March 22, 2017 – The House of Representatives is preparing to vote on a health care bill that would take away insurance from 24 million Americans in 2025—the same year that it would give a tax cut of $57,570 to the average household making more than $1 million per year. The personal benefit to President Donald Trump appears to be even larger: more than $2 million, based on recently leaked partial tax returns from 2005.
If the Affordable Care Act, or ACA, had been law in 2005, then President Trump could have paid $2,183,552 under two taxes on the wealthiest Americans that help pay for expanding health insurance coverage. This includes $589,080 in Additional Medicare Tax on President Trump’s wages and self-employment income, along with $1,594,473 in Net Investment Income Tax on his interest, dividends, and capital gains.
The ACA includes a 0.9 percent tax on wages and self-employment income that exceeds $250,000 for married couples. In 2005, President Trump reported $998,599 in wages on his tax return. President Trump also paid $1,887,596 in self-employment taxes in 2005, which suggests that he received $64,704,690 in income subject to self-employment taxes based on 2005 tax rates. After subtracting $250,000, President Trump’s wages and self-employment income total $65,453,289, on which a 0.9 percent tax would cost $589,080.
The ACA also includes a 3.8 percent tax on investment income for married couples with incomes exceeding $250,000. In 2005, President Trump received $9,460,371 in taxable interest, $314,320 in dividends, and $32,185,114 in capital gains. A 3.8 percent tax on these sources of income could have cost President Trump $1,594,473 in 2005.
To be clear, these calculations can only be rough estimates because President Trump has still not released his complete tax return for 2005 or any other year. The actual tax savings for President Trump from ACA repeal could be substantially higher, particularly if any of the income reported on line 17 of his tax return—including rental real estate, royalties, and partnerships—is also subject to the 3.8 percent tax on investment income. Without President Trump’s full tax return, however, there is no way to know. It is also unclear whether 2005 was a typical tax year for President Trump.
If the ACA had been law in 2005, it is possible that President Trump would have prepared his tax return differently to avoid its taxes. The only way to get a clear answer for how much President Trump stands to personally benefit from ACA repeal is to see his tax returns from more recent years, where his ACA tax obligations would be clearly displayed. Although President Trump is still hiding his tax returns from the American people, the leaked documents from 2005 confirm that President Trump stands to reap an enormous windfall from ACA repeal, while ordinary Americans lose their health insurance or face skyrocketing health care costs.
Harry Stein is the Director of Fiscal Policy at the Center for American Progress. Link to original article: https://www.americanprogress.org/issues/economy/news/2017/03/22/428905/2183552-donald-trumps-annual-tax-cut-aca-repeal/
Special thanks to Lily Batchelder for her input and suggestions for these calculations. Any errors are the sole responsibility of the author.