Forms give glimpse into Trump’s taxes
President Donald Trump earned US$153 million ($220.5m) 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 highly sought-after tax documents disclosed yesterday.
The pages from Trump’s federal tax return show the real estate mogul also reported a business loss of US$103m that year, although the documents don’t provide detail. The forms show that Trump paid an effective tax rate of 24.5 per cent, a figure 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 American TV’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 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 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, a tax aimed at preventing high-income earners from paying minimal taxes.
The AMT requires many taxpayers to calculate their taxes twice — once under the rules for regular income tax and then again under AMT — and then pay the higher amount. Critics say the tax has ensnared more middle-class people than intended, raising 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 decades-long 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 — though experts and IRS officials said such audits do not bar taxpayers from releasing their returns.
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,” the White House said in a statement issued on condition that it be attributed to an anonymous official, although the President has decried the use of anonymous sources.
The unauthorised release or publishing of federal tax returns is a criminal offence, punishable by a fine of up to US$5000 and up to five years in jail. But Maddow argued that the network MSNBC was exercising its First Amendment right to publish information in the public interest.
Trump long insisted the American public wasn’t interested in his returns and said little could be learned from them. But his full returns would contain key details about things such as his charitable giving, his income sources, the type of deductions he claimed, how much he earned from his assets and what strategies he used to reduce his tax bill.