Earlier this evening, MSNBC host Rachel Maddow broke the news that she had done the unthinkable: she had obtained a copy of Trump's tax returns, something that journalists and news organizations have been scrambling to do since Trump broke with decades of tradition by refusing to release them himself during the 2016 elections. The 1040 form from 2005 that Maddow obtained revealed that Trump earned $150 million that year, and paid $5.3 million in regular income tax — less than 4 percent of his income. But Trump also paid an "alternative minimum tax" of an additional $31 million.
The alternative minimum tax, or AMT, is a federal supplemental tax requirement that helps to make sure that the super-wealthy, like Trump, pay their fair share of taxes.
The policy was created in 1969, when Congress noticed that high-income earners were legally using so many deductions and tax breaks that they were paying almost nothing in federal income taxes. The alternative minimum tax established stricter "AMT rules" that taxpayers who earn more than $200,000 a year must follow to prevent high-income earners from taking advantage of benefits and loopholes.
During the presidential campaign, Trump vowed to abolish this 47-year-old tax, stating that it affects millions of middle-class Americans who shouldn't have to pay higher taxes out of pocket than the average American.
But the revelations of Trump's leaked tax returns have raised questions about Trump's motivations in shaping tax-reform policy. And, many have criticized his resolve to eliminate a tax that, according to the 2005 tax returns, caused him to pay roughly 85 percent of the total amount that he paid the IRS in 2005.
It's clear why Trump wants to abolish the alternative minimum tax. In 2005, he paid 6 times as much in AMT as in regular tax.— Nicholas Kristof (@NickKristof) March 15, 2017
While the alternative minimum tax was originally intended to affect only the wealthiest Americans, it has expanded over the years to affect many upper-middle class Americans, and as many as 4.8 million families could be paying additional taxes in 2017 because of it, according to the Tax Policy Center at the Brooking Institute.
Still, the fact that Trump has specifically advocated against a policy that has directly cost him millions of dollars a year raises some serious questions about his ability to use his power to protect his own financial interests through tax reform.
Buried lede = Trump wants to eliminate alternative minimum tax which would have him paying ~3.5% in taxes rather than 24% as per 2005 return— Andrea Woo | 鄔瑞楓 (@AndreaWoo) March 15, 2017
The White House issued a statement just before Rachel Maddow's big reveal of Trump's tax returns aired, stating that "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."
While Trump's tax returns may not reveal any illegal activity, they will certainly lead to greater scrutiny when assessing any changes Trump hopes to make to federal income tax policy throughout his presidency.