Trump Tries To Cut His Own Taxes 81%!
The Alternative Minimum Tax (as Rodney Dangerfield might have put it) don't get no respect. Few who don't pay it have ever even heard of it. Those who do pay it hate it. The A.M.T. has no real champions among the political class, because there are so many other facets of tax policy to get worked up about. Take the estate tax, for instance -- a tax only paid at death, but one with a rousing political chorus on both sides (Republicans scornfully refer to it as the "death tax"). The estate tax gets some respect in Washington, both pro and anti. The A.M.T., not so much. But it should get a whole lot more attention now that the GOP has released their new tax-cutting outline. Because Donald Trump is effectively trying to cut his own taxes by a whopping 81 percent -- and, really, that's just the minimum tax break Trump would receive.
Surprisingly, it is also the easiest to figure out, from the most-recent public tax return we have from Trump. How all the rest of the GOP proposal would affect Trump's taxes is an open question. We've never publicly seen a Schedule A from him, so it's impossible to tell how the changes to deductions would affect him personally. But how the obliteration of the A.M.T. would affect Trump is pathetically easy to see -- in fact, any layman can understand it just by looking at a few numbers on Trump's 2005 Form 1040.
That year, Trump had $151.8 million dollars in income, before he began to write things off. Here are Trump's reported tax numbers, in millions of dollars, rounded to the nearest $100,000:
Income tax (line 44) -- $5.3
A.M.T. (line 45) -- $31.3
Total tax (line 63) -- $38.4
About 30 seconds with a calculator shows that Trump paid an effective tax rate of 25.3 percent. This isn't too unreasonable, considering how much lower Mitt Romney's reported tax rate was. But if the Alternative Minimum Tax disappeared, then Trump would have only paid a paltry 4.7 percent on an income of over $150 million. By making this single change in the tax code, Trump's own taxes would have been reduced by $31 million (from a previous total of $38 million down to just over $7 million). That is an eyebrow-raising 81 percent tax cut -- even before considering how any of the other parts of the GOP tax framework would apply to Trump's taxes.
Democrats looking to attack the GOP's tax-cutting plan really need look no further than the A.M.T. to make a clear and convincing case to the public. The political talking points really write themselves:
"Donald Trump wants to cut his own taxes 81 percent! Does anyone here think Trump's tax cuts will cut their taxes by four out of every five dollars? This plan is nothing short of a massive tax giveaway -- and 81 percent is pretty massive, folks -- to the wealthiest one percent. An average family might save a couple hundred dollars -- maybe -- on their taxes, while by one single rule change that most taxpayers have never even heard of, Trump is going to save himself over 31 million dollars on his own taxes, each and every year. That's what the media should be asking him about -- why he saw fit to reduce his own taxes by such a gargantuan amount!"
Harking back to Rodney Dangerfield again, the A.M.T. needs to get a lot more respect, starting with Democrats absolutely howling about the injustice of Trump cutting his own taxes by four out of every five dollars he pays. Beyond the GOP's attempts to abolish the A.M.T., though, Democrats really should be championing this particular tax for another very good reason.
The A.M.T. was designed as a check on wealthy taxpayers using too many loopholes and deductions to avoid paying their fair share of taxes. Individuals were using so many tax shelters and other tax schemes that some of them paid little or nothing on substantial incomes. So Congress added the A.M.T. as an adjustment. The idea is simple: the wealthiest taxpayers should not be able to game the system so that they're paying a lower tax rate than an average middle-class family. If they do game the system in such a fashion, the A.M.T. kicks in and restricts their ability to write everything off while filing their taxes. Donald Trump is the poster child for the A.M.T., since he was forced to pay $38 million in taxes instead of $7 million. That's how it is supposed to work.
In attacking the A.M.T., Republicans like to point out that it now affects a lot more people than it was originally intended to cover. If this is really a valid complaint, then adjusting the exemption amount (the amount of income allowed before the A.M.T. kicks in) is all that would be required to fix the problem. But they're not satisfied with that -- they want to abolish the tax entirely.
Democrats should forcefully point out that the A.M.T. was specifically intended to lessen income inequality in the tax system. It specifically targets the wealthy who were previously able to shield much of their income from federal taxes. It adds fairness to the tax system as a whole, by closing loopholes and limiting deductions. If anything, Democrats should be calling for a more robust A.M.T., to force millionaires and billionaires to pay a fairer amount in taxes.
