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Biden paid nearly $300K in federal incomes taxes in 2019

President Biden released his tax return statements the day leading up to the first presidential debate, showing that he had paid $300,000 in federal income tax in 2019. This comes as The New York Times reported that Trump has paid no federal income tax in 10 of the last 15 years. Yahoo Finance’s Rick Newman joins The Final Round panel to discuss why a better IRS is needed to facilitate more ethical and responsible tax collection.

Video Transcript

SEANA SMITH: Aside from the debate, when you take a look at the poll numbers that we were just discussing, but then also that "New York Times" story about President Trump and his taxes, the new revelations that President Trump's tax filings in "The New York Times," really exposed moreso this bigger issue, I think, and that is that you're focusing on, and that's the potential problem with the IRS and its inability to really go after aggressive tax evaders and that a lot of times it's wealthy Americans who can afford this type of advice and figure out some of the loopholes. And I know you crunched some of the numbers for us, so one, why is this the case, and is this something that needs to be addressed, and I guess, how do you address it?

RICK NEWMAN: I think it needs to be thoroughly addressed. I mean, we basically have a tax enforcement system that does not work, and it lets wealthier people get away with paying less tax than they owe. It's that simple. So, you know, people who are looking at this story about the taxes Donald Trump doesn't pay, they might be wondering, if this is all wrong, why does the IRS let him get away with it? And it's a great question, and there are answers.

So funding for the IRS, which Congress appropriates, has been dropping every year since 2011, and that's mainly because Republicans hate the IRS, and they have controlled one or both houses of Congress every year since 2011. So they've been had they've had the leverage to either block funding increases for the IRS or in some years actually cut their budget. And so the IRS, funding is down about 20% over that period of time, and the manpower, or the person power, I should say, is down even more, because it just takes a lot of labor to do the kind of audits it takes to catch people who are cheating.

So in one instance, the tax experts who do the most sophisticated audits, the number of those people at the IRS has dropped by 48%, so they only have about half as many of those people. You know, wealthy people know this. They amass, you know, expensive lawyers and accountants, and they just outman and outgun the IRS, so the IRS just cannot keep up with all this. They're losing, the government is losing about $130 billion per year in taxes that people owe, and the IRS just can't collect.

ANDY SERWER: Hey, Rick, quick follow question, and I think that President Trump was trying to suggest this that, you know, there is this whole notion in the United States that well, don't tax the rich so much, and that's acceptable, because people aspire to be rich in America, right? Do people aspire to be tax dodgers? I'm not saying tax frauds, tax dodgers and tax avoiders. I mean, President Trump seems to be saying, hey, look, this is what you should do.

RICK NEWMAN: Yeah, I think the answer is yes. I mean, I think we all want to pay the least amount of tax we possibly can, and even Joe Biden, who paid $300,000 in taxes in 2019, that was a tax rate of about 33%, even he set up, he has set up these two S corps to handle the money he gets from book royalties and speaking fees, because you actually pay less tax if you're able to do it that way just because of technicalities in the tax code than if you just take the checks and put them right in the bank and declare it as ordinary income. So, you know, that I think there are a multitude of problems here. One of them is that the tax code is just too complicated, and that favors people who can afford to hire the expert to know where all the tax breaks are.

But, you know, we've had this big debate in 2017 about should we cut taxes when we're not even collecting all the taxes that people legally owe? So I mean, Democrats, if they are able to take power in Washington, they do want to beef up the IRS and improve this performance. And look, the government needs money. I mean, I couldn't believe it when I looked it up today. The national debt is now almost $27 trillion. So at some point, we're going to have to find ways to get new revenue, and this is one of them.