Recently, in a shocking report revealed by the New York Times, it was exposed that the President of the United States paid nearly $750 per year in income taxes in the first and second year, i.e., 2016 and 2017, of his presidency.
Trump income taxes tell a dismal story of the US tax laws that make a difference between rich and poor people.
This came as a shock to many, as people had the notion that he had a successful business model running in parallel with his presidency. Not only this, but he also did not pay a single penny in ten out of the fifteen recent years in income taxes.
With a net worth of more than 2.5 billion USD, Trump paid fewer taxes than the average salary of the homeless person in the United States. Trump actually had a legitimate reason to pay less taxes, considering the downfall of his business empire in recent times.
It was more of a messy U.S. tax system instead of corruption by Trump that made him pay just $750 per year in income taxes.
Trump income tax discrepancies also sparked some protests where lower-wage workers were seen with banners protesting against Trump’s low taxes in front of the Supreme Court.
Trump’s lies regarding taxes in the first presidential debate:
The most unfortunate part of this story is that it is mostly legal and cannot be termed “fraud.”
However, the situation became worse when he tried to convince the public that he was paying millions of dollars in taxes.
In the first presidential debate on September 29, Trump answered a question from Chris Wallace stating that he paid millions of dollars as income taxes.
What triggered him to pass the sweeping statement is still unknown; however, it seems that he just answered in the heat of the moment to avoid further interrogation from the moderator as well as from the Democratic presidential nominee, Joe Biden.
Deconstructing Trump’s income in 2017: Why Trump income taxes are too low?
If we deconstructed the income structure of the President in 2017 when he paid $750 in income taxes, it looks something like this.
|Taxable Interest||+ $6,758,494|
|Ordinary dividends||+21, 984|
|Capitals gains and profits||+ $7,562,038|
|Pensions and annuities||+84,351|
|Business losses||– $15,313,785|
|Losses from previous years||– $ 12,306,111|
Trumps’ net income can be seen as red and negative, so it was justifiable not to pay income tax on it, according to the laws. Not only this, but he was also donating his salary as president to the government.
However, all those people who face the situation of negative income in a certain period of time qualify to pay Alternative Minimum Tax (A.M.T.)
Did Trump skim the Alternative Minimum Tax system?
A.M.T. is that tax, which is a minimum to be paid regardless of any losses in the business.
This results in deductions from the money of the rich people who are not qualified to pay taxes due to any reason to negate wealth accumulation in certain hands in the longer run.
The major A.M.T qualifying money of Trump in this regard was $45 million that he carried over the past years to 2017, and he was bound to pay income taxes on this money despite any loss in the business.
Trump income tax bill was $7,435,857. But the twist came here too, and this is where the messy U.S. tax system comes to play again.
Under these special circumstances, he could even apply for a tax reduction on A.M.T., and he did exactly that same thing.
His accountants just subtracted $750 from this tax bill, taking Trump income tax tally to just $750.
Had he paid even nothing, this would not be an issue at all, and all of the credit goes to the U.S. tax system, which has different rules for the richest 0.1 % as compared to the rest of 99.9% of the citizens of the country.
Donald Trump paying this lesser amount in taxes is more of a systematic glitch rather than Trump’s fault. He actually tried to capitalize on every tax law to get as much monetary advantage from the laws as possible. However, Trump misleading the nation regarding taxes in the first presidential debate to attract the voters was one of the lies he told at the debate that night.
He sought an easy escape by saying that he paid millions of dollars, instead of explaining the complexities present in the U.S. tax system to the moderator.
Still, he is bound to face the consequences of the wrath of those voters on November 3 who do not understand the complexities of the U.S. tax laws.
Probably, that was the reason he preferred to lie instead of explaining the system to the people to win the trust of the voters.