On Tuesday, Treasury secretary nominee Janet Yellen will come before the Senate Finance Committee for her confirmation hearing. That hearing took on a bit more drama after New Year’s Eve, when Yellen’s financial disclosure forms revealed she made millions of dollars giving speeches to Wall Street banks.
As one might expect, news of the incoming Treasury secretary making millions from Wall Street institutions, many of which she would regulate, caused concern among the progressive left. But given the way she paid taxes on those speaking fees, Yellen’s actions raise as many concerns about the actions of the man who appointed her: Joe Biden.
Millions from Wall Street
According to her financial disclosure form filed with the Office of Government Ethics, Yellen made more than $7.2 million giving speeches to dozens of businesses, many of them with ties to the financial sector. For instance, she received nearly $1 million from Citi for nine separate appearances, raising echoes of Hillary Clinton receiving $675,000 for three speeches to Goldman Sachs because “that’s what they offered.”
Yellen and the Biden team attempted to pre-emptively address concerns that the speaking fees raise conflicts of interest. Specifically, Yellen promised to consult Treasury ethics attorneys about any company that has paid her within the past 12 months.
Unlike Biden, She Paid All Her Taxes
But Yellen’s financial disclosure also contains a noteworthy omission, revealing that she did not funnel those speaking fees through an S-corporation to avoid paying payroll taxes on her earnings. By contrast, Biden’s financial disclosure forms list him as the president of the CelticCapri Corporation, and Jill Biden’s involvement with the Giacoppa Corporation.
I previously reported that Joe and Jill Biden created these corporations for their book and speech income. The Bidens paid income taxes on all the income they received in 2017, 2018, and 2019. But because they characterized more than $13.5 million of their $14.6 million in income those three years as corporate profits rather than wages, they avoided paying over $513,000 in payroll taxes that fund Medicare and Obamacare. Tax experts have called the Bidens’ maneuvers legally questionable, because they characterize intellectual work product—i.e., income from speeches—as corporate profits rather than wages.
Anticipating criticism from the progressive left for Yellen’s Wall Street speeches, the Biden transition team launched a pre-emptive attack defending Yellen. An official said Yellen’s record shows she will not “pull punches when it comes to bad actors,” claiming that “she will bring the same high ethical standards and tough enforcement philosophy to Treasury.”
But unfortunately for Team Biden, standards cut both ways. If the incoming administration wants to make Yellen into the paragon of ethical conduct, it will make the contrast between the way she paid taxes on her speaking fees, and the way the man who appointed her handled his millions in honoraria, all the more obvious.
The fact that Yellen will have jurisdiction over tax policy—and the Internal Revenue Service—adds to the drama. If Yellen felt uncomfortable using an S-corporation to avoid payroll taxes on her speaking fees from Wall Street, does that mean she believes Biden violated tax laws by doing so himself? If so, will she ask the IRS’s career civil servants to consider an audit of Biden’s returns?
Count Yellen’s speeches, and the potential conflicts they pose, as fair game in her confirmation hearings. But so too should senators ask Yellen why she didn’t use an S-corporation to avoid payroll taxes on her speech income, and what she thinks of Biden’s use of this loophole. If Yellen has the ethical standards the Biden transition team says she does, perhaps Hunter won’t be the only Biden facing an investigation about his taxes.