President Trump’s 2005 Tax Returns – What It Tells Us

President Trump’s 2005 Tax Return – What It Tells Us

Yesterday, Tuesday March 14, 2017, while most of the New England area was buried in snow, MSNBC published President Trump’s 2005 income tax return – or at least the first two pages of it.  What does the return tell us and what does it not?

The Basics – We know he had a positive income in the amount of $152,737,866 and $103,201,242 in tax write-offs.  He paid a total of $38,435,451 in taxes for the year.

In Further Details – Of the income reported by Donald Trump, nearly 10 million dollars came in form of interest and dividends.  He also had nearly 75 million dollars in business income or capital gains, plus more than 67 million dollars in income from real estate, royalties, partnership or other business income.  He had more than 17 million dollars in itemized deductions (which may or may not include charitable contributions).

How Much Did He Pay In Taxes? President Trump ultimately paid a total of $38,435,451 in taxes.  However, this is because he incurred $31,261,179 in Alternative Minimum Taxes (AMT).  Without this tax, President Trump would have only paid $5,310,616 (3.48%) on an income of $152,737,866.

What is the AMT?  This is an important aspect of the tax laws that ensures higher-earning taxpayers pay at least a minimum amount of tax notwithstanding otherwise legal deduction they may have.  Ergo, without the AMT, President Trump would have paid only 3.48% of his income in taxes.  Instead, he was forced to pay 25.16% of his income in taxes because of the AMT.

What is the Future of the AMT? According to the tax proposals made by the Trump administration, the AMT will be entirely eliminated from the tax code.  If such proposal is passed into law, taxpayers, especially the higher-income ones, will be able to take better advantage of their negative incomes and other deductions to dramatically reduce their taxes.  You guessed it!  Taxpayers like President Trump will pay even less in taxes and significantly reduce the government’s revenue.

How Much Did President Trump give in Charitable Donations?  There is no way to tell with any reliable certainty.  He may have donated anywhere from $0 dollars to just over $17 million.  The published return does not include the Schedule A which would have otherwise shown the itemized deductions.  Thus, there is no way to tell if any or how much President Trump donated to charities. If he does reveal his returns in the future, or the press publishes it, we may be able to know.

Will President Trump Reveal His Tax Returns for Other Years?  President Trump has steadfastly refused to produce his tax returns claiming that he is under audit for past years and he will not produce them until the audits are completed.  If he maintains this stance, it is unlikely he will reveal his returns for at least the next four years as his returns as the President (and the Vice-President) are automatically selected for audit.

How Much Loss Did He Write Off? President Trump wrote off more than $100 million in losses to offset his income of about $150 million.

Did the Returns Show Sources of President’s Income or His Borrowings?  No.  The two-page disclosure did not disclose the sources of President Trump’s income for 2005.  It also did not show the exact nature of the more than $100 million write-offs.  Furthermore, any information on who the President may owe any money to was not included in the two-page report.

 

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