Trump Likely Paid Less In Federal Income Tax Than Average Middle-Class American
According to The Washington Post, the average middle-class American household paid about three times as much in federal income taxes as President Donald Trump in 2016 and 2017, despite Trump holding billionaire status.
The New York Times on Sunday revealed that the president, who has for years refused to release his tax returns, paid $750 in income taxes in 2016 and $750 again in income taxes in 2017.
In 2016, households in the middle 20 percent of the U.S. income distribution paid an average of $2,200 in federal income taxes, according to the Congressional Budget Office, a nonpartisan government agency. Those middle-income households each earned about $60,000 on average in 2016.
- Brian Galle, a law professor and tax expert at Georgetown Law, told The Post: “His income tax burden is certainly much lower than the average taxpayer. He’s likely paying less than the shoeshine guy who works in the foyer of the Trump Tower.”
- The Post noted that the report on “Trump’s shockingly low federal income payments prompted an outpouring of criticism of what appeared to be his unusually aggressive attempts to evade obligations to the Internal Revenue Service.”
The Times’s report reveals that Trump also appears to have stretched the boundaries of deductions that allow firms to lower their federal tax burdens on losses and expenses, for instance by paying his daughter Ivanka Trump consulting fees that the firm later claimed as a tax write-off.
- Ernie Tedeschi, who served as an economist in President Barack Obama’s Treasury Department, said about half of American households paid more in federal income taxes than Trump did, with Trump’s obligation amounting “to less than the typical amount paid by families earning between $40,000 and $50,000, including after their tax credits are factored in.”
Lily Batchelder, a tax expert at New York University, said on Twitter that over 18 years, from 2000 to 2017, Trump paid the taxes of someone who earned roughly an average of $150,000 annually.
- The Post noted that Trump’s lower tax bill is due in large part to how his businesses are legally incorporated, set up as “pass through” entities.
This legal structure — such as an “S-Corporation” or “Limited Liability Corporation” — requires business owners to report both the income and losses from their business operations on their personal tax returns. There are almost 30 million pass-through entities in America.
“Trump is not an ordinary taxpayer: He is a business taxpayer with loads of losses, which can do funny things to your taxes and zero them out for some years or many years,” said Kyle Pomerleau, a tax expert at the American Enterprise Institute, a conservative-leaning think tank. “It can happen across different industries, for different reasons.”