Trump wants to repeal the tax that ensured he owed money in 2005

Bryce Covert

Bryce Covert Economic Policy Editor, Think Progress

President Donald Trump has refused to release his tax returns. But late on Tuesday evening, reporter David Cay Johnston released a leaked copy of Trump’s income tax return in 2005 that showed he paid $38 million in taxes on more than $150 million in income.

The document throws a bit of cold water on the hypothesis that he had been able to avoid paying all income tax for two decades thanks to his ability to write down enormous business losses. But the documents also show that the only reason he paid income tax at all that year is thanks to a part of the tax code called the individual alternative minimum tax, or AMT.

And Trump wants to get rid of the AMT altogether.

The AMT dates back to 1969, when it became public that 155 people who made more than $200,000 paid no federal income tax three years prior. After public outcry, Congress enacted an additional minimum tax. That eventually transformed into the AMT.

Today, the AMT requires eligible taxpayers to calculate what they would owe in regular income tax and what they would owe under the AMT — and pay the higher amount. It’s meant to ensure that the wealthy can’t get out of owing federal income taxes by adding up deductions, such as Trump’s write-off of business losses.

In 2005, the AMT meant that Trump owed the government $31 million on an income of $150 million, paying an effective rate of 25 percent. That was already lower than the 35 percent statutory rate he faced on paper. But if the AMT weren’t in place, he would have paid an effective 5 percent rate.

In his most recent tax plan, Trump called for completely eliminating the AMT. According to the Tax Policy Center, doing so would cost the government $412.8 billion over the first decade and nearly another $700 billion over the next decade.

That would not just benefit someone like Trump, but many other wealthy Americans. More than 60 percent families who make between $500,000 and $1 million pay the AMT, compared to less than 2 percent of those making under $200,000. While it also falls heavily on families who have a large number of children and live in high-tax states — grounds for potential reform to better target it at those with the most money — getting rid of it altogether would be a costly giveaway to the rich.

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Reposted from Think Progress.

Bryce Covert is the Economic Policy Editor for ThinkProgress. She was previously editor of the Roosevelt Institute’s Next New Deal blog and a senior communications officer. She is also a contributor for The Nation and was previously a contributor for ForbesWoman. Her writing has appeared on The New York Times, The New York Daily News, The Nation, The Atlantic, The American Prospect, and others. She is also a board member of WAM!NYC, the New York Chapter of Women, Action & the Media. Follow her on Twitter @brycecovert

Posted In: Allied Approaches

Union Matters

Neil Gorsuch Unacceptable for Supreme Court

Hugh J. Campbell

Hugh J. Campbell Son of a steelworker, Philadelphia, Pa.

Bill Haschke’s Neil Gorsuch is the wrong choice for U.S. Supreme Court provides an historical framework for the U.S. Senate to reject confirm Gorsuch to the U.S. Supreme Court

Our founding fathers knew that only government could protect the rights of all citizens, because it would be large enough to challenge all other economic powers who wanted to exploit peoples’ rights for their own greedy pursuit of wealth and power. The declaration states “…that to protect these rights, governments are instituted among men, deriving their just powers from the consent of the governed.”

The Declaration of Independence informs us of exactly what governments should be, whom they serve and the values that should be applied to form valid governments; it codified the natural rights of man. After our “slavery issue” was resolved, the court began interpreting the constitution more in the light of the Declaration of Independence, in keeping with the exceptional ideals put forth in our founding document.

However, since January 7, 1972 when Justices Powell and Rehnquist were sworn-in, the SCOTUS began ignoring the Declaration of Independence with more and more power over our elections, and therefore our government, being granted to powerful economic interest, including corporations, culminating with the Citizens United case.

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Out of Pocket and Out of Reach

Out of Pocket and Out of Reach