Democratic presidential candidate Joe Biden used a tax loophole that the Obama administration tried and failed to close, substantially lowering his tax bill.
Mr. Biden and his wife, Dr. Jill Biden, routed their book and speech income through S corporations, according to tax returns the couple released this week. They paid income taxes on those profits, but the strategy let the couple avoid the 3.8% self-employment tax they would have paid had they been compensated directly instead of through the S corporations.
The tax savings were as much as $500,000, compared to what the Bidens would have owed if paid directly or if the Obama proposal had become law.
“There’s no reason for these to be in an S corp—none, other than to save on self-employment tax,” said Tony Nitti, an accountant at RubinBrown LLP who reviewed the returns.
“As demonstrated by their effective federal tax rate in 2017 and 2018—which exceeded 33%—the Bidens are committed to ensuring that all Americans pay their fair share,” the Biden campaign said in a statement Wednesday.
The technique is known in tax circles as the Gingrich-Edwards loophole—for former presidential candidates Newt Gingrich, a Republican, and John Edwards, a Democrat—whose tax strategies were scrutinized and drew calls for policy changes years ago. Other prominent politicians, including former President Barack Obama and fellow Democrat Hillary Clinton, as well as current contenders for the 2020 Democratic nomination Sens. Elizabeth Warren and Bernie Sanders, received their book or speech income differently and paid self-employment taxes.
Unlike his Democratic rivals and predecessors in both parties, Mr. Trump has refused to release his tax returns, and his administration is fighting House Democrats’ attempt to use their statutory authority to obtain them. Democratic presidential candidates have released their tax returns and welcomed criticism to draw a contrast with Mr. Trump.
Mr. Biden, who was vice president from 2009 to 2017, has led the Democratic field in polls since entering the race. He is campaigning on making high-income Americans pay more in taxes and on closing tax loopholes that benefit the wealthy.
Mr. Biden has decried the proliferation of such loopholes since Ronald Reagan’s presidency and said the tax revenue could be used, in part, to help pay for initiatives to provide free community-college tuition or to fight climate change.
“We don’t have to punish anybody, including the rich. But everybody should start paying their fair share a little bit. When I’m president, we’re going to have a fairer tax code,” Mr. Biden said last month during a speech in Davenport, Iowa.
“There was a brashness about him that I always associated with the Wall Street ethos,” the Rev. John Paul Wauck, an Opus Dei priest who knew McCloskey, wrote in an email. “You could say that, as a priest, he maintained an entrepreneurial attitude. For some, this was off-putting; for others, it was, I’d say, invigorating and even entertaining.”
McCloskey harnessed that entrepreneurial spirit to persuade people, mostly men, to become Catholics. In New York in 1997, he converted Kudlow, who was recovering from addiction. Mark Belnick, a former general counsel of Tyco International, who described McCloskey as a “great friend” in a New York magazine article, soon followed. They would be among the first in a long line of high-profile conversions that McCloskey facilitated.
“It’s just like the brokerage business or any business of sales,” McCloskey told the National Catholic Reporter in 2003. “You get a reputation, you deal with one person and they mention you to another person . . . and all of a sudden you have a string of people.”
The conversions came naturally to McCloskey because “he just had an absolute certainty about what he was proposing, and he had no hesitation at all about unapologetically offering Catholicism as an option,” said Shaw, his co-author.
.. Although he left Washington at perhaps the height of his fame, McCloskey’s legacy is the ongoing influence of the Catholic Information Center. The center’s board includes Leonard Leo, executive vice president of the Federalist Society, which helped shepherd the Supreme Court nominations of Brett M. Kavanaugh and Neil M. Gorsuch. White House counsel Pat Cipollone is a former board member, as is William P. Barr, who served as attorney general under President George H.W. Bush and is now President Trump’s nominee for the same position.
.. The small center — its members and its leaders — continue to have an outsize impact on policy and politics. It is the conservative spiritual and intellectual center that McCloskey had imagined and its influence is felt in all of Washington’s corridors of power.
