How Trump's Tax Plan would impact his personal tax return
Let's look at one specific aspect of the Trump Tax Plan (TTP) and how it might impact the Liar-In-Chief. It is known as the Alternative Minimum Tax (AMT). While some (including me) thought it began with tax "reform" during the Reagan Administration, it began before that.
In January of 1969, then Treasury Secretary Joseph Barr testified before Congress that 155 high income individuals had paid no income tax on their 1966 tax returns. That led to the inclusion of a "minimum tax" in the Tax Reform Act of 1969, which was modified by the 1982 Tax Equity and Fiscal Responsibility Act of 1982. Now instead of an add-on tax, it is a "different" system that takes deductions that are allowed by the "normal" tax system, adds them back into income and then recalculates the tax using a different formula.
One of the arguments being proffered by those who support the TTP in spite of the lack of details, is that it will benefit the middle class. In fact, removing the AMT from the present system will do no such thing.
This chart from the non-profit Tax Foundation shows that less than one percent of households with income below $100,000 in 2013 were hit by the AMT, while over 62% of households with incomes of between $200,000 and $500,000 are paying AMT.
Since the Liar-In-Chief refuses to release his tax returns, we don't know much about his situation. But there were two pages from his 2005 tax return that were leaked by someone.
Page 1 tells us that even after using a Net Operating Loss (NOL) of over $103 million, he had an Adjusted Gross Income (AGI) of $48.6 million.
Under the normal income tax system, he would have paid $5.3 million plus self-employment tax (Medicare and Social Security Retirement) of $1.9 million on his income from self-employment. But thanks to the AMT, his total tax bill was $38.4 million. That's right, his Alternative Minimum Tax amount was more than $31.3 million.
So if the TTP was in effect 12 years ago, it would have saved Donald J. Trump $31.3 million in income tax.
The non-profit Tax Policy Center estimates that Americans will pay $38 billion in AMT in 2017, representing roughly 2.5% of all income tax revenues.
This is a tax break for a small percentage of people whose AGI is over $100,000 and a much larger percentage of people whose AGI rises above $200,000.
Is that where tax reform is needed? You tell me.
In January of 1969, then Treasury Secretary Joseph Barr testified before Congress that 155 high income individuals had paid no income tax on their 1966 tax returns. That led to the inclusion of a "minimum tax" in the Tax Reform Act of 1969, which was modified by the 1982 Tax Equity and Fiscal Responsibility Act of 1982. Now instead of an add-on tax, it is a "different" system that takes deductions that are allowed by the "normal" tax system, adds them back into income and then recalculates the tax using a different formula.
One of the arguments being proffered by those who support the TTP in spite of the lack of details, is that it will benefit the middle class. In fact, removing the AMT from the present system will do no such thing.
This chart from the non-profit Tax Foundation shows that less than one percent of households with income below $100,000 in 2013 were hit by the AMT, while over 62% of households with incomes of between $200,000 and $500,000 are paying AMT.
Since the Liar-In-Chief refuses to release his tax returns, we don't know much about his situation. But there were two pages from his 2005 tax return that were leaked by someone.
Page 1 tells us that even after using a Net Operating Loss (NOL) of over $103 million, he had an Adjusted Gross Income (AGI) of $48.6 million.
Under the normal income tax system, he would have paid $5.3 million plus self-employment tax (Medicare and Social Security Retirement) of $1.9 million on his income from self-employment. But thanks to the AMT, his total tax bill was $38.4 million. That's right, his Alternative Minimum Tax amount was more than $31.3 million.
So if the TTP was in effect 12 years ago, it would have saved Donald J. Trump $31.3 million in income tax.
The non-profit Tax Policy Center estimates that Americans will pay $38 billion in AMT in 2017, representing roughly 2.5% of all income tax revenues.
This is a tax break for a small percentage of people whose AGI is over $100,000 and a much larger percentage of people whose AGI rises above $200,000.
Is that where tax reform is needed? You tell me.
posted by me at 8:41 PM
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