- In 2005, Trumps paid USD 5.3 million in regular federal income tax, USD 31 million in ‘Alternative Minimum Tax’, and USD 1.9 million in self-employment tax.
- Leaked form was mailed to DCReport, not unlike 1995 forms leaked in October 2016 to The New York Times.
- Initial reports in left-leaning publications estimated Trump’s 2005 tax rate to have been 25% but estimations based on his adjusted gross income indicate it was 79%.
- Trump’s 2005 federal tax rate is higher than Obama’s 2016 federal tax rate of 18.7%.
- White House has confirmed the numbers while calling the publication of tax forms illegal.
- Trump himself has described it as ‘fake news’.
Current US President Donald Trump paid over USD 38 million in federal taxes on an income of over USD 150 million back in 2005, revealed a leak of his 2005 Form 1040 confirmed by the White House.
Two pages of Trump’s 2005 Form 1040 have been optained by the DCReport whose founder, David Cay Johnston, presented them on MSNBC’s “The Rachel Maddow Show”.
Before that, however, as Maddow’s program announced it was going to reveal the details from Trump‘s tax form, the White House issued a preemptive statement slamming the “dishonest media” and confirming the 2005 figures about the future US President’s taxes.
Trump’s Actual Tax Rate in 2005
DCReport’s David Cay Johnston, a former reporter for The New York Times, revealed on Tuesday the two pages had been sent to him through the US Postal Service.
“Let me point out it’s entirely possible Donald sent this to me,” Johnston said during his appearance on Rachel Maddow’s program on MSNBC, adding,
“Donald has a long history of leaking material about himself when he thinks it’s in his interests.”
The pages from Trump’s 2005 tax return form are not the ones providing a breakdown of the real estate tycoons specific sources of income but they do reveal that in that year Trump about USD 153 million in income, of which USD 67 million in rental income, about 60% more than he reported from his general business interests.
On DCReport, David Cay Johnston noted that in 2005, the year when Donald Trump married his third wife, Slovenian model Melanija (anglicized as “Melania”) Knavs, his third wife, he paid “a rate of 24%, putting the Trumps in much the same tax league as any other two-earner professional couple making about USD 400,000 a year“.
“Or to put it another way, Donald Trump was paid that year like a member of the 0.001%, but he paid taxes like the 99%. And by at least one measure, he paid like the bottom 50%,“ Johnston concluded.
The White House reacted by saying that Trump’s alleged USD 153 million in income in 2005 was derived after accounting for “a large-scale depreciation.”
The pages from Trump’s tax return forms show a writedown of USD 103.2 million. Thus, Trump paid the Alternative Minimum Tax of about $38 million.
Other publications, however, have cautioned that in 2005, the then future US President actually paid an effective tax rate of 79% on his income that year since his adjusted gross income for 2005 was actually USD 48.6 million.
“To properly calculate a taxpayer’s total effective tax rate, one must divide total tax liability by adjusted gross income, or AGI. Total tax liability can be found on line 63 of a form 1040, while AGI can be found on line 37 or 38,” Sean Davis wrote in The Federalist.
“But instead of using AGI as the denominator in the effective tax rate calculation for Trump, many journalists added USD 103 million in losses (found on line 21) to Trump’s actual AGI of USD 48.6 million to produce an annual income figure of USD 151 million. They then divided Trump’s tax liability of USD 38.4 million over the USD 151 million figure to produce an effective tax rate of 25%,” he notes.
“That number is incorrect. The correct calculation of Trump’s total effective federal tax rate in 2015 is total tax liability of USD 38.4 million divided by an adjusted gross income of USD 48.6 million, which produces an effective tax rate of 79%,” Davis concludes.
Whether Trump’s 2005 tax rate is calculated at 25% or at 79%, it is still higher than the most recent effective tax rate of President Barack Obama of 18.7%, as calculated by the former Administration: in 2016, Obama paid USD 81.472 in federal taxes on an adjusted gross income of USD 436,065.
‘Fake News’ Accusation
In its statement, the White House lambasted the media while seeking to defend Donald Trump’s taxation practices.
“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,“ it said, while stressing that before becoming President of the United States, Trump was “one of the most successful businessmen in the world”.
“Mr. Trump paid $38 million dollars even after taking into account large scale depreciation for construction, on an income of more than $150 million dollars, as well as paying tens of millions of dollars in other taxes such as sales and excise taxes and employment taxes and this illegally published return proves just that,“ the White House stated.
“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, which includes tax reform that will benefit all Americans,“ the White House statement concluded.
US President Donald Trump’s first reaction to the leak of his 2005 tax return forms came on Twitter Wednesday morning.
“Does anybody really believe that a reporter, who nobody ever heard of, “went to his mailbox” and found my tax returns? NBC News FAKE NEWS!,” Trump tweeted.
During his presidential campaign, Trump broke with decades of precedent by becoming the first major-party nominee since Richard Nixon during the 1970s to refuse to release his tax returns.
He argued he would do so once an ongoing IRS audit of his taxes was completed but after his inauguration as President in January 2017, his counselor, Kellyanne Conway, said the President had changed his mind and was not going to release his tax forms.
In October, The New York Times reported Trump declared a USD 916 million loss on his 1995 New York State income tax returns. The Trump campaign objected to publication of those 20-year-old returns, alleging that they also were illegally obtained.
The documents in question were also mailed but to New York Times reporter Susanne Craig.