In summary, no. The president would benefit powerfully from any version of the Republican Party's tax bill. (Meg Kelly / The Washington Post)
"This is going to cost me a fortune, this thing, believe me, this is not good for me … I think my accountants are going crazy right now"
– President Trump, comments on the tax plan, St. Charles, Missouri, November 29, 2017
There have been many times when we have thrown out evidently ridiculous claims made by the president in our database of false and misleading claims, only to decide later that we have to do a complete verification because the president repeats the falsehood.
With the tax bill pbaded in the House and pending in the Senate, this is one of those moments. In September, Trump said he would not benefit from the tax plan, twice in improvised comments with reporters and once in a speech. "It's not good for me," he said. He seemed so foolish that he was not worthy of complete control of the facts.
But now, Trump has bowed to the claim, saying that the tax bill "would cost me a fortune, believe me." He even claimed that his accountants "Now they are going crazy," but he did not care because he is now the president and "this is a higher calling".
If anyone believes in this line, we have a bridge in Brooklyn available to them. Let's take a tour of Trump's taxes.
Oh, wait, we do not have Trump's tax returns because he broke the promise to release them. He is the first president in four decades to have refused to release his taxes. Obviously, it would be easier to verify your claims if we had a current tax return to review. But a portion of his 2005 tax return was leaked, and the White House confirmed that the numbers of final results were correct. Then, we will have to do our badysis based on that return.
In any case, it should not come as a surprise that someone with Trump's wealth benefits from the tax plan. The Center for Non-partisan Tax Policy estimates that more than 70 percent of taxpayers in the top 0.1 percent would receive a tax cut in the House or Senate versions of the tax plan.
There are differences between the House and the Senate versions, here is the impact on the president's finances in five key areas.
Alternative Minimum Tax
Both bills would repeal the alternative minimum tax, which is designed to ensure that the rich pay at least some tax. The 2005 statement shows that the AMT increased Trump's tax bill from approximately $ 5.3 million to $ 36.5 million. Then, at least in that fiscal year, he could potentially have saved $ 31 million. (The tax on capital gains for people in the Trump income tranche has increased since then, so the savings would now be lower.)
The bill would reduce drastically taxes a maximum rate of 39.6 between 25% and 25% in "transfer" entities, which are companies that direct income through the individual income tax code and not the corporate tax code. The Senate bill is currently less generous, allowing a deduction of 17.4 percent of its income from taxable income, but lawmakers are discussing increasing the deduction to 20 percent, which would increase the benefit for Trump. (Effectively, this would be similar to a maximum tax rate of 30.8 percent).
Trump's 2005 tax return showed he had more than $ 109 million in business income, partnerships and transfer entities, which accounted for a large portion of his income. A letter from Trump's tax attorneys launched by the Trump campaign stated that he was the sole or principal owner of some 500 entities, "almost exclusively through exclusive companies and / or nearby companies."
Thus, the legal version could, in theory, reduce taxes on that large transfer income by up to $ 16 million, although in 2005 a large part of that income was offset by commercial losses. The version of the Senate bill could have cut the tax bill by about $ 9 million.
While bills tend to close gaps, there are provisions that offer better deals for real estate investors. The impact of these provisions is unclear, but it certainly raises an eyebrow.
"In terms of transfers, there are rules against abuse to make sure that wages do not avoid the two main tax rates of 35 percent and 39.6 percent," said a White House official. "It ensures that the tax relief is intended for the job creators of Main Street and not the rich people."
Income Tax Rates
The House bill does not reduce the maximum tax rate, but the Senate offers a small reduction to 38.5 percent. The other changes in rates would be only a modest difference for Trump, who at least in 2005 obtained relatively little (approximately $ 10.8 million) of wages, interest and dividends. According to the Senate bill, you would see a reduction of approximately $ 100,000.
Here is an area where Trump taxes would increase because bills would eliminate the deductibility of state and local taxes. The House would still allow a $ 10,000 deduction for property taxes, but that is a misery for Trump's properties.
In 2005, Trump had itemized deductions worth $ 17 million, but we do not know how much he represented state and local taxes and how much represented mortgage and charitable contributions. (Mortgage and charitable deductions are relatively intact, but the House would reduce the size limit of new mortgages from $ 1 million to $ 500,000.)
If we badume that approximately three-quarters of Trump's detailed deductions come from State and local taxes, the tax bill would increase your taxes by $ 5 million.
We would be negligent if we did not include the impact of the possible derogation of inheritance tax in the Trump family. Although Trump would not benefit personally, it could make a big difference for his children.
The House would completely revoke the estate tax, even eliminating any capital gains tax. The Bloomberg Billionaires Index says that Trump is worth $ 2.86 billion, so at a tax rate of 40 percent, it would be a savings of $ 1.1 billion. (If you think Trump questions that it's worth $ 10 billion, it would be a $ 4 billion savings.)
The Senate bill would only increase the amount of tax-exempt property, from approximately $ 11 million for couples to $ 22 million. That would save Trump's heirs only about $ 4 million.
The Pinocchio Test
When you add it up, Trump would have saved $ 42 million on his 2005 taxes under the House bill and $ 35.1 million under the Senate bill. A large part of the savings comes from the elimination of the alternative minimum tax and, of course, we do not know how often it was subject to it.
But the fact that the president has refused to release his statements should not allow him to make claims on his taxes without offering documented proof. The information we have – the partial return of 2005 – shows your claim of losing a fortune on the tax bill is poppybad.
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