Leaked tax return shows how little tax Donald Trump would have to pay with his proposed changes applied

DONALD Trump’s leaked tax returns show the President paid $38 million in tax in 2005. Now he wants to scrap the tax that cost him the most.

DONALD Trump’s first ever publicly released tax return showed the billionaire President paid more than $US36 million in taxes in 2005, but if his proposed changes to the tax system had been enforced, he would only have had to cough up a small slice of it.

Although the US President campaigned for the presidency by pledging no tax cuts for the wealthy, the leaked pages revealing his personal tax details show just how much he would have benefited from one of the tax proposals he has promised.

Mr Trump’s proposals to eliminate the alternative minimum tax (AMT), cut the capital gains tax rate and curb income tax rates would have shrunk his tax bill dramatically if they had been in place over a decade ago.

The leaked tax return documents showed Mr Trump made about $150 million in 2005 and paid $38 million in taxes. Only $5.3 million of that was regular federal income tax — the bulk of it was AMT.

The AMT alone was responsible for roughly 86 per cent of his federal tax bill.

The Trump administration has said it would make up for lost revenue by closing loopholes, but the specific deductions Trump’s plan would eliminate have not been laid out in detail.

Donald Trump tax returns were made public by MSNBC after being leaked by an anonymous source.

“Any reductions we have in upper-income taxes would be offset by less deductions, so there would be no absolute tax cut for the upper class,” Treasury Secretary Steven Munchin told CNBC in November.

Trump’s promise to not slash taxes for the rich has already been called into question by the nonpartisan Tax Policy Center and other analysts. According to the group, the top 1 per cent of earners would receive a tax break averaging more than $200,000 each. Those gains would be concentrated among the wealthiest: The top 0.1 per cent would receive tax breaks averaging around $1.1 million. Meanwhile, middle-income households would receive $1,010 in tax cuts, and the lowest-income earners would receive a benefit of $110.

The summary of Trump’s 2005 taxes does not provide a full picture of Trump’s finances, the deductions he claimed and the detail of his income earned. Still, the numbers in broad strokes illustrate why his tax plan would be a boon for the ultra-wealthy.

Trump made nearly $1 million in wages and another $32 million in capital gains, according to the two pages obtained by journalist David Cay Johnston. Most of his earnings came from business income, rental real estate, royalties and partnerships. Trump offset much of that income through a tax loophole in the 1990s that enabled him to deduct more than $900 million in past losses on his casinos as past business losses of his own.

Trump has maintained that the publication of the returns was illegal, although he seemed to take pride in the financial results shown in the returns during an interview for Fox News Channel’s “Tucker Carlson Tonight” to be aired Wednesday. “It’s certainly not an embarrassing return at all,” Trump said.

The first big win for Trump would have come from his proposed elimination of the Alternative Minimum Tax, which was first enacted in 1969 to ensure that top earners could not use tax breaks and deductions to avoid paying any federal taxes.

Without the AMT he would have paid just over $5 million.

Donald Trump paid more than $36 million in tax.

Another smaller benefit of removing the AMT for Trump would come from a lower tax on the wages he pays himself. Under the most recent Trump plan announced during the campaign, the president would pay a lower 33 per cent tax rate on his nearly $1 million in 2005 wages.

Other elements of Trump’s tax plan would be likely to benefit him as well, his 2005 filing shows. Trump would cut taxes on pass-through income, such as that earned from assets he holds through various holding companies, to 15 per cent — a boon for people who have set up businesses in the same way he has, a common practice in the real estate business. As such, it would encourage other taxpayers — including regular wage earners — to set up sole proprietor companies, then declare their income as business income, according to the Tax Policy Center.

If the president’s current income is similar to his 2005 tax filings, he may also save money through the House Republican plan to repeal and replace President Barack Obama’s health care law.

The replacement would repeal a 0.9 per cent Medicare surtax on high earners and a 3.8 per cent net investment income tax that would apply to capital gains and rental and royalty income, among other sources. The Congressional Budget Office estimated that repealing these two taxes would amount to a nearly $275 billion tax cut over 10 years.

Those savings would largely accrue to wealthier Americans such as Trump.