Taxes

Trump Tax Return Leak Jeopardizes GOP Tax Reform

SK Ashby
Written by SK Ashby

Two pages of Trump's 2005 tax return were published last night and they revealed that he paid a significant amount of taxes that year, but he paid very little federal income taxes.

This is important for reasons I'll add.

The documents show Trump and his wife Melania paying $5.3 million in regular federal income tax—a rate of less than 4 percent. However, the Trumps paid an additional $31 million under the alternative minimum tax, or AMT. Trump has previously called for the elimination of this tax.

Trump’s 2005 return also shows that he’d continued to benefit from the roughly $916 million loss he reported in his 1995 return—published last year by The New York Times. Using a loophole Congress closed in 1996, Trump converted that loss into a tax credit for the same amount he could offset against income.

Both Trump and Speaker of the House Paul Ryan want to eliminate the Alternative Minimum tax, meaning they want to eliminate the only tax Trump really pays.

It's possible Trump's financial situation has changed since 2005, but it seems unlikely that he began paying a significant amount of federal income tax since that time. As the New York Time pointed out during the 2016 campaign, Trump's nearly billion dollar loss in the 1990s could allow him to avoid federal income taxes for the rest of his natural life.

And the Alternative Minimum tax is not the only tax on rich people that Paul Ryan wants to eliminate. Ryan also wants to lower income tax rates and eliminate taxes on capital gains and estates.

If or when the Republican party moves forward on tax reform this year or next, the trap has already been set. Their agenda will benefit Trump personally more than the overwhelming majority of Americans, even those who are moderately wealthy. That's not going to play well and they're going to find themselves in the same situation they're in now; financing tax cuts for the rich with massive spending cuts for the poor. Ryan will call for cutting the government to the bone to pay for this tax cuts for Trump.

Some members of the press have been snookered into saying Trump's leaked return (from 2005) makes him look good because it shows he paid a significant amount of taxes, but I believe that's extremely short-sighted.

Democrats have new weapons to use against Trump and Republicans in Congress that they didn't have before.