Wednesday 13 December 2017

Donald Trump's income tax payments revealed in leaked documents: Here's what we know

By Nilima Marshall

It appears the US president paid $36.5 million in income taxes in 2005.

During the 2016 US election campaign, many called for Donald Trump to make his tax returns public, with more than a million people signing a White House petition urging him to release them.

Now, it appears the US president’s income taxes from 2005 may have been released in leaked documents.

The documents show Trump earned $153 million (£123 million) and paid $36.5 million (£31 million) in income taxes in 2005.

The forms were obtained by journalist David Cay Johnston, who runs a website called

While Trump himself refrained from tweeting about MSNBC’s The Rachel Maddow Show, where the news of the leaked documents was revealed, his son Donald Trump Jr was seen praising Maddow for her efforts:

So what else did the documents reveal?

They show the billionaire paid a rate that was effectively just under 25% thanks to a tax he has since sought to eliminate.

The pages from Trump’s federal tax return show the then-property mogul also reported a business loss of $103 million (£85 million) in 2005, although the documents do not provide details.

The forms show Trump paid an effective tax rate of 24.5%, a figure well above the roughly 10% the average American taxpayer hands over each year.

But it is below the 27.4% that taxpayers earning $1 million a year average, according to data from the Congressional Joint Committee on Taxation.

What about the other years?

Trump’s hefty business loss appears to be a continued benefit from his use of a tax loophole in the 1990s, which allowed him to deduct previous losses in future years.

In 1995, he reported a loss of more than $900 million (£740 million), largely as a result of financial turmoil at his casinos.

Tax records obtained by The New York Times last year showed the losses were so large they could have allowed Trump to avoid paying taxes for up to 18 years.

But his 2005 filing shows another tax prevented him from realising the full benefit of those deductions.

So why was Trump’s tax bill high in 2005?

The bulk of Trump’s tax bill that year was due to the alternative minimum tax (AMT), a tax aimed at preventing high-income earners from paying minimal taxes.

The AMT requires many taxpayers to calculate their taxes twice – once under the rules for regular income tax and then again under the AMT – and then pay the higher amount.

Critics say the tax has ensnared more middle-class people than intended, increasing the amount they owe the government each year.

Were it not for the AMT, Trump would have avoided all but a few million dollars of his 2005 tax bill.

His campaign website called for the end of the AMT, which is expected to bring in more than $350 billion (£288 billion) in revenues from 2016 to 2025.

Why didn’t Trump release his tax returns in the first place?

As a candidate and as president, Trump has refused to release his tax returns, breaking a decades-long tradition.

Although he initially promised to do so, he later claimed he was under audit by the Internal Revenue Service and said his lawyers had advised against it.

The White House hit back even before the release of the documents on Tuesday night, saying that publishing the information was illegal.

“You know you are desperate for ratings when you are willing to violate the law to push a story about two pages of tax returns from over a decade ago,” the White House said.

So are Maddow and Johnston breaking the law?

The unauthorised release or publishing of federal tax returns is a criminal offence, punishable by a fine of up to $5,000 (£4,113) and up to five years in jail.

But Maddow argued that MSNBC was exercising its First Amendment right to publish information in the public interest.

Trump insists the American public is not interested in his returns and says little could be learned from them.

The issue was a major point of attack from his election rival Hillary Clinton, who suggested Trump had something to hide.

Press Association

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