mr. Biden's campaign said the latest release means he has now
released 22 years of tax records, covering years when he served in
the Senate representing Delaware, as vice president and his time
after he left the Obama administration.
"This is a historic level of transparency meant to give the
American people faith once again that their leaders will look out
for them and not their own bottom line," said Kate Bedingfield, Mr.
Biden's deputy campaign manager.
Mr. Biden's campaign said his running mate, California Sen.
Kamala Harris, was also releasing her 2019 tax returns with her
husband, Doug Emhoff, a lawyer who has taken leave from his
position as a partner with the firm DLA Piper.
Mr. Biden employed a significantly scaled-back version of a
tax-avoidance technique that he used in 2017 and 2018 on the income
that he and his wife, Jill, earned from books and speeches. They
set up S corporations to receive that income.
By doing so and by taking relatively small salaries from those
companies as a share of profits, they avoided a 3.8% tax on those
profits, totaling up to $500,000 in savings in those earlier years.
Such businesses are supposed to pay their owners reasonable
compensation for work. For businesses that generate profits from
their owners' labor, large gaps between profits earned and wages
paid can be considered questionable.
In 2017 and 2018, the S corporations generated more than $13
million in profits and paid the couple less than $800,000 in wages.
In 2019, the Bidens' S corporations generated about $229,000 in
profits and paid them about $309,000 wages. The tax reduction for
2019 was less than $10,000.
"That's probably not much greater than the amount the Bidens
paid to have the two S corporation returns prepared, so the savings
of operating as an S corporation is now down to next to nothing,"
said Tony Nitti, an accountant at RubinBrown LLP.
Other politicians, including former House Speaker Newt Gingrich
and former Democratic vice presidential candidate John Edwards,
used the same strategy. The Obama administration, during Mr.
Biden's time as vice president, proposed closing that gap in the
law.
The Bidens reported receiving income from several sources,
including Northern Virginia Community College, where Dr. Biden has
worked as an English professor, and the University of Pennsylvania,
where Mr. Biden established a center for diplomacy after the end of
the Obama administration. Mr. Biden also receives a federal
pension.
They reported making $14,700 in charitable contributions,
including donations to a Presbyterian church and the Catholic
church where the Bidens attend Mass in Delaware.
Ms. Harris and Mr. Emhoff reported receiving $3.1 million in
adjusted gross income and paid more than $1 million in federal
taxes. Their income included about $265,000 from Ms. Harris's
writing work, but the bulk of the couple's money came from Mr.
Emhoff's law-firm income.
Vice President Mike Pence released tax returns through 2015
during the 2016 campaign but hasn't released any more recent
returns. Last year, Mr. Pence's office said he would disclose them
before the 2020 election if they were no longer under audit. Vice
presidents, like presidents, face mandatory audits, though Mr.
Pence's finances are far less complicated than Mr. Trump's.
The vice president's office hasn't responded to repeated
requests over the past few months about his returns. The Trump
campaign didn't immediately respond to a request for comment
Tuesday on the release of Mr. Biden's returns.
Write to Richard Rubin at richard.rubin@wsj.com and Ken Thomas
at ken.thomas@wsj.com
(END) Dow Jones Newswires
September 29, 2020 14:16 ET (18:16 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.