Yes, Trump paid taxes in 2005, they just don't look much like a billionaire's taxes

Picture: Getty Images

Thanks to MSNBC’s Rachel Maddow and investigative reporter David Cay Johnston of, America got to see two more pages of President Trump’s tax return.
And while the pages don’t tell us much about where his money comes from, what we do know from looking at them is that — in 2005 at least — Trump wasn’t making money like the billionaire people thought he was.

Back in 2005, Forbes put Trump’s net worth at $US2.6 billion and Trump was trying to convince people he was worth a lot more. That same year a journalist — Tim O’Brien — reported that Trump’s wealth was probably less than $US250 million. The claim got O’Brien sued by Trump but the suit was dismissed, and O’Brien — then a reporter for the New York Times and now a boss at Bloomberg News — has spent the past year or so beating Trump up over his claims.

The tax return doesn’t entirely settle the matter, because, unfortunately, we only got to see 2 pages of the document.

Trump’s return shows he earned about $US110 million off his investments — which includes a one-time, $US32 million gain that came from selling off assets, while the rest comes from income earned off of rental real-estate and ownership of businesses and in the form of interest.

The second chunk — about $US78 million — basically suggests what he’s earnings from all his assets. It’s a return of just 3% on $US2.6 billion in assets, which isn’t great, but it’s not all Trump earned that year. Trump discloses another $US42 million of “business income” but it’s not clear what this is and some could’ve been coming off of his role as star and part-owner of The Apprentice.

Now, its true that anyone can have a lousy year as an investor. But remember again that we’re talking about 2005. The pre-financial crisis real-estate bubble was still inflating, stocks were rising and interest rates were high. You could get 4% just from 10-year Treasury bonds back then, meaning you’d be netting $US40 million just by parking $US1 billion in the safest investment out there.

Then there’s the matter of the $US103 million loss. When it came to paying taxes, all that income we described above, got whittled down by this huge loss, leaving him with a
adjusted gross income (AGI) of just $US48.5 million. Where it comes from isn’t clear, but some tax experts speculated to CBS News that it is lingering from the huge write-down Trump took in a 1995 tax filing that was released by the New York Times during the campaign.

About $US32.1 million of that is the one-time sale of assets taxed at a lower rate, which leaves another $US16 million to be taxed at a regular rate. So that means, with all the losses folded in, Trump’s claiming he earned $US16 million in 2005.

The reason his tax bill is much higher is the Alternative Minimum Tax. This is a tax on people or entities that take a lot of deductions. In fact, the way the law was written in the 1960s sounds like it had a businessman like Donald Trump in mind:

Individuals or corporations which received the bulk of their income from such sources as capital gains or were in a position to benefit from net lease arrangements, from accelerated depreciation on real estate, from percentage depletion, or from other tax-preferred activities tended to pay relatively low rates of tax.

This is the government’s way of saying — we know you lost money doing business, but you still have to pay on whatever it is you made. Without the AMT, Trump was gonna pay taxes of only about $US5 million.

That’s not billionaire money.

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