Now that we’ve seen part of President Donald Trump’s 2005 tax returns, we know that he paid $38 million in taxes that year. But under his proposed tax plan he would have paid far less.
In 2005, Donald and Melania Trump reported an income of $152.7 million, but $103.2 million in “negative income” from depreciation, according to a White House statement.
— David Shepardson (@davidshepardson) March 15, 2017
The Trumps paid around $36.5 million in taxes, a tax rate of about 25 percent. This is because the Alternative Minimum Tax (AMT) does not allow taxpayers to deduct all of their negative income from their positive income. Without the AMT, the Trumps would have paid $5.3 million dollars, a tax rate of less than 3.5 percent.
David Cay Johnston, the reporter who received the two pages of Trump’s taxes in the mail, noted the possibilities under the new Trump tax plan. “If we didn’t have the alternative minimum tax, he would have paid taxes at a lower rate than the poor who make less than $33,000 a year.”
Under Trump’s plan, the AMT would be eliminated. The original intention of the AMT was to keep the wealthiest Americans from writing off their taxes entirely. It only applied to a 19,000 people. Now, the AMT effects almost 5 million Americans. People who have to pay the AMT calculate their taxes with deductions and without deductions and then must pay the higher amount.
Trump’s tax bill would also decrease under his plan because
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