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Official White House photo by Cameron Smith


** Biden's S Corporations and the Tax Law
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After the State of the Union address, Republican Sen. Rick Scott of Florida aired a TV ad that rehashed debunked claims about President Joe Biden cutting Medicare ([link removed]) and hiring "80,000 new IRS agents ([link removed]) ."

The ad also accused Biden of being a "tax cheat." Citing a 2019 Wall Street Journal story, Scott said Biden "improperly used a loophole to dodge half a million dollars in taxes that should have gone to Medicare."

Deputy Manager Editor Rob Farley examined the "tax cheat" claim, which centers on Joe and Jill Biden's creation of two S corporations — CelticCapri Corp. and Giacoppa Corp. — for their book and speech income after Biden had left the vice presidency in January 2017.

According to their 2017 and 2018 returns, the Bidens earned roughly $13.3 million in combined revenue from the S corporations in those years. But because the Bidens claimed a little less than 6% of that income in 2017 and 2018 as salary (as opposed to profit), they avoided paying a 3.8% Medicare tax on the vast majority of the S corporation income.

It's a "loophole" that Biden has unsuccessfully tried to close as president and vice president.

Rob spoke to tax policy experts and reviewed the tax documents. He also spoke to the White House, which defends the tax maneuver and claims the IRS blessed it after Biden became president.

A White House official told Rob that during an audit of the Bidens’ 2021 tax return, “the IRS did review the S corporation income, including whether the 3.8% Medicare tax should apply. And the IRS conclusively agreed it did not apply.” (The tax returns of all presidents are supposed to be audited by the IRS while they are in office, although that did not happen in President Donald Trump’s first two years.)

Some tax experts, though, remain unconvinced.

Read about it in Rob's article "The Facts on Sen. Scott’s Claim That Biden Is a ‘Tax Cheat. ([link removed]) '"
HOW WE KNOW
For a story on Trump's claim that "many" of the classified documents found by the FBI at Mar-a-Lago were simply “empty folders” stamped “classified,” Rob (who had a busy week) went through numerous court filings and found that Trump had more than 300 unique classified documents in his possession after leaving the White House. That includes 103 documents that the FBI discovered while executing a search warrant at the Trump's Florida home in August. Read more ([link removed]) .
FEATURED FACT
Service workers’ tips have been taxed by the federal government for decades. They were first explicitly included in the instructions in 1945 for the form 1040, which specified that filers must include “all ‘tips,’ and any ‘gift’ which is really compensation for services.” And before that, it was tacitly understood that tips were part of net income required to be disclosed since federal income taxes were established by constitutional amendment in 1913. Read more ([link removed]) .
WORTHY OF NOTE
The Annenberg Science Knowledge survey released today found that 49% of respondents say they received a seasonal flu shot.

That's statistically unchanged from 47% in the ASK survey in January 2022 and 50% in April 2021, despite public health officials warnings that the 2022-23 flu season could be worse than usual.

The survey, among other things, also measured what the public knows about the flu and flu shots, as well as their attitudes toward flu vaccination and COVID-19 and MMR vaccine mandates.

For more from the national panel survey, see "Flu Vaccination Rate Holds Steady But Misinformation About Flu and Covid Persists ([link removed]) ."
REPLY ALL

Reader: When did this recession begin? Blame is on Biden. Didn’t it start with Trump's tax cut?

FactCheck.org Director Eugene Kiely: No recession has been declared during President Joe Biden’s time in office – at least not to date – and the brief recession that occurred under President Donald Trump was caused by the COVID-19 pandemic, not by his tax cuts.

But I can understand that there may be some confusion about this.

On Oct. 18, 2021, we published “The COVID-19 Recession Officially Ended Before Biden Took Office ([link removed]) ,” when Transportation Secretary Pete Buttigieg wrongly credited Biden for guiding “this economy out of the teeth of a terrifying recession.”

In that article, we wrote:

The National Bureau of Economic Research’s Business Cycle Dating Committee determined that the COVID-19-induced recession lasted just two months — from March through April 2020 — making it the shortest recession on record.

That was the last time that the NBER declared a recession. A full list of recessions dating to 1857 can be found on the NBER’s website ([link removed]) .

The U.S. economy did post two straight quarters of decline in real GDP in the first and second quarters of 2022, which Republicans and some conservative media outlets said is the very definition of a recession. But that’s not how the NBER defines a recession, as it explains in an FAQ ([link removed]) :

Q: Why doesn't the committee accept the two-quarter definition?

A: There are several reasons. First, we do not identify economic activity solely with real GDP, but consider a range of indicators. Second, we consider the depth of the decline in economic activity. The NBER definition includes the phrase, “a significant decline in economic activity." Thus real GDP could decline by relatively small amounts in two consecutive quarters without warranting the determination that a peak had occurred. Third, our main focus is on the monthly chronology, which requires consideration of monthly indicators. Fourth, in examining the behavior of production on a quarterly basis, where real GDP data are available, we give equal weight to real GDI. The difference between GDP and GDI—called the “statistical discrepancy”—was particularly important in the recessions of 2001 and 2007–2009.

