The Senate bill would also lead to substantial savings for Trump’s estate, but less than the House bill. The Senate legislation wouldn’t eliminate the tax but would double the exemption thresholds, making the tax liability for estates worth more than $11.2 million, or $22.4 million for a couple. (Like many individual income tax provisions in the Senate bill, this is set to expire in 2025. But Republicans say they will extend the tax provisions at some point.)
See this chart from the Tax Policy Center on the major provisions of the two bills.
Pass-through taxes. The tax bills aim to lower the tax rate on some pass-through business income — these are taxes paid by sole proprietorships, LLCs, partnerships and S corporations. Such entities don't pay corporate taxes; instead the owners or investors pay taxes on the business earnings through their individual income tax returns. On a 2005 tax return, which was obtained by DCReport.org in March, Trump reported more than $100 million in such pass-through income (reported as business income, or rental real estate, partnership and S corporation income on form 1040).
Right now, the top rate on pass-through income is the top individual income tax rate of 39.6 percent, which falls on income above $470,700 for a married couple. The House bill cuts the top rate to 25 percent for "passive" income, such as rental income and businesses in which the taxpayer isn’t materially involved, and 35.22 percent for "active" income, such as income from businesses where the taxpayer regularly works. The Senate bill is more complicated, with a 38.5 percent top rate after a 17.4 percent deduction. That deduction is limited to 50 percent of paid wages for the business entity.
Alternative minimum tax. Both bills repeal the AMT, which was designed to ensure that wealthy taxpayers pay a minimum tax. On that 2005 return, Trump paid $31 million in taxes due to the AMT.
Steven Wamhoff, senior fellow for federal tax policy at the nonpartisan Institute on Taxation and Economic Policy, told The New York Times that those last two items — lower pass-through tax rates and an AMT repeal — "are so hugely beneficial to Trump that I have trouble imagining any way that he wouldn't come out ahead."
The Times noted that Trump paid 24 percent of his income in 2005 because of the AMT, but would have paid just 4 percent without it.
SALT deductions. Trump, like some other high-income taxpayers from high-tax states, could see a drop in the amount he could claim as itemized deductions, because the bills would eliminate a deduction for state and local income or sales taxes. However, those state taxes aren't deductible under the AMT. So it's unclear how much Trump benefits from the deduction now.
Bottom line: The president needs to release his tax returns to support his claim.
FactCheck.org's Editor’s Note: For more about Trump’s tax speech, see our item, “Trump’s Claims Don’t Add Up.”
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We are a nonpartisan, nonprofit “consumer advocate” for voters that aims to reduce the level of deception and confusion in U.S. politics. We monitor the factual accuracy of what is said by major U.S. political players in the form of TV ads, debates, speeches, interviews and news releases. Our goal is to apply the best practices of both journalism and scholarship, and to increase public knowledge and understanding. FactCheck.org is a project of the Annenberg Public Policy Center of the University of Pennsylvania. The APPC was established by publisher and philanthropist Walter Annenberg to create a community of scholars within the University of Pennsylvania that would address public policy issues at the local, state and federal levels.
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