MSNBC’s Rachel Maddow made her claim to fame yesterday after she reported she obtained part of President Trump’s 2005 tax return.
His tax return shows that Donald Trump paid $38 million in federal taxes in 2005, $36.5 million of which was income tax. Furthermore, $31 million of that payment was an “alternative minimum tax,” which the government designed to minimize excessive deductions. Additionally, he paid approximately $1.5 million in Medicare and Social Security taxes.
That year, his income was $153 million and he reported he lost $105 million in business losses. Trump’s tax rate for the year was 24 percent.
Maddow received the first two pages of Trump’s return from journalist David Cay Johnston. In response to Maddow sharing the details on “The Rachel Maddow Show,” the White House criticized Maddow. However, they also confirmed some details of the return. President Trump, nor his administration, knew the documents were obtained. Previously, Trump refused to release any information regarding his taxes.
“You know you are desperate for rating when you are willing to violate the law to push a story about two pages of tax returns from over a decade ago,” said White House officials. “Mr. Trump paid $38 million even after taking into account large scale depreciation for construction…Despite this substantial income figure and tax paid, it is totally illegal to steal and publish tax returns. The dishonest media can continue to make this part of their agenda, while the President will focus on his.”
While the released documents do not depict specific financial ties, they do provide insight into Trump’s financial history and responsibility. The subject was a popular criticism during the presidential campaign in 2016, as many people claim Trump avoided paying federal income taxes. This speculation arose after Trump told Hillary Clinton in their first debate that not paying federal taxes made him smart.’ He also claimed his lawyers advised him not to release his taxes because the Internal Revenue Service was auditing him. However, the IRS never confirmed this claim.
“I have brilliantly used those [tax] laws,” Trump said while campaigning last year. “I was able to use the tax laws of this country, and my business acumen, to dig out of the real estate mess — you would call it a depression — when few others were able to do what I did.”
Trump and First Lady Melania Trump reportedly made most income tax payments as part of the alternative minimum tax. When filers request excessive itemized deduction, they are required to pay this tax. This minimum tax rejects certain deductions, such as deductions for dependent individuals and real estate write-downs. Despite President Trump’s use of this tax, he is attempting eliminated it in his tax reform plans.
Unclear financial past
Although the released documents show that Trump did pay federal taxes in 2005. Multiple reports show that on many occasions, he avoided part or all of his federal taxes.
The New York Times reported in 2016 that President Trump claimed a $916 million loss in 1995. This extensive loss likely carried to more tax years and helped him avoid paying income taxes for approximately 18 years. This transferred over to his 2005 returns, allowing Trump to report those net losses.
Additionally, in 1978 and 1979, Trump used real estate deductions to avoid federal taxes. The majority of these reported losses are because of a real estate developer deduction. This allows developers to minimize their real estate income because buildings depreciate over time.
While the two pages of his 2005 tax returns are helpful in understanding Trump’s financial responsibility, there is still missing information.
The financial ties he claimed during that year are still unknown, which may include financial gain from stock in the oil and pipeline companies that build the North Dakota Access and Keystone XL pipelines. These ties may be included in the $67 million income he received from partnerships, trusts, and “S corporations.”
Moreover, much of the tax obligation for his $74 million income from businesses and capital gains went unpaid for. He claimed approximately $103 million in net operating losses, which vastly decreased his owed taxes in 2005.