The tax Trump paid in 2005 is the tax Trump wants

President Donald Trump (Business Insider)(Business Insider) President Donald Trump wants to abolish the “Alternative Minimum Tax” (AMT) that, according to a copy of his federal tax return, cost him $31 million in 2005.That $31 million was a majority of all the $38.5 million in taxes he paid on his $153 million in total income for that year. The White House confirmed part of the president’s 2005 tax returns ahead of a report from MSNBC host Rachel Maddow.Trump said he wanted to abolish the AMT in 2016 when he was on the campaign trail:“All … Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax while providing the lowest tax rate since before World War II.”If the AMT didn’t exist, Trump would have paid only a fraction of his 2005 bill. Trump’s return shows that alongside the AMT adjustment the other taxes he paid total only about $7 million, or 4.5% of his $153 million in total income. As it is, Trump paid an effective tax rate of about 25% on his income.Here is a basic summary of Trump’s income and tax data:Total income: $153 millionWritedown on losses: -$103 millionIncome after writedown: $50 millionAMT: -$31 million (20% rate)Regular income tax: -$5.3 million (4.5%)Other taxes: -$1.9 million (1%)Total taxes Trump paid in 2005: -$38.5 million (25%)Total taxes Trump would have paid absent the AMT: $7 million*Numbers may not add due to rounding and various tax provisionsUnder Trump’s proposal, he would have paid about 5.5% in tax rather than the 25% he actually paid. That would have lowered his tax rate to below that for people who earn less than $100,000, according to the New York Times. It would also have saved him about $31 million.You can debate the numbers because the tax rules generate them according to the structure in place in 2005, not the structure that would be in place if the AMT were abolished, which might change how Trump’s income and taxes would be calculated. Despite that, the numbers do give a rough guide to how much Trump would personally save if his AMT proposal were enacted.The intent of the AMT is to ensure that wealthy and self-employed Americans pay tax rates that are comparable to those paid by ordinary workers on a salary or a simple wage. The AMT was introduced in 1970 to solve the problem of wealthy people paying lower tax rates that those poorer than them.The US tax code contains many provisions allowing wealthy and self-employed people to take “deductions” — business expenses they paid throughout the year — against the taxes they owe. These deductions often lead to a situation in which a wealthy person with multiple streams of income might pay a lower tax rate, or even less tax overall, than someone on an average annual wage.The intent of the AMT is that if your income is above a certain level ($109,475 in 2005) you pay a flat minimum tax rate regardless of the deductions you’re trying to write off.Trump’s proposal to abolish the AMT would replace it with a simpler set of bands in which the very rich pay a top tax rate of 25%. Trump’s campaign said many deductions would be abolished to pay for it:“Reducing or eliminating most deductions and loopholes available to the very rich.”But the rich would keep some valuable (but unspecified) deductions:“Those within the 25% bracket will keep fewer deductions. Charitable giving and mortgage interest deductions will remain unchanged for all taxpayers.” Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)RelatedTrump pulls U.S. out of Pacific trade deal, loosening Asia tiesJanuary 24, 2017In “World”Trump: Obamacare key provisions to remainNovember 12, 2016In “latest news”Trump to hit Mexico with tariffs in anti-immigration measureMay 31, 2019In “latest news”

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