Find out what added $31 million to President Trump's tax bill


President Donald Trump has said that paying as little in taxes as is legally required is a smart move. But that doesn't mean the president has never had to pay tax at all. In fact, Trump's 2005 tax return reveals that he and first lady Melania Trump paid more than $38 million in taxes that year -- and a closer look at the 1040 form shows that a single provision of the tax laws was responsible for more than 80% of the president's tax burden that year.

What President Trump owed in regular income tax: $5.3 million

President Trump's 2005 joint tax return, released by MSNBC Tuesday night, showed gross income of more than $151 million. That included $42.4 million in declared business income, $32.2 million in capital gains, and $67.4 million in rental real estate and other sources of business and investment income. The Trumps also wrote off more than $103 million, bringing their adjusted gross income down to $48.6 million.

The president's joint return claimed about $17 million in itemized deductions, bringing reported taxable income to $31.6 million. If that had been the end of the story, then the Trumps would have paid roughly $5.3 million in tax -- an effective tax rate of 17%. If that sounds low, it's because so much of the Trumps' income came from long-term capital gains, which are taxed at a much lower rate than ordinary income.

RELATED: 7 things that cost the same amount as Trump's tax bill

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7 things Trump could've purchased with the $38M he paid in taxes
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7 things Trump could've purchased with the $38M he paid in taxes

190 initiation fees
for Trump's Mar-a-Lago resort in Palm Beach

Cost per member initiation: $200K

Photo credit: Getty

2,715 annual memberships
to Trump's Mar-a-Lago resort in Palm Beach

Cost per membership: $14K/year

Photo credit: Getty

190 sets of diamonds
That Ivanka Trump wore to her wedding

Cost of Ivanka Trump's wedding day jewelry: $200K

Photo credit: Getty

26 engagement rings
That Donald Trump proposed to Melania with

Cost of Melania Trump's engagement ring: $1.5M

Photo credit: Getty

845 annual tuitions
To the high school that Barron Trump attends, Columbia Grammar and Preparatory School

Tuition cost: $45K/Year

Photo credit: Getty

543 annual tuitions
To the university that Tiffany Trump attended, University of Pennsylvania 

Tuition cost: $70K/year

Photo credit: Getty

10,556 Gucci jackets
That Kellyanne Conway wore to the 2017 Presidential Inauguration

Cost of jacket: $3.6K

Photo credit: Reuters 

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The Trumps' alternative minimum tax bill: $31.3 million

But the Trumps were snagged by the alternative minimum tax provisions of the tax code, and that dramatically increased their total tax bill. The AMT in its current form was created during the Reagan administration in 1982, and the purpose of the provision was to ensure that taxpayers with high income levels wouldn't be able to use the available deductions to avoid tax entirely.

For most Americans, the provisions of the AMT that hit the hardest are those that eliminate the itemized deductions for state and local income and property tax. As residents of New York City, the Trumps would have had to pay both state and city income tax, and the property taxes on their Fifth Avenue home would likely have been substantial as well.

However, although we can only speculate because the MSNBC release didn't include the IRS Form 6251 that the Trumps would have had to file along with their 1040 return, it's likely that other provisions of the alternative minimum tax came into play to boost their overall tax liability. For instance, the AMT handles the gain and loss on certain dispositions of property differently than the regular tax system, and that could have been a consideration in real estate sales. Similarly, the AMT has different allowances for taxpayers to claim depreciation on assets, and certain loss limitations and passive activity allowances could have boosted the Trumps' income for AMT purposes significantly.

Is AMT repeal coming?

President Trump has spoken out against the alternative minimum tax, and his tax plan calls for the provision to get repealed. But the president is hardly the first Republican to call for the end of the AMT, and House Speaker Paul Ryan's tax plan also called for AMT repeal.

Interestingly, the alternative minimum tax has become more of a problem for upper-middle-class taxpayers over the years than for the extremely rich. On one hand, the AMT's exemptions went a long time without being indexed for inflation, allowing inflation to pull more taxpayers into its grasp. On the other hand, rising regular tax rates made many high-income taxpayers' ordinary income tax liability higher, making it less necessary for the AMT to kick in.

Most taxpayers will never have to deal with the alternative minimum tax. Yet President Trump's personal interactions with the AMT have cost him tens of millions of dollars. That first-hand experience puts the president's views on the tax into context in a way that is sure to generate more controversy about the fairness of the tax system and how lawmakers can best reform it.

See how people reacted to Rachel Maddow's report:

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Reaction to MSNBC's report on President Trump's taxes
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Reaction to MSNBC's report on President Trump's taxes
Thank you Rachel Maddow for proving to your #Trump hating followers how successful @realDonaldTrump is & that he paid $40mm in taxes! #Taxes
WH responds to MSNBC report on Trump tax returns: "you know you are desperate when you willing to violate the law..… https://t.co/B3a4Ximn3s
Dems should return focus to Trumpcare tomorrow & the millions it will leave uninsured, not get distracted by two pages from '05 tax return
@NBCNews He found them in his mailbox?? Did the Russians put them there??
Trump won cause while an intelligent woman was trying to tell us about Russian ties u complained about her presentation & here we are again
This 2005 Donald Trump tax return is a total nothingburger https://t.co/ASYV8eLMPb https://t.co/CqhN1uh9Q8
Here's a photo of the Trump tax returns that @maddow just displayed. There's a stamp that reads "Client Copy." https://t.co/GxmHGQDmd0
Well folks let's see what this is all about. RT @maddow: BREAKING: We've got Trump tax returns. Tonight, 9pm ET. MSNBC. (Seriously).
I thought they couldn't release them, due to reasons https://t.co/BsWaesGRBt
I am sure some genius soon will say Trump himself leaked the tax return to distract us from that CBO score
To date we had seen Trump tax information for nine different years, but the most recent was 1995. https://t.co/Vcl7gOW9ZB
Maddow has the returns? https://t.co/UC04gDSRa8
I'd like a refund for that 25 mins of my life. :/
The gap between the MSNBC-hype & the reveal is enormous. That said, it's genuinely scandalous that he won't release… https://t.co/LCPnvMwujJ
The only news out of this is that the White House CAN release the President’s taxes, despite what campaign said. Which we all suspected.
We have information now that we did not have yesterday on a story the public has a continued interest in seeing reported. Quit your whining.
So I guess these tax returns were what was actually inside Al Capone's vault
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