Trump used tax he wants to scrap
UNITED STATES: US President Donald Trump earned US$153 million and paid US$36.5M in income taxes in 2005, paying a roughly 25 per cent effective tax rate thanks to a tax he has since sought to eliminate, according to documents disclosed yesterday.
The pages from Trump’s federal tax return show that the then-real estate mogul also reported a business loss of US$103M that year, although the documents don’t provide details.
They show that Trump paid an effective tax rate of 24.5 per cent, well above the roughly 10 per cent the average American taxpayer forks over each year, but below the 27.4 per cent that taxpayers earning US$1M a year average, according to data from the Congressional Joint Committee on Taxation.
The forms were obtained by journalist David Cay Johnston, who runs a website called Dcreport.org, and reported on MSNBC’S The Rachel Maddow Show. Johnston, who has long reported on tax issues, said he received the documents in the mail, unsolicited.
Trump’s hefty business loss appears to be a continued benefit from his use of a tax loophole in the 1990s, which allowed him to deduct previous losses in future years. In 1995, Trump reported a loss of more than US$900M, largely as a result of financial turmoil at his casinos.
Tax records obtained by The New York Times last year showed that the losses were so large they could have allowed Trump to avoid paying taxes for up to 18 years. But Trump’s 2005 filing shows that another tax prevented him from realising the full benefit of those deductions.
The bulk of Trump’s tax bill that year was due to the Alternative Minimum Tax (AMT), which is aimed at preventing high income earners from paying minimal taxes. It requires many taxpayers to calculate their taxes twice - once under the rules for regular income tax, and then again under AMT - and pay the higher amount. Critics say it has ensnared more middle-class people than intended, increasing what they owe the federal government each year.
Were it not for the AMT, Trump would have avoided all but a few million dollars of his 2005 tax bill.
Trump’s campaign website called for the end of the AMT, which is expected to bring in more than US$350 billion in revenues from 2016 to 2025.
As a candidate and as president, Trump has refused to release his tax returns, breaking a decadeslong tradition. Although he initially promised to do so, he later claimed he was under audit by the Internal Revenue Service and said his lawyers had advised against it. Experts and IRS officials say such audits don’t bar taxpayers from releasing their returns.
The issue was a major point of attack from his election rival Hillary Clinton, who suggested Trump had something to hide.
The White House pushed back even before the release of the documents, saying that publishing the information was illegal. ’’You know you are desperate for ratings when you are willing to violate the law to push a story about two pages of tax returns from over a decade ago,’’ it said in a statement.
The White House has not said whether Trump plans to release his tax returns while he is in office. -AP