I didn’t watch The Rachel Maddow Show live when it was revealing Trump’s 2005 tax returns—because I don’t have a TV and also I probably wouldn’t have anyway—but I was scrolling through Twitter in the hours before, during and after, and from what I gathered, it was a bit of a letdown. After months of intense wondering about what Trump’s tax returns would reveal, the paltry two-page report from 2005 did not live up to the hype.
Celebrities tweeted that the reveal was unimpressive, and journalist Joe Scarborough suggested that Trump himself could’ve leaked the returns to distract from his current agenda, as well as to silence those still asking for the full receipts. David Cay Johnston, the journalist who first received the 1040, offered up that same theory as one possibility as well.
But just because the 2005 Form 1040 didn’t have any explosive revelations doesn’t mean that it’s not incredibly valuable in understanding Trump’s finances.
Because I care—about our country, and about you—I did some research so you don’t have to. I literally know nothing about tax returns, so I did some digging around to see what the hullabaloo is about.
The 1040 is the basic tax return system, documenting Trump’s annual income, his losses in income, and the amount of money he filed in taxes. Against an income of roughly $153 million, Trump reported $103 million in losses, which according to the Washington Post could include depreciation and sums carried over from previous years, and paid $38 million in taxes.
Here’s where things get interesting. Trump paid that $38 million in taxes because of something called the Alternative Minimum Tax, a parallel tax system that, according to the Wall Street Journal, is “designed to make sure that high-income individuals can’t use legal deductions and credits to avoid all income taxes.”
From what I’m able to understand, the AMT recognizes that, for most people, having roughly 67 percent of your income in loss (the $103 million loss against the $153 million income) would be detrimental. However, the AMT is designed for wealthy individuals, and forces them to pay taxes accordingly. Without the AMT, Trump would, due to his losses, paid a little over $5 million, according to David Cay Johnston—the investigative reporter who first had the tax returns dropped in his mailbox. $5 million is 3.5 percent of Trump’s income, which is less than half of what people who make $33,000 a year pay in taxes.
So the AMT prevented Trump from taking advantage of his losses and paying next-to-nothing (for him) in taxes. And the most interesting part is that Trump proposes to cut the AMT in his upcoming tax plan. Republicans in Congress, like Speaker Paul Ryan, want to get rid of the AMT in their next goal after healthcare. I don’t really understand why they would pursue tax cuts for the extremely wealthy, except that it would be a harkening back to Reaganomics.
In my VERY preliminary research—so if anyone has more information, please let me know—Reagan gave cuts on federal income tax and capital gains tax, along with a decrease in government regulation and government spending, with the idea that—with more capital—companies would invest more money into their spending, their workers and infrastructure. This is also called supply-side economics, which argued that economic growth comes from investing in capital. Reagan was dealing with stagflation, and from what I’m able to understand, his economics brought an end to that recession. And while Reagan saw a decrease in poverty, the level shot up after he left office to higher than before, and Reaganomics—while it did increase GDP—did not benefit the middle class in the way that it promised to. While still impressive, job creation under Reagan was lower than under Clinton and Carter.
But this isn’t an economics class, and even though when I wear a turtleneck and glasses I look like an economics professor who was Seventeen Again-ed, I’m not an economics professor.
So let’s focus on why Trump’s tax returns are important, even if they weren’t as flashy as one might’ve hoped. They’re important because they show us his motivation. Trump would’ve saved $33 million if the AMT were eliminated. That’s a pretty impressive amount. And while Trump has already claimed that utilizing tax loopholes makes him very smart, that’s still capital that is being lost in the economy. The GOP says that even with the elimination of the AMT, closing other tax loopholes will make up for that loss. But when we have a president who won’t release his full tax returns, how can we trust anything they say?
Releasing full tax returns would show exactly how much Trump has given to charity (he claims to be very charitable, and giving to charity is a tax write-off), from where he gets his income, and exactly what entities he might be beholden to. Since we don’t know any of this, we don’t know what policies Trump makes that would be beneficial to his benefactors or his businesses. We know nothing. Every presidential candidate since 1976, besides Gerald Ford who only released summary tax data, has released their tax returns. The Clintons have released tax information dating back to the 1970s. It alerts people to possible red flags and conflicts of interest. By withholding his own, Trump is hiding his own possible conflicts.
Johnston, towards the end of his interview with Maddow, said, “I’ve been at this for 50 years…Every time some high-level politician wants to hide something, it always turns out there’s a reason. They’ve got something to hide.”