The effect of Bush’s 1992 loss on the current GOP cannot be overestimated. The object lesson for the GOP was that neither preparation nor accomplishment mattered as a metric for political success. The two salient facts for Republicans were:
(1) Bush compromised with Democrats to reduce the budget deficit, thereby reversing his pledge not to raise taxes and alienating the GOP base; and
(2) Bush lost in 1992.
Newt Gingrich supplanted Bush as the GOP standard-bearer. This paved the way for political success and policy disasters.
Donald Trump can do one useful thing for the modern GOP: He can lose in 2020. Trump’s control over his party has already wobbled a bit after the midterms. And as CNN’s Harry Enten noted last week, Trump is laying the groundwork for that kind of ignominious failure:
The difference between Trump’s net economic approval rating and net overall approval rating is astonishingly high when put in a historical context. I looked up every single president’s overall and economic net approval ratings right around each midterm since 1978.
No other president has done this much worse overall than his economic ratings would suggest. On average, their overall net approval rating has actually run 17 points better than their economic net approval rating. Trump is running 27 points worse. The only president to come close to Trump’s negative differential was Bill Clinton in 1998. That was when Clinton was getting impeached….
Trump’s tweets, attacks on the media and improvisational style may be fodder for his base, but they don’t seem to be working on the electorate at-large. A Monmouth University poll earlier this year found that the vast majority of Americans said Trump ran a less conventional administration than normal, and by a 21-point margin, they said that was a bad thing.
If Trump loses in 2020, then maybe the modern GOP would start tacking back toward the style of George H.W. Bush and his aspirations for a kinder, gentler nation.
In a new book, Steve Kornacki looks back at the 1990s — and finds the roots of today’s polarization in the Clintons’ ascent.
.. the 1990s was until recently an invisible decade. “The holiday from history,” it was called, a “lull” where nothing much really happened, a candy-colored coma between the Berlin Wall’s fall on 11/9 and the 9/11 attacks less than a dozen years later.
.. The Red and the Blue, is a political procedural that sets out to explain how we went from giga-landslides in the ’60s, ’70s, and ’80s to Electoral College squeakers today, how Republicans disappeared from the coasts and Democrats died their final deaths in the South and Midwest.
.. it benefits from the context provided by Trump’s ascent, which has clarified that one big reason we’re seemingly reliving the 1930s today is because both the Left and Right spent the 1990s and early 2000s rehashing the culture wars of the 1960s and early ’70s.
.. Because cable and the Internet have so completely transformed American culture over the past two or three decades, it’s easy to forget (and younger people can’t even remember) just how norm-shattering Bill Clinton was, compared to the Greatest and Silent Generation leaders who came before him. To social conservatives and foreign-policy hawks, Clinton’s election was downright triggering, and deserved nothing less than full-on #Resistance. Historian Steven Gillon famously interviewed one who succinctly fumed that Clinton was “a womanizing, Elvis-loving, non-inhaling, truth-shading, draft-dodging, war-protesting, abortion-protecting, gay-promoting, gun-hating Baby Boomer!”
.. aside from Gary Hart, whose ill-fated career was recently reexamined in the Jason Reitman movie The Front Runner, America hadn’t had a youthful, truly sexualized major-party presidential nominee since JFK — until Clinton came along.
- .. The Federal Reserve’s preference for financialization and neoliberalism was at its very peak under the influence of Paul Volcker and Alan Greenspan.
- Nearly half of Americans still thought “sodomy” — never mind same-sex marriage or civil unions — should be illegal.
- And while America was pro-choice, huge percentages of voters demanded restrictions to abortion-on-demand.
The Red and the Blue gives an excellent Gen-X-plaining of just how systemically, institutionally, and culturally impossible it would have been for Democrats to move even farther leftward than they did back then — of how much damage their “too far left” brand had done to the party in the ’80s and of the disastrous political consequences of Bill Clinton’s attempts to govern from the left in 1993–94, as epitomized by Hillary’s attempt at health-care reform. He reminds his readers with his trademark aptitude for facts and figures that America in the 1990s was still very much living in what Sean Wilentz called The Age of Reagan.
