However, Richard Rubin from the Wall Street Journal found a much more interesting nugget: in 2017 and 2018, Joe Biden and his wife ran $13 million of profits through two 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.
Biden, incidentally, is campaigning in favor of an across-the-board tax increase.
If this all sounds familiar to veteran politicos, it’s the same tax problem that helped bring down Democrat presidential candidate John Edwards in 2004.