Believe me, believe me
Donald Trump went to one of his favorite catchphrases when claiming the 2017 Tax Cuts and Jobs Act would be bad for him. The following quote is from a CNN article published in November of 2017:
"America's tax code is a total dysfunctional mess. ... It is riddled with loopholes that let some special interests, including myself, in all fairness -- it is going to cost me a fortune, this thing," Trump said. "Believe me, believe me, this is not good for me."
In the aftermath of the passage of the Trump Tax Plan, there were a number of articles that claimed Trump's statement was a falsehood. But because #DonTheCon has never released any of his federal income tax returns, we had no way of really knowing. However, we have the two pages of #DishonestDon's 2005 tax return, thanks to it being leaked to the media. So I decided to take the data from that return and prepare a return involving the same items of income under the Internal Revenue Code in effect for the year 2018.
When I first started this project, I was in agreement with the authors of those articles. The Tax Cuts and Jobs Act would actually result in Trump paying less tax.
Because I did not have all of the forms and schedules from that 2005 return, I had to make a few assumptions.
In 2005, Trump had itemized deductions of just over $17 million. I have to assume that most of that was deductions for payment of state and local taxes. A deduction that is limited to only $10,000 in 2018. But knowing that Trump was still donating to his personal non-profit foundation until 2008, I gave him credit for $1,000,000 in itemized deductions.
Not having the prior and subsequent years of tax returns, I assumed the Net Operating Loss reported on Line 21 of page 1 of the 2005 form 1040 was from a prior year being carried forward. That assumption is based on the fact that Trump claimed nearly $1 billion in Net Operating Losses in 1995.
On his 2005 tax return, under older tax law, Mr. Trump paid $38.4 million in federal income tax on his Form 1040
The income items from Trump's 2005 tax return are listed below:
Wages - $998,599
Taxable interest income - $9,460,371
Ordinary dividends - $314,320
Business income (from self-employment) - $42,395,804
Capital gains Income - $32,185,114
Pass-through entity income - $67,383,658
Other Income (Net Operating Loss) - ($103,201242)
That income was reduced by $17,034,485 in itemized deductions.
The breakdown of the taxes paid on the 2005 return are as follows:
Income tax - $5,310,616
Alternative minimum tax - $31,558,179
Self-employment tax - $1,887,596
Credit for foreign taxes paid - ($23,940)
Total tax - $38,435,451.
When you apply those same items of income using 2018 law and the assumptions made above, the tax breaks down this way:
Income tax - $12,211,637
Alternative minimum tax - $27,536,871
Self-employment tax - $1,135,423
Affordable Care Act Tax - $2,210,429
Credit for foreign taxes paid ($23,940)
Total tax - $43,070,420
We have to adjust out the ACA tax as it was not in effect in 2005.
Adjusted total tax - $40,859,991
Trump pays just over $2.4 million more in taxes under the new tax law. Why?
Because of the cap of the deduction for State and Local Taxes (SALT) of $10,000.
I wonder if the Democrats who are seeking to repeal that cap realize that the people who benefit the most from that repeal are the wealthiest Americans, not the working-class so many of last night's debate participants were talking about representing.
As to who really benefitted from the Trump Tax Plan, this chart still works:
"America's tax code is a total dysfunctional mess. ... It is riddled with loopholes that let some special interests, including myself, in all fairness -- it is going to cost me a fortune, this thing," Trump said. "Believe me, believe me, this is not good for me."
In the aftermath of the passage of the Trump Tax Plan, there were a number of articles that claimed Trump's statement was a falsehood. But because #DonTheCon has never released any of his federal income tax returns, we had no way of really knowing. However, we have the two pages of #DishonestDon's 2005 tax return, thanks to it being leaked to the media. So I decided to take the data from that return and prepare a return involving the same items of income under the Internal Revenue Code in effect for the year 2018.
When I first started this project, I was in agreement with the authors of those articles. The Tax Cuts and Jobs Act would actually result in Trump paying less tax.
Because I did not have all of the forms and schedules from that 2005 return, I had to make a few assumptions.
In 2005, Trump had itemized deductions of just over $17 million. I have to assume that most of that was deductions for payment of state and local taxes. A deduction that is limited to only $10,000 in 2018. But knowing that Trump was still donating to his personal non-profit foundation until 2008, I gave him credit for $1,000,000 in itemized deductions.
Not having the prior and subsequent years of tax returns, I assumed the Net Operating Loss reported on Line 21 of page 1 of the 2005 form 1040 was from a prior year being carried forward. That assumption is based on the fact that Trump claimed nearly $1 billion in Net Operating Losses in 1995.
On his 2005 tax return, under older tax law, Mr. Trump paid $38.4 million in federal income tax on his Form 1040
The income items from Trump's 2005 tax return are listed below:
Wages - $998,599
Taxable interest income - $9,460,371
Ordinary dividends - $314,320
Business income (from self-employment) - $42,395,804
Capital gains Income - $32,185,114
Pass-through entity income - $67,383,658
Other Income (Net Operating Loss) - ($103,201242)
That income was reduced by $17,034,485 in itemized deductions.
The breakdown of the taxes paid on the 2005 return are as follows:
Income tax - $5,310,616
Alternative minimum tax - $31,558,179
Self-employment tax - $1,887,596
Credit for foreign taxes paid - ($23,940)
Total tax - $38,435,451.
When you apply those same items of income using 2018 law and the assumptions made above, the tax breaks down this way:
Income tax - $12,211,637
Alternative minimum tax - $27,536,871
Self-employment tax - $1,135,423
Affordable Care Act Tax - $2,210,429
Credit for foreign taxes paid ($23,940)
Total tax - $43,070,420
We have to adjust out the ACA tax as it was not in effect in 2005.
Adjusted total tax - $40,859,991
Trump pays just over $2.4 million more in taxes under the new tax law. Why?
Because of the cap of the deduction for State and Local Taxes (SALT) of $10,000.
I wonder if the Democrats who are seeking to repeal that cap realize that the people who benefit the most from that repeal are the wealthiest Americans, not the working-class so many of last night's debate participants were talking about representing.
As to who really benefitted from the Trump Tax Plan, this chart still works:
posted by me at 8:10 PM
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