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.

***

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

Failing Bridges Hold Public Hostage

From the USW

From tumbledown bridges to decrepit roads and failing water systems, crumbling infrastructure undermines America’s safety and prosperity. In coming weeks, Union Matters will delve into this neglect and the urgent need for a rebuilding campaign that creates jobs, fuels economic growth and revitalizes communities.

The Seattle Department of Transportation (SDOT) gave the public just a few hours’ notice before closing a major bridge in March, citing significant safety concerns.

The West Seattle Bridge functioned as an essential component of  the city’s local and regional transportation network, carrying 125,000 travelers a day while serving Seattle’s critical maritime and freight industries. Closing it was a huge blow to the city and its citizens. 

Yet neither Seattle’s struggle with bridge maintenance nor the inconvenience now facing the city’s motorists is unusual. Decades of neglect left bridges across the country crumbling or near collapse, requiring a massive investment to keep traffic flowing safely.

When they opened it in 1984, officials predicted the West Seattle Bridge would last 75 years.

But in 2013, cracks started appearing in the center span’s box girders, the main horizontal support beams below the roadway. These cracks spread 2 feet in a little more than two weeks, prompting the bridge’s closure.

And it’s still at risk of falling.  

The city set up an emergency alert system so those in the “fall zone” could be quickly evacuated if the bridge deteriorates to the point of collapse.

More than one-third of U.S. bridges similarly need repair work or replacement, a reminder of America’s urgent need to invest in long-ignored infrastructure.

Fixing or replacing America’s bridges wouldn’t just keep Americans moving. It would also provide millions of family-supporting jobs for steel and cement workers, while also boosting the building trades and other industries.

With bridges across the country close to failure and millions unemployed, America needs a major infrastructure campaign now more than ever.

 

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There is Dignity in All Work

There is Dignity in All Work