On March 14 MSNBC’s Rachel Maddow took to the airwaves and presented an hour-long segment on two pages of President Donald Trump’s 2005 tax returns. Those documents, obtained by journalist David Cay Johnston, revealed that Trump made $150 million in personal income that year, on which he paid $38 million in taxes.
It was one of the most hyped segments to air on cable news this year, with Maddow tweeting ahead of time, “BREAKING: We’ve got Trump tax returns. Tonight, 9pm ET. MSNBC. (Seriously).” It was also widely felt to be one of the most disappointing cable news segments of the year. The National Review’s Jim Geraghty opined that it was a “waste [of] everyone’s time.” Slate’s Willa Paskin called it “a cynical, self-defeating spectacle.” The Observer’s Ashe Schow summed it up as an “epic fail.”
While most of the criticism centered on the lengthy way Maddow constructed the segment, perhaps unaware that such long wind-ups are her stock in trade, her critics had a point. It was weird, knowing that she’d only obtained two pages of documentation to bill the matter on Twitter the way she did ― only afterwards could you see that the phrase “we’ve got Trump tax returns” allowed her the linguistic wiggle-room necessary to claim to have billed the show properly. Moreover, the tax returns on hand were more than a decade old, and weren’t sufficient to get into the meat of Trump’s tax return mysteries ― like the extent to which he is leveraged by debtors, or the breadth of his international business entanglements.
But while Maddow may have not delivered on the day, the segment nevertheless planted a seed of inquiry. And now that we have the broad contours of Trump’s tax cut proposals, there’s new light to be shone on what the MSNBC host did back in March.
One of the few things that viewers were able to ascertain during Maddow’s segment was the amount of money Trump paid through the alternate minimum tax (AMT). In fact, that’s the vehicle through which Trump paid the bulk of that $38 million. In terms of regular federal income tax, Trump and his wife paid $5.3 million, which would peg his tax rate at less than four percent. However, the AMT collected $31 million in tax revenue.
Trump is not the only person who’s called for the repeal of the AMT. While the AMT primarily hits high income earners, it’s not aimed at the mega-rich. As the Tax Policy Center summarizes, “The individual alternative minimum tax (AMT) primarily affects well-off households, but not those with the very highest incomes. It is also more likely to hit taxpayers with large families, those who are married, and those who live in high-tax states.” Those who want to eliminate the AMT can do so knowing that this isn’t a tax break that lets plutocrats off the hook ― it can be framed as a benefit for upper-middle class strivers and entrepreneurs.
And liberals, like Bernie Sanders, have called for the AMT’s elimination as well ― though there are important distinctions to note. But as Business Insider’s Frank Chapparo reported back in March, Sanders also “called for a number of ‘provisions aimed at high-income households’ that would essentially do what the AMT was intended to do: make sure the extremely wealthy pay their fair share.” His aim: to secure the necessary proceeds to expand the safety net on more vulnerable Americans. Trump’s tax plan doesn’t make any attempt at doing this ― it’s just a straight up giveaway to the wealthy.
Knowing that 81.5 percent of the taxes he paid in 2005 were facilitated through the existence of a tax he wants to eliminate puts Trump’s own interests under the spotlight. According to the Center for Economic and Policy Research, eliminating the AMT is one of the mechanisms in his tax plan that would pay off big for Trump down the line. Thanks to Maddow, we have a feel for how much he’ll save. (A lot!)
But the Center for Economic and Policy Research (CEPR) estimates that another potential windfall awaits Trump through another part of his tax plan: his proposal to drop the tax rate on mechanisms called “S-corporations” down to 15 percent. S-corporations can be considered a federal government subsidy for the wealthy because they permit an entity to claim limited liability benefits while also allowing them to pay the corporate income tax rate.
As the CEPR notes, Trump’s proposal would mean that “while the top marginal tax rate will ostensibly be 33 percent on the rich, those who are not too dumb to breathe will get their money through S-Corporations and pay just 15 percent.” This, they conclude, would “lead to tremendous job growth in the tax shelter industry, as hundreds of thousands of rich people rush to hire lawyers and accountants so that they can get all their income through pass-through corporations.”
And Trump would benefit as well. Per the CEPR:
While he has refused to release his tax returns he claims he has assets of $10 billion. Let’s say that he gets a 5 percent annual return, or $500 million a year, as income. This is certainly a very modest assumption for a person with Donald Trump’s business acumen.
Now, if he had to pay the 28 percent alternative minimum tax he would be paying $140 million a year in taxes. But after the Trump tax plan goes into effect, he would only have to pay $75 million in taxes. This means that the Trump tax plan will save Donald Trump $65 million a year in taxes. Trump’s savings would be only a bit less than the annual wages of 4,500 minimum wage workers. Now isn’t that terrific?
Of course, the CEPR can only guess at how much Trump stands to benefit because he has not released his tax returns. That we have only two pages of his personal tax returns from 2005 is not enough to evaluate how much skin Trump has in the game he’s asking the entire country to play.
Given the fact that the man is indistinguishable from his business interests, perhaps we need to shut down Trump’s tax proposal until we know what’s going on. But what little we know, we know because of what Maddow and Johnston told us. And if that Maddow segment left audiences wanting more, well...maybe that was the point.
Jason Linkins edits “Eat The Press” for The Huffington Post and co-hosts the HuffPost Politics podcast “So, That Happened.” Subscribe here, and listen to the latest episode below.