Fortunately for Democrats, doing so is pretty easy. Of all the tax proposals in the GOP plan, this is really the easiest one to attack, and the hardest for Donald Trump and the Republicans to defend. Because in one fell swoop, getting rid of the Alternative Minimum Tax would save Trump over 80 percent on his own taxes. All Democrats have to do is point this basic fact out, over and over again. If they can effectively do so, sooner or later the A.M.T. will begin to get the respect it deserves.
-- Chris Weigant
Cross-posted at The Huffington Post
Follow Chris on Twitter: @ChrisWeigant
The cohones this man has. If the American public let him away with this, he is going to think we are the biggest bunch of suckers in the history of the World.
neilm: Too late. He figured that out some time ago.
John M
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Considering how much wealth and income is not ever included in the tax figures the wealthy pay, it's safe to say all of the wealthy figured out that we're suckers... and they're right.
The silver lining in Trumps case is that he probably isn't actually as wealthy as he claims.
A
John M
2
For example...
Excerpt-
"The BVI is known as a tourist location, but the island’s raison d’être for the ruling elite in Britain and globally is as the site for financial swindling on a vast scale. The BVI government derives 60 percent of its revenues from its financial sector. It is home to more than one million registered companies, according to the Financial Secrecy Index, with assets of more than $1.5 trillion—double their value as estimated by the International Monetary Fund in 2010.
The Financial Times reported in 2012 that the British Virgin Islands were the fifth largest recipient of foreign direct investment globally, “with inflows at $72 billion, higher than those of the UK, which has an economy almost 3,000 times larger.”
These are nothing more than shell companies that have little physical presence and employ few local people. BVI’s protective regime ensures anonymity, secrecy and a complete absence of wealth or corporate taxation.
Two thirds of these companies are used for “corporate structuring,” and tax “planning,” aka tax avoidance. More than 140 stock market-listed companies in London, New York and Hong Kong have at least one subsidiary in the BVI. According to the Action Aid charity, in 2013, 98 of the companies in the FTSE 100 had BVI subsidiaries."
http://www.wsws.org/en/articles/2017/09/27/bvir-s27.html
After the hurricanes, food, power and communication for the poor people are scarce, but the tax evasion operations are back in action!
A
OK, just spent some time answering comments from earlier in the week, just for everyone's information...
So go back and check it out!
:-)
-CW
Hey gang
Off topic
From the founding fathers to Trump, a little dose of reality in an interview with Gerald Horne
http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=20056
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Death - the ultimate erectile dysfunction. Hugh Hefner dead at 91.
The Republican cult of economic failure lives on ...
The psychology of axing the minimum tax tends to be Republican friendly.
"An average family might save a couple hundred dollars -- maybe -- on their taxes". That's an obvious dollar based upside.
The downside to the average family is much more subtle: reduced government services and/or budget deficits. Oh, and the rather abstract notion of "fairness."
The Democrats are going to fight hard against this sugar coated poison pill - especially since it puts more money in the pockets of the big Democratic donors too! Self sacrifice is hard, especially if nobody is looking too closely.
Stig [7]: Thanks for noting Hefner's passing. It has some real relevance here, as I'm sure we've discussed before the fact that Hefner was the originator and still reigning champion of the brand of conspicuous consumption that Trump later put on steroids in service to his own ego.
I remember having caught a glimpse of Hef's "Bunny plane" - a reconditioned DC-10 painted black with a huge playboy logo painted on the tail - once when I was a child, at the El Paso international airport once. It was truly the most impressive thing I'd ever seen until I lost my virginity.
Today, Playboy.com consists of a picture of Hef from that era with a quote: "Life is too short to be living somebody else's dream."
Rest in Play, Hef.
It's also worth noting that Hefner was a very different kind of rich guy than Trump is. Jessie Jackson today reminded everyone that Hefner helped finance the Civil rights movement. Hef also provided the seed money, I think, for the National Organization for Reform of Marijuana Laws.
Balthasar -
He was also in favor of gay rights long before it became cool...
I almost wrote today's column on Hef. Most people under 30 have no idea that nekkid pichurs of wimmen have not always been universally available at the click of a button. Hef changed America, and helped usher in the sexual revolution. For better or for worse, he was a pioneer, that's for sure.
-CW
Hefner had the pulse of the USA in the 60's. He lost it when he left Chicago.for nicer weather.
Hefner had the pulse of the USA in the 60's. He lost it when he left Chicago.for nicer weather.
Odd....I only tapped send once.....long delay, 2 posts. ....????