On Tuesday night, news broke about President Donald Trump's tax returns, which he famously refused to disclosed during the election. Journalist David Cay Johnston shared with MSNBC's Rachel Maddow forms showing Trump's 2005 federal income taxes. According to the forms revealed by Johnston, Trump paid $38 million in income taxes on reported $150 million income. In trying to figure out what accounts for how much Trump paid in taxes, people are wondering who pays alternative minimum tax?
According to CNN Money, the alternative minimum tax (AMT) is an "alternative calculation of one’s tax bill that basically disallows many deductions, including state and local tax, childcare credits and property taxes. When you do your taxes, you are required to also determine your AMT... You pay whichever amount is higher." According to the Tax Policy Center at the Brookings Institute, the AMT provision was initially passed by Congress to make sure the wealthiest Americans couldn't take advantage of tax loopholes, but it currently affects many upper-middle-class Americans. While fewer than one million were affected by the AMT until the late 1990s, around 4.8 million American taxpayers will be in 2017, according to the Tax Policy Center.
Here's the key thing with AMT and the first family's tax situation. According to the documents shared by Johnston, more than $30 million of taxes paid by the Trumps was thanks to AMT. As The Daily Beast noted, on regular federal income tax alone, Trump and his wife, Melania, paid $5.3 million but the AMT added $31 million to the total owed to the government.
AMT is mostly a tax for the quite wealthy, not for the ultra-wealthy. Trump paid lots because his taxes are very strange for a very rich guy https://t.co/AuZIy0zflO— Josh Barro (@jbarro) March 15, 2017
When Johnston spoke to Maddow, he noted that Trump paid 24 percent for his tax rate, which was the same that he and his wife paid as an upper-middle-class couple making $400,000 a year.
The White House commented on Johnston's report on Trump's taxes before the MSNBC show aired:
As Bloomberg noted, Maddow tackled the allegation that her show was doing something illegal, saying the First Amendment “gives us a right to publish this return" as part of freedom of the press protections. Johnston added that since he had not solicited the tax forms, "there is absolutely nothing improper” about publishing them.
Many reports have noted that Trump called for abolishing the AMT in his campaign platform.