Biden’s Return: Exhibit A for Tax Reform

May 9th, 2011 at 1:08 pm | 5 Comments |

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The 2010 Federal income tax returns of the Vice President and his wife demonstrate a great deal about the Bidens. More importantly, the Biden tax returns demonstrate that today, a fairly uncomplicated personal financial situation requires an eighteen page federal tax return. This is crazy.

One key to a responsible tax system is to reduce complexity for most, yet leave significant complexity for those with the resources and knowledge to invest their assets in a manner that will result in reduced taxes (tax shelters). The Bidens’ return offers the opportunity to demonstrate how fairly straight-forward and simple changes to the Internal Revenue Code and the rate tables could reduce tax preparation complexity without creating tax planning opportunities.


Issue One:  The Bidens paid alternative minimum taxes solely because of their state taxes.

Solution: Eliminate the deduction for state and local taxes for non-business activities and reduce Federal income tax rates.

Resulting Wealthy Taxpayer Opportunities Created – None.

Reduction of pages in Biden tax return: 4.3.


Issue Two: The Bidens gave used clothing away and took a charitable deduction for the clothing.

Solution: Eliminate the tax deduction for charitable donations of clothing and household goods and reduce federal income tax rates. Allow other non-cash charitable deductions only if they exceed 5% of the taxpayer’s adjusted taxable income.

Resulting Wealthy Taxpayer Opportunities Created – None.

Reduction of pages in Biden tax return: 1.0.


Issue Three: The Bidens had interest income of $4,014.

Solution: Eliminate the requirement for identification of the source of interest or dividend income unless the amounts in total exceed 10% of adjusted gross income. (Note that there are already matching 1099s filed with the Internal Revenue Service)

Resulting Wealthy Taxpayer Opportunities Created – None.

Reduction of pages in Biden tax return: 1.0.


Issue Four: The Bidens received $28,190 of Social Security benefits of which $23,962 was taxable.

Solution: Include all Social Security income as taxable income and reduce federal income tax rates. (Note that those that call or oppose means testing for Social Security generally ignore the current varying taxation rates of Social Security benefits depending upon other taxable income.)

Resulting Wealthy Taxpayer Opportunities Created – None.

Reduction of pages in Biden tax return: 1.0.


Issue Five: The Bidens had reduced personal exemptions for their alternative minimum tax calculation because of the size of their adjusted gross income.

Solution: Change the personal exemption to a credit and reduce federal income tax rates.

Resulting Wealthy Taxpayer Opportunities Created – None.

Reduction of pages in Biden tax return: 1.0.


Issue Six: The Bidens had cash contributions of $4,400.

Solution: Eliminate the charitable deduction unless over five percent of adjusted gross income and reduce federal income tax rates.

Resulting Wealthy Taxpayer Opportunities Created – None.

Reduction of pages in Biden tax return: 1.3.


Issue Seven: This isn’t in the Bidens’ tax return, but is such a simple and necessary change, I include it here. Many years ago, the special rates for capital gains were reflected as only a percentage of the income being reported on the tax return rather than a specific rate. Returning to that methodology would also reduce the number of pages and the mathematical complexity of the tax return for millions of taxpayers without any significant impact on tax payments by taxpayers or tax receipts by the government.

Resulting Wealthy Taxpayer Opportunities Created – None.


The revised Biden 2010 federal income tax return is only seven pages and includes information for a rental property and two pages for household help taxes paid. None of these three pages would be necessary or included in most tax returns. (Note they had an additional blank form in their returns and one piece of information could easily be added to another page.) So, without the household help and the rental property, the revised tax return would be four pages and there would not be a dollar of opportunity created for the most creative tax accountant.

Of course, now the tax rate tables would need changing. The original Biden tax return calculated an $86,047 tax on taxable income of $304,840. The revised Biden tax return would report taxable income of $353,387 and, to be appropriate as tax simplification as opposed to tax increases, the rate tables would have to be reduced to achieve the same $86,047 in Federal income taxes. That change would take about two seconds to accomplish and the goal of reducing the complexity of filing would in great part be achieved without creating opportunities for tax accountants to creatively reduce their client’s taxes.