.. He manages, for example, to nail the most salient point of the abusive relationship between Bill Clinton and Newt Gingrich: that it was at heart a love story, and/or a co-dependency worthy of Dr. Phil. One man could simply not have managed to stay in office without the other.
.. It was Clinton hatred on the social right that gave us Gingrich, and it was Gingrich’s surefire ability to trigger the libs that protected Clinton year in and year out. “Do you want him – or me?” became the basic campaign pitch of both men.
.. his Officer Friendly approach to the media is just too naïve by half, especially for someone who is a cable-news host with considerable experience in online journalism. In Kornacki’s telling, reporters merely report, offering just the facts or serving as quickie Greek choruses and footnote sources. This might work for a tenth-grade term paper, but for a book that seeks to illuminate the decade that saw the rise of the Internet, the birth of Fox News, unprecedented media consolidation, and what Eric Alterman called “the punditocracy” at the height of its influence, it’s entirely inadequate.From highly influential anti-Great Society “Atari Democrats” like
- Michael Kinsley,
- Joe Klein,
- Sidney Blumenthal, and
- Robert Samuelson and proudly un-PC pundits like
- Camille Paglia,
- Ben Wattenberg,
- Bill Maher, and
- Andrew Sullivan to donor-funded think tanks like
- Heritage and
- Cato, an entire intellectual infrastructure was shaping the national narrative for what became Third Way Clintonism well before the Clinton era began. Yet most of these people and institutions do not even appear in Kornacki’s index, or if they do, they’re curtly dispensed with in one or two lines.
.. It’s possible that with Donald Trump’s attacks on the press (and with some people using criticism of “the media” as an anti-Semitic dog whistle), Kornacki didn’t want to even go there.
.. But a book on 1990s polarization that omits Steve Jobs, Roger Ailes, and Bill Gates from its index? One that effectively ignores the O.J. trial, Maureen Dowd’s gendered, campy, sexist (certainly by today’s standards), Pulitzer-winning coverage of Monicagate, and Clarence Thomas vs. Anita Hill?
.. writers as far apart as Ann Coulter and Eric Alterman blamed Al Gore’s loss in 2000 on the media’s hatred of him (and his hatred of them)?
.. Limbaugh’s pioneering tactic (soon perfected by Gingrich, Coulter, and Karl Rove) of branding anyone whose politics were even slightly to the left of, say, Sandra Day O’Connor or Dianne Feinstein, as a Loony Liberal, Radical Leftist, or Femi-Nazi. From Clinton and Dubya well into the Obama years, red-meat conservatives intentionally fuzzed the line between corporate social-liberals and the true hard left of Michael Moore, Pacifica Radio, and Thomas Frank, and Kornacki captures their strategy perfectly... Aside from the Obamas themselves, no other politician would even remotely disrupt or challenge Clintonistas’ hold on the Democratic party for another ten or 15 years. But Clintonism could only continue as long as the true far-left remained repressed, and as long as the economy kept humming... When a fist-shaking socialist senator from Vermont lined up an army of Millennials in formation behind him eight years after the dawn of the Great Recession caused in no small part by Clinton-era financial policy, it became crystal clear that Newt Gingrich had won the war... When they exited the White House, the Clintons left behind a Democratic party that working class, rural, and/or religious whites had become almost allergic to, one more dependent on African-American and Latino voters than ever... Donald Trump cruised to triumph in 2016 using all of the dog whistles and wedge issues that Gingrich, Rove, Buchanan, and Ross Perot had refined to perfection... And just as education-conscious, socially liberal white professionals reacted against Gingrich’s and Buchanan’s reactionary rhetoric in the late ’90s, Trump’s Republican party has now been effectively evicted from places as once-synonymous with the GOP as Long Island, Maine, New Jersey, San Diego, and Orange County.