News

What Is The Alternative Minimum Tax?

President Donald Trump’s tax returns, leaked Tuesday night by journalist David Cay Johnston on the MSNBC host Rachel Maddow’s show reveals that he incurred the majority of his tax liability from the Alternative Minimum Tax (AMT), a feature of the tax code he has vowed to eliminate. According to the leaked data, Trump paid taxes of about $31 million from the AMT. 

Based on the President’s leaked 1040 form from 2005, all in all, Trump earned $150 million and paid $38 million in federal income taxes, for an effective income tax rate of just above 25 percent.

The AMT is a federal supplemental tax requirement, which aims to limit the ability of wealthy individuals to dodge taxes through benefits and deductions and minimize their tax burdens. The AMT replaced its predecessor –the minimum tax – ten years after it was brought in 1969 by the congress. AMT was based on data, which suggested that 155 taxpayers making more than $200,000 per year paid no taxes after leveraging benefits and deductions, according to USA today

Read: Rachel Maddow Discloses President’s 1040 Form

During the Presidential elections last year, Trump’s tax plan promised to remove the AMT. He claimed that millions of middle-class Americans are unfairly burdened by it. Trump’s latest tax disclosures, which was confirmed by the White House show that without the AMT, Trump owed and paid just $5.3 million in regular income tax.

Besides, some of the other big questions surrounding Trump’s taxes, such as the sources of his income, the nature of his investments, the central questions surrounding the AMT, can’t be definitely answered from the president’s 1040 form from 2005. They may be found in supplemental materials such as schedules and forms etc, but it does leave room for people to speculate and venture guesses.

David Day Johnston, the journalist who disclosed the president’s 1040 form, said that Trump got a 20 percent tax concession because he claimed a negative income of $103 million. It is also speculated that Trump lowered his regular federal income tax bill by deducting the declining value of his assets, along with his past business’ losses from his income, according to Time.

The AMT is forecast to bring in more than $350 billion in revenues from 2016 to 2025, according to Time.

Related Articles


Source link
0

Leave a Reply

Pin It on Pinterest

Share This

Share this post with your friends!