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5 Comments so far ↓

  • Sinan

    Pardon me but reducing the number of pages of a tax return is not a top priority of mine. I use Turbo Tax and the number of pages it spits out is immaterial. At every turn, you take a page away and reduce federal tax rates. Thank God you did not count letters or words or by the time you got through with your analysis, there would be zero tax left to pay for anyone.

  • Frumplestiltskin

    absolutely Sinan, the issue is not the number of pages, I think mine was 7 pages but I honestly didn’t give it a thought nor did I find doing those pages much of a hassle, I worked on it over a couple of days and then filed. Now outside of this anal fixation on page counts lets address some of the issues:
    Issue One: The Bidens paid alternative minimum taxes solely because of their state taxes.

    Solution: Eliminate the deduction for state and local taxes for non-business activities and reduce Federal income tax rates.

    Bullshit, this will simply punish blue states, like NY that actually provide decent services for their population. As it is these states are already paying far more to the federal government than red states do. I would support such a proposal if red states were not free riders.

    Issue Two: The Bidens gave used clothing away and took a charitable deduction for the clothing.
    OK, now I give away clothing all the time and never take the deduction and lord knows why the Biden’s tax accountant thought to do this, so maybe this is one I would have no problem getting rid of.

    Issue Three: The Bidens had interest income of $4,014.
    Big deal, one page. Meaningless issue.

    Issue Four: The Bidens received $28,190 of Social Security benefits of which $23,962 was taxable.
    Personally I would prefer less be taxable since I am against means testing. But this is a legit. issue.

    Issue Five: The Bidens had reduced personal exemptions for their alternative minimum tax calculation because of the size of their adjusted gross income.
    Solution: Change the personal exemption to a credit and reduce federal income tax rates.
    I have no strong opinion one way or another except for this constant “reduce income tax rates” which is tiresome. Credit or exemption is fine by me as long as it is revenue nuetral.

    Issue Six: The Bidens had cash contributions of $4,400.
    Solution: Eliminate the charitable deduction unless over five percent of adjusted gross income and reduce federal income tax rates.
    Fairy tale time. The churches and charity organizations won’t go for this, and again with the reduce federal income tax rates. Are you against charity, are you that much of a Randian that you begrudge tax deductions for those that support charity?

    and my own issue 7, treat Capital gains tax the same rate as that of income. Why should I enjoy an tax advantage of making a lot of money for doing nothing (which I did when I sold some property) as opposed to a plumber. Don’t get me wrong I was happy to pay the lower rate but I knew it was bs.

  • think4yourself

    Issue “A” – any change to the tax code means every special interest under the sun will be lobbying profusely to keep it’s own exemptions and deductions and scrambling to create new ones. The last revision added a couple of thousand pages to the tax code, do you think re-opening it will simplfy it?

    I’d consider ending all deductions, lowering the rate and making the tax base broader, but that would never pass either, then you’d put all the accountants out of business.

    For every point listed above, someone had a valid reason to put them in (I have occasionally itemized the clothing I donate because the charts that determine the deduction are so high – it’s why Bill Clinton got a $6 deduction for his underwear – of course given what happened in those brief’s he could have done better by selling them on Craig’slist, I know – ewww).

  • Houndentenor

    LOL. 18 pages is nothing. I have been responsible for sending in returns that filled three banker boxes.

  • Primrose

    I oppose the charity one since this is an important way for non-profits to get donations. The used clothing bit is dubious I agree. I also think I oppose the state income tax deduction for reasons already stated by others—also some of us have to pay double taxes because we commute into a different state so that would really kill us.

    I’m all for everyone paying into social security without a cap. If you are lucky enough not to need it when you are old, well, your lucky and life has not been that unfair. I think cap gains can be taxed as income period though more, or longer, exemptions for school or retirement funds.

    As others have said, the number of pages doesn’t matter. The ability to figure it with relative ease does. Though Turbo tax has made things much easier.