Lastly, I should note that the U.S. economy has improved since the second quarter of 2022.

The real GDP, which accounts for inflation, expanded at an annual rate of 3.2% ([link removed]) in the third quarter of 2022 and 2.9% in the fourth quarter ([link removed]) . Also, the Federal Reserve Bank of Atlanta’s “GDP Now ([link removed]) ” estimates that, as of Feb. 16, the economy will increase at an annual rate of 2.5% in the first quarter of 2023.


** Wrapping Up
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Here's what else we've got for you this week:
* "Biden’s Tax Rate Comparison for Billionaires and Schoolteachers ([link removed]) ": President Joe Biden has said there are hundreds, if not a thousand, billionaires paying lower federal tax rates than schoolteachers, police officers, firefighters and nurses. What his audience may not know is that his comparison relies on including wealthy families’ gains on unsold stock as income.
* "Posts Misrepresent Moderna CEO’s Remarks on Vaccine Production ([link removed]) ": Moderna’s CEO said in January that the company’s total production in 2019 was “100,000 dose,” referring to all its vaccines and therapeutics. Online posts distorted the remarks to falsely claim Moderna made COVID-19 vaccines “before the pandemic started.” Moderna’s first batch of COVID-19 vaccines wasn’t ready until February 2020.
* "Haley Twists Biden’s and Harris’ Comments on Racism in America ([link removed]) ": President Joe Biden and Vice President Kamala Harris said in April 2021 that they do not believe America is a racist nation — although both have said America has a history of racism and racism does exist in the country today.
* "Trump’s Hollow ‘Empty Folders’ Defense ([link removed]) ": Former President Donald Trump’s latest defense for having classified documents found by FBI agents at his Mar-a-Lago home is that many of them were simply “empty folders” stamped “classified” on the outside that Trump kept as mementos. The FBI says it did find dozens of empty folders, but it also found 103 classified documents.
* "Internet Hoax Spreads False ID on Michigan State University Shooter ([link removed]) ": Police identified the suspect in the Feb. 13 mass shooting at Michigan State University as Anthony Dwayne McRae, who shot and killed himself. But a viral internet hoax used the photo of another man and falsely claimed that the suspect was named “Lynn Dee Walker.”
* "‘Heckling’ at State of the Union Addresses ([link removed]) ": A day after several Republicans interrupted President Joe Biden’s second State of the Union address with loud jeering, a Democratic leader said he couldn’t “remember a Democrat ever heckling a president in a State of the Union.” But the Democrats have voiced displeasure with a Republican president at such events on several occasions, dating to at least 2005.
* "Posts Misquote Biden’s Year-Old Remarks on Tanks for Ukraine ([link removed]) ": President Joe Biden announced on Jan. 25 that the U.S. would provide Ukraine with 31 tanks. After the announcement, a meme on social media misquoted Biden’s remarks from March 2022, suggesting he said that sending tanks to Ukraine would cause World War III. Biden said sending weapons “with American pilots and American crews” would cause a world war.
* "Partisan Posts Misrepresent IRS’ Voluntary Program Proposal on Tip Income ([link removed]) ": The IRS has proposed a voluntary program that employers could choose to use in order to manage the taxes owed on employees’ tips. The program would replace similar existing programs. But some partisan social media accounts have wrongly suggested that the program indicates either new taxes or increased enforcement. Neither is true.
* "Thai Princess’s Coma Due to Infection, Country Not Banning Pfizer’s COVID-19 Vaccine ([link removed]) ": Thai officials attributed the collapse of the king’s eldest daughter in December to a bacterial infection, not to COVID-19 vaccination, as some have baselessly claimed online. Rumors about the country banning Pfizer’s vaccines are also “fake news,” officials said.
* "Gen. Milley Has Long Combat History, Contrary to Social Media Posts ([link removed]) ": Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff, is the nation’s highest-ranking military officer. But posts on social media falsely claimed Milley “never served in combat.” Milley has an “extensive background of combat experience,” according to the U.S. Army, including deployment to Iraq and three tours in Afghanistan.

Y lo que publicamos en español ([link removed]) (English versions are accessible in each story):
* "Las vacunas contra el COVID-19 pueden alterar el ciclo menstrual ligera y temporalmente, pero no dañan la fertilidad ([link removed]) ": Según investigaciones, las vacunas contra el COVID-19 pueden provocar cambios en el ciclo menstrual. Pero los cambios son pequeños y de corta duración, y los estudios han demostrado que no afectan la fertilidad. Sin embargo, algunos en las redes sociales sugieren que los cambios en el ciclo son prueba de que causan daño.
* "La pastilla absorbente en el interior de las pruebas de embarazo no es una ‘píldora del día después oculta’ ([link removed]) ": Las pruebas de embarazo contienen una pastilla desecante para absorber la humedad y mantener la prueba seca antes de usarla. Pero publicaciones en redes sociales afirman erróneamente que la tableta es una “píldora del día después oculta”. Las compañías que fabrican las pruebas de embarazo advierten en sus sitios web que la pastilla desecante en el interior de las pruebas no se debe consumir.

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