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David Cay Johnston: How Trump Pays So Little in Taxes and Plans to Change Tax Law to Pay Even Less

StoryMarch 15, 2017
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David Cay Johnston

Pulitzer Prize-winning investigative reporter previously with The New York Times, now founder and editor of DCReport.org, where he published Donald Trump’s 2005 Form 1040 federal tax return. His biography of Donald Trump is titled The Making of Donald Trump.

Two pages from Trump’s tax return were obtained by Pulitzer Prize-winning investigative journalist David Cay Johnston of DCReport, who appeared last night on "The Rachel Maddow Show" on MSNBC. The 2005 tax return shows Trump earned $153 million—or more than $400,000 a day. Trump paid out $36.6 million in federal income taxes, much of it in the form of what’s known as the alternative minimum tax, which Trump now wants to eliminate. For more, we speak with investigative journalist David Cay Johnston, who obtained part of Trump’s 2005 tax returns and who has won a Pulitzer Prize for his reporting on tax law.


TRANSCRIPT
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: David, you talked about how much Donald Trump has paid in his taxes in 2005. In their response to you, they said, "We have to get back to more serious work of changing the tax system." If he succeeds in changing the tax system, this alternative minimum tax, that required that he pay even the amount he did, he would eliminate?

DAVID CAY JOHNSTON: Yes. Donald Trump, in writing, in his campaign documents, has said, "We’re going to get rid of the alternative minimum tax." Well, of the $36.6 million in tax that he paid, more than $31 million was because of the alternative minimum tax. And the reason for that is that that $103 million that was disallowed under the alternative minimum tax—it’s allowed under the regular tax, disallowed under the alternative—even with it being disallowed, Donald Trump still got a 20 percent tax discount on his taxes. And here’s why. At that level of income in 2005, your tax rate is 35 percent of your income. But if you’re on the alternative minimum tax, your tax rate is only 28 percent. That’s 20 percent less. So he was only paying 80 cents on the dollar to begin with. And this is part of what I’ve been writing about for years. We really have a tax system in America that very effectively and efficiently taxes your wages, your labor income. But if, like Donald Trump, you’re a business owner, and if, like Donald Trump, you’re willing to buy aggressive and dubious tax shelters and do sketchy things, you can pay very little tax. And we know that there are at least two years when Donald Trump did not pay any income taxes, even though he had multimillion-dollar income, because he had to put some of that information into the public record.

AMY GOODMAN: Who do you believe sent you this, David?

DAVID CAY JOHNSTON: Well, it’s possible that Donald sent it, although his attacks on me today—he tweeted about me today, so I clearly got under his skin—suggest not. When Donald has leaked something about himself, he usually doesn’t have a complaint. He didn’t complain about the really crude pornographic pictures of his wife when she was a porn model or the partial tax returns of his that were released last year, so I suspect those came from him. Most likely, this was somebody who’s familiar with my work, who knows that I have written a great deal about this idea of negative income and the alternative minimum tax, and trusted that I would get the maximum possible value out of these two pages.

AMY GOODMAN: And finally, if it were Donald Trump, why do you think he would do this? What even led you to think it might be?

DAVID CAY JOHNSTON: Well, first of all, because Donald has a long, well-documented history of leaking things about himself, of posing as his own PR man and calling himself John Barron or John Miller, planting stories that famous, beautiful women were pounding on his bedroom door, when in fact they had nothing to do with him. In this case, Donald wants to divert people from a couple things. He wants to get us off thinking about his connections to the Russian oligarchs, which raise fundamental questions about whether he is loyal to the United States or disloyal. He wants to get people off what appears to be the fiasco with the Republican healthcare plan, that he has put his name on without clearly understanding what it means and that contradicts his promises, and other matters. And Donald is very big, Amy, on distraction. He’s always trying to get journalists, you know, who are not well known for sticking to something for a long time—they’re generally not book writers—to distract them and get them to go write about something else or put on TV something else. So that may also—if he were to have done it, that would be part of that strategy.

AMY GOODMAN: Well, David Cay Johnston, thanks so much for spending this time, Pulitzer Prize-winning investigative reporter, previously with The New York Times, now founder and editor of DCReport.org, where he published Donald Trump’s 2005 Form 1040 federal tax return. David’s biography of Donald Trump is titled The Making of Donald Trump.

This is Democracy Now!, democracynow.org. When we come back, famine—what the U.N. is doing about it, what the U.S. is doing about it. Stay with us.

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