How times have changed.
On Sunday, the New York Times reported President Trump paid $750 in federal income tax his first year in office, the lowest first-year tax payment of any president since at least Carter and, in raw dollar terms, significantly less than what the average middle-class American family pays.
Trump’s predecessor Barack Obama, by contrast, paid nearly $1.8 million in federal income tax his first year in office, primarily on royalties from the sale of his books. George W. Bush’s first-year federal tax burden was $250,221, paid largely on his presidential salary and investment income from the blind trusts in which his assets were held. Prior presidents each paid tens of thousands of dollars in taxes during the first years of their administrations.
On Monday, Trump tweeted, “I paid many millions of dollars in taxes but was entitled, like everyone else, to depreciation & tax credits.” He also claimed his assets far outpaced his debts and boasted about giving away his presidential salary. That salary, however, is just a fraction of the income and losses he reports on his businesses. It has little bearing on his overall tax burden.
“Almost none of [Trump’s predecessors] were major capitalists,” said Eugene Steuerle, a fellow at the Urban Institute. “Most of their income was in wages and, in some cases, books. Those tend to be taxed fairly well.”
Trump, however, is different. He stands out for his vast reported wealth, which dwarfs that of any of his predecessors. That wealth is largely tied to his commercial real estate and resort holdings, which are overseen by hundreds of different business entities, the Times reported, which allowed Trump to slash his federal tax burden by exploiting loopholes in the tax code and declaring extensive losses on some of those entities.
“Most very wealthy people can easily avoid individual taxation with support from tax laws that provide them with discretion over how much tax they pay, bankruptcy laws that allow them to pass on losses to others even while they retain gains elsewhere, bank lending practices that favor the rich, and a monetary policy that for the last three decades has hugely subsidized wealthy investors,” Steuerle said.
At a 2016 presidential debate, Trump boasted he was “smart” for not paying federal income tax. Unlike every other major party presidential candidate since Richard Nixon, Trump has refused to release his tax returns. The documents analyzed by the Times show more than $400 million in debts coming due soon, a potential national security issue.
Thorndike, the presidential tax historian, said “a president is not like anybody else. They are the taxpayer in chief and the tax collector in chief. They are their own tax enforcer.” For that reason, he says, there should be a law mandating the disclosure of presidential tax returns. Otherwise, “there’s really no way to be sure they’re meeting their obligations, because at the end of the day the IRS answers to them.”