Last night, we had a couple with whom we're close friends over for dinner. After we finished dinner and before we played a game called Mexican Train, we engaged in a political discussion. When I mentioned that Rachel Maddow was doing a phenomenal job with investigative reporting pertaining to Donald Trump, they commented that she really bombed on her recent program regarding Trump's 2005 federal income tax returns(link is external).
While I had read that many people felt the same way, that response coming from them surprised me. I actually found the program very enlightening and extremely important.
When I asked why they were so disappointed with the program, they explained that Maddow's efforts had backfired because the tax returns showed Trump in a very positive light. They told me that as explained on the Rachel Maddow Show, Trump earned approximately $152,700,000 in positive income that year and paid approximately $36,500,000 in federal income taxes. The program confirmed that Trump was clearly earning a great deal of money and that he was paying the legally required amount of taxes on his income. This, they believed, proved the naysayers wrong about Trump.
I then responded that I had watched the exact same program and that I had a very different reaction. I explained that they missed the entire point of the episode.
What I learned while watching the program was that had there been no Alternative Minimum Tax, Donald Trump would have paid $5.3 Million dollars in federal income taxes on his $152,700,000 in positive income, which would have meant that his income tax rate would have been 3 1/2 percent. Among other things, the reason his income taxes would have been so incredibly low was because the tax return showed $103,201,242 in "write downs" that year.
The IRS describes the Alternative Minimum Tax(link is external) as follows:
"Under the tax law, certain tax benefits can significantly reduce a taxpayer's regular tax amount. The alternative minimum tax (AMT) applies to taxpayers with high economic income by setting a limit on those benefits. It helps to ensure that those taxpayers pay at least a minimum amount of tax."
The importance of this information relates to the fact that Trump has vowed to eliminate the Alternative Minimum Tax(link is external). Without that tax, Trump would pay income taxes at a lower rate than the bottom half of taxpayers - those earning less than $33,000 per year. In 2005 alone, had the Alternative Minimum Tax not been in existence, Trump's federal income tax bill would have been reduced by $31,200,000. In other words, Trump's desire to eliminate the Alternative Minimum Tax is for his own self-interest and not to "Make America Great Again."
And, before anyone feels any empathy toward Trump for having paid $36,500.000 in federal income taxes in 2005, as explained on the Rachel Maddow Show, since Trump's federal income taxes were paid based upon the Alternative Minimum Tax rather than the regular tax amount, his tax rate was 28%, rather than 35%. He just wants his tax rate reduced to 3.5%. In other words, even with the Alternative Minimum Tax, people at the top in terms of income are not burdened like the rest of us.