Would Trump Get ‘Killed’ by the House Tax Bill? Um, No
“My accountant called me and said ‘you’re going to get killed in this bill,'” the president said during a phone call from his trip in South Korea. He was apparently trying to increase Democratic support by claiming the bill would hurt wealthy taxpayers like himself, making the point that only the repeal of the estate tax would provide him any benefit.
My initial impression when I read this was that the president’s accountant did not actually call him and say the legislation would increase his taxes, because it won’t. Given what we know about the House version of the tax bill and the president’s attitude toward factual accuracy, that’s certainly the Occam’s-razor explanation.
The legislation is, on the whole, quite generous to the wealthy. Every distributional analysis released so far shows that those with very high incomes would, as a group, gain from the envisioned changes, and the Urban-Brookings Tax Policy Center analysis estimates that those in the top 0.1 percent of the income distribution will see bigger tax cuts — in both dollar and percentage terms — than any other income group over the next decade.
But analyses of the House tax bill also indicate that people with the same incomes can experience very different outcomes depending on where they live, how they make their money, how many kids they have and so on. Despite the big overall gains that those in the top 0.1 percent will reap from the legislation, 30.8 percent of those in that income group would see their taxes rise by 2027, according to the Tax Policy Center. So I really did wonder for a moment if perhaps Trump really did talk to his tax accountant, who really did inform him that something unique about his tax situation made the legislation bad news for him.
Then I did some calculating.
First, just for fun, I analyzed what the Tax Cuts and Jobs Act would have done to Trump’s predecessor’s taxes. In 2015, Barack and Michelle Obama enjoyed a presidential salary of $393,454, plus $56,069 in business income, all stemming from book sales. They paid $78,204 in income taxes.
Under the House plan they would no longer be able deduct their $18,390 in state income taxes and would be able to deduct only $10,000 of their $30,167 in local property taxes, but according to Marketwatch’s handy Trump Tax Calculator, the lower rates and Alternative Minimum Tax abolition envisioned in the bill would still bring their income tax total down to $72,194, a 7.7 percent reduction. Senate tax writers are considering wiping out the state and local tax deduction altogether, which — all else being held equal in the two bills — would result in a $76,494 tax obligation, a 2.2 percent reduction.
Donald and Melania Trump’s income is presumably much bigger and their tax situation much more complicated than the Obamas’. We can’t know exactly how much bigger and more complicated because, unlike the previous eight presidents, Trump has not released his income tax forms. We do, however, have his 2005 1040 form, provided to journalist David Cay Johnston by an anonymous tipster earlier this year.
It showed almost $153 million in income, about $110 million of which was of the pass-through variety — business income not subject to corporate taxation but simply passed through to the owner’s personal return — and much of the rest of which was capital gains. The form also showed a $103 million writeoff for business losses, which the White House described as “large-scale depreciation for construction,” leaving an adjusted gross income of $48.6 million. That and various deductions (which we don’t know much about because Johnston didn’t get the Trumps’ Schedule A or any other forms) brought taxable income down to $31.6 million. This would have resulted in only a $5.3 million tax obligation but for the Alternative Minimum Tax, which boosted the Trumps’ total federal income tax bill to $36.6 million.