Chances are most of the people who jumped on the “Trump only paid $750 in taxes” bandwagon last week after The New York Times published a story on his tax returns and ran to social media to share their outrage never bothered to read the piece.
Odds are they do a lot of online shopping through Amazon as well.
More on that in a few paragraphs.
If you are one of those who hasn’t read the story, you should do yourself a favor and spend a few minutes doing so.
It does make me angry that Trump or any other person in the millionaire or billionaire category can get away with taking advantage of all the loopholes in the U.S. tax system year in and it should anger you.
But this is the way it is and the way it has been for decades. Singling out one individual and crying foul while ignoring this fact is hypocritical: The tax laws were written and tweaked by many of the same Senators and Representatives from both sides of the aisle that point their crooked fingers at each other daily to the cheers of red and blue blooded Americans gathered in the seats of the virtual arena these hypocrites have created to distract from the fall of America.
That includes Mr. Five Decades in Office Joe Biden.
There are some troubling accusations to be found within the story — from Trump’s dealings with certain Russian investors to his being on the hook personally for a whole lot of big money loans about to come due.
At the same time the piece is worded in such a way as to create more doubt and division through double talk carefully constructed to twist the truth.
For example, when it comes to the now infamous $750 Trump tax payment for both 2016 and 2017, the Times reports: “When they (Trump’s accountants) got to line 56, the one for income taxes due, the amount was the same each year: $750.”
If you look at an IRS Form 1040 from those years, line 56 is actually part of a section under the heading of alternative minimum tax (Line 45), which is a tax that was, as the times writes, “created as a tripwire to prevent wealthy people from using huge deductions, including business losses, to entirely wipe out their tax liabilities.”
There are a lot of various tax credits found between Line 45 and line 56 that many Americans could and have taken advantage of.
Line 64 on Form 1040 is the actual, “These are your total payments,” line.
So the wording there is a little suspect, but nonetheless according to the Times, Line 56 on Trump’s taxes for those two years says $750 each year. That’s a lot less than mine reads from those two particular time periods.
But the story also goes on to explain the following: “Mr. Trump paid alternative minimum tax in seven years between 2000 and 2017 — a total of $24.3 million, excluding refunds he received after filing. For 2015, he paid $641,931, his first payment of any federal income tax since 2010. As he settled into the Oval Office, his tax bills soon returned to form. His potential taxable income in 2016 and 2017 included $24.8 million in profits from sources related to his celebrity status and $56.4 million for the loans he did not repay. The dreaded alternative minimum tax would let his business losses erase only some of his liability.
“Each time, he (Trump) requested an extension to file his 1040; and each time, he made the required payment to the I.R.S. for income taxes he might owe — $1 million for 2016 and $4.2 million for 2017. But virtually all of that liability was washed away when he eventually filed, and most of the payments were rolled forward to cover potential taxes in future years.”
The story goes on to detail that to cancel out the tax bills, Trump made use of $9.7 million in business investment credits, at least some of which related to his renovation of the Old Post Office hotel, which qualified for a historic-preservation tax break.
“Although he had more than enough credits to owe no taxes at all, his accountants appear to have carved out an allowance for a small tax liability for both 2016 and 2017,” the Times reported.
The key takeaways here are twofold.
First, Trump paid $5.2 million in income taxes in 2016 and 2017 and didn’t get a refund. That money is sitting in a U.S. government bank account somewhere. Second, he took legal (key word here) advantage of credits readily available to ever U.S. taxpayer.
The question you should be asking yourself while pointing accusatory fingers at Trump is would you not take advantage of the same things if you could? I would bet most Americans would do it in a heartbeat and in some cases, they already do.
And it is your right to do it. It’s law.
You know who else takes advantage of those credits and write-offs? Jeff Bezos.
Bezos owns Amazon and is the richest person in America. According to Forbes magazine, as of July 2020, he was worth $129 billion.
In 2018 and 2017, Amazon paid zero taxes on a respective $11.2 billion and $5.6 billion in profits by “leveraging unspecified tax credits and stock-based compensation deductions.”
The company is worth more than $1 trillion.
Instead of paying taxes those years, as first reported by the Institute on Taxation and Economic Policy, Amazon received a federal income tax rebate of $129 million, essentially amounting to a tax rate of negative 1%.
Earlier this year it was reported that Bezos announced his company paid $162 million in federal taxes on $13.3 billion in U.S. pre-tax income. That might sound like big money, but it is an effective tax rate of 1.2%.
The company was able to defer more than $914 million (94% of their bill) in taxes – to future years (similar to what Trump’s team did).
I’m sure this news means all of the people so concerned about Trump’s taxes will no doubt think twice about hitting the “buy it now” button on Amazon the next time they need a cheap Chinese made toaster.
But I doubt it.