In 2017 and 2018, Joe Biden and his wife ran $13 million of profits through 2 subchapter-S corporations. In so doing, they avoided $500,000 in Social Security and Medicare taxes they would have paid if they instead reported the income as sole proprietors directly on their 1040 income tax returns.
That’s because profits from an “S-corp” are subject to federal income tax, but not to the Social Security and Medicare tax. This is not true for sole proprietors, who are liable for both layers of tax in full.
To be equally clear, Joe Biden is a hypocrite for using S-corporations in this way for at least 4 reasons. This is, after all, a man who said that paying more in taxes was a “patriotic act.”
If you or a friend or family member own a small business, the business is likely use the same “tax loopholes” that both Trump and Biden use, because it’s part of the tax code that has been passed and updated for many years by both Democrats and Republicans.
Even if you don’t own a small business or don’t know anyone that does, you take every deduction that you or your tax guy can find to either reduce what you owe or get a bigger tax refund.
Just like Trump does and just like Biden does, it’s the way it was designed.
