Bookmark and Share

Will Trump’s Tax Agenda Be His Biggest Conflict of All?

President Trump says he will release his tax reform agenda this week.

What a multi-tasker. It’s not easy to be early and late at the same time.

While he’s behind in announcing his reforms—just barely squeezing his program (which isn’t even in legislative form) into the 1st Hundred Days, he’s actually rushing it. He still hasn’t provided the American people with the information we need to decide whether to provide our support: his tax returns.

And, for once, the response is bi-partisan. Twelve Republican senators have now joined with Democrats calling for Trump to release his tax returns.

There’s any number of reasons to want presidents to disclose their tax returns. We want to know they are being honest and not hiding income. Many want to see their charitable contributions.

But, perhaps most important of all: We need to know how the changes would benefit the billionaire and his family. Reporters are pouring over Trump’s properties to identify conflicts of interest. Tax policy may be the biggest conflict of all.

And it goes beyond Trump himself. His returns give us insight into how his proposals will affect not just him, but those like him—the 1%’ers, the super-rich.

Unfortunately, when Rachel Maddow a few weeks ago released two pages of the President’s 2005 tax return, she played it as if she were reporting a major scandal.

But there was no scandal—at least the tax returns themselves didn’t reveal one.  Trump paid $36 million+ in federal income taxes on an income of just over $150 million. An effective tax rate of about 25%.

Trump’s defenders were quick to point out that, 25% is, more than others pay. The Obamas and Bernie Sanders paid less.

Nearly every Fox News host ridiculed Maddow, including Greg Gutfeld, who noted: “There’s just no “there” there.”

Sorry, Greg, you missed the point, too. There is a “there” there in Trump’s 2005 return.

It is this: Trump’s taxes were so high for one reason—the Alternative Minimum Tax (AMT). Without it, Trump is estimated to have a 2005 income tax liability of roughly $5 million. Then, his effective tax rate drops from 25% to roughly 4%. (The AMT was only mentioned in passing on Maddow’s show.)

Later, Maddow’s “defense” became: Just the revelation of Trump’s taxes is a “bombshell”.

Uh, sorry, Rachel. Here’s the bombshell: Donald Trump wants to repeal the Alternative Minimum Tax so that, in percentage terms, he can pay virtually no taxes!

As noted above, this goes well beyond Donald Trump. Over 10,000 households earn over $10 million each year (averaging about $30 million). Their effective tax rate:  22% (not the 39.6% that right-wing TV/radio hosts claim to be paying to the federal government.)

Recall Mitt Romney paying an effective tax rate of just 13.9% on $22 million of income.

The Alternative Minimum Tax should be re-examined. But not to repeal it. Warren Buffett has suggested raising the AMT from 28% on incomes as low as $200,000 to a rate of 30% at $1 million—and it shouldn’t stop there.

We should have a Graduated AMT—starting at 30% and $1 million and increasing by 1% per million until it maxes out at the top rate, 39.6%, at $10 million. And, yes, if you earned $10 million and paid a 39.6% rate, you would still be able to live affluently on your post-tax income without working ever again. In other words, you’d be rich.

Then we should apply a Graduated AMT to corporations, as well. Say, 15% at a net income of $100 million, increasing by 1% per $100,000 to top off at 25% at $1 billion in earnings. Some large companies have had years where they paid little or no federal income taxes despite billions in earnings. And the effective rate for all U.S. companies making billions can drop to near 15%--or below.

These graduated taxes could be part of real tax reform: Too many earning between $200,000-$500,000 are caught up in the AMT. According to the Tax Policy Center, more people under $500,000 in income pay the AMT than those earning above $1,000,000.

We could also drop the top corporate rate in exchange for a Corporate Tax AMT. And index the AMT for inflation.

This raises real money—estimated at over $100 billion annually. (Not in 10 years. In one year!)

While Trump’s 2005 IRS Return raised the issue of the AMT, how many other tax provisions affecting Trump would be revealed in other years? How do those affect his agenda? He wants to do away with the Estate Tax.  How about releasing the returns where we can see how the Estate Tax affected his inheritance. (Yes, even if they are his father’s returns.)

If Trumpian tax reform is the next thing on Trump’s agenda, then it’s time for the disclosure of Trump’s tax returns to be the next big thing on all of ours. It may not be early, but it’s not too late!

Mitch Rofsky is the President of the Better World Club, the nation's only eco-friendly auto club.