Advertisement
  1. Business

PolitiFact: Nancy Pelosi on target about what Donald Trump might save under his tax plan

WASHINGTON, DC - APRIL 27:  House Minority Leader Nancy Pelosi (D-CA) talks to reporters during her weekly news conference at the U.S. Capitol Visitors Center April 27, 2017 in Washington, DC. Pelosi gave President Donald Trump a letter grade for his performance as he approaches his 100th day in office.  (Photo by Chip Somodevilla/Getty Images)
WASHINGTON, DC - APRIL 27: House Minority Leader Nancy Pelosi (D-CA) talks to reporters during her weekly news conference at the U.S. Capitol Visitors Center April 27, 2017 in Washington, DC. Pelosi gave President Donald Trump a letter grade for his performance as he approaches his 100th day in office. (Photo by Chip Somodevilla/Getty Images)
Published May 5, 2017

The statement

"The 'tax plan' rolled out by @realDonaldTrump would have cut his taxes by $30 million in 2005 (the only year we have returns for)."

Rep. Nancy Pelosi, D-Calif., April 27 in a tweet

The ruling

Trump is the first presidential candidate, and the first president, in decades not to release his tax returns.

Two portions of Trump's tax returns have been leaked to the media. One consists of summary pages from state tax returns from 1995, which were sent anonymously to the New York Times last fall. However, because these are state — not federal — tax documents, they don't shed much light on Pelosi's claim.

The second forms are the summary pages from his 2005 federal tax return, which were first reported in March by MSNBC's Rachel Maddow.

The 2005 returns suggest that Pelosi is in the ballpark, judging by the alternative minimum tax alone.

Trump's tax plan would eliminate the alternative minimum tax, or AMT, which is a calculation that guarantees that certain higher-income taxpayers with large deductions pay at least a minimum amount of tax.

A line in Trump's 2005 tax return shows that Trump paid $31,261,179 that year for the AMT. That was a large portion of his total tax bill: Had it not been for the AMT, Trump would have owed only about $5.3 million in federal taxes that year.

When we contacted Pelosi's office, a spokesman provided two analyses.

One, by Pelosi's own staff, cited the AMT line from his 2005 report.

The other analysis, published by the Democratic staff of the House Ways and Means Committee on April 26, said that Trump would save about $28.6 million mostly through the reduction of the "pass-through income" rate to 15 percent. ("Pass-through income" involves a certain type of structuring for business and personal income taxes.)

Given these two projections, "We decided to go with an average of $30 million," said Pelosi spokesman Drew Hammill.

Several tax experts said that $30 million is a reasonable estimate, given what we know.

"In round numbers, Pelosi's assertion is correct," said Roberton Williams, a fellow at the Urban Institute-Brookings Institution Tax Policy Center.

Several experts added, however, that the combination of Trump's lack of transparency about his own taxes and the lack of detail he's offered so far in his tax proposal provide a lot of room for uncertainty.

For instance, in future years, Trump's taxes may be more reliant on the lower, 15 percent tax on pass-through income than the AMT, said Daniel Shaviro, a New York University law professor whose specialties include taxation. But we don't know exactly how that would change the equation.

"We don't really have enough detail from Trump's tax returns to properly analyze the impact of reforms," said Gary McGill, director of the Fisher School of Accounting at the University of Florida. "And even the reform plan is not so much a plan but a high level of general objectives."

Follow trends affecting the local economy

Follow trends affecting the local economy

Subscribe to our free Business by the Bay newsletter

We’ll break down the latest business and consumer news and insights you need to know every Wednesday.

You’re all signed up!

Want more of our free, weekly newsletters in your inbox? Let’s get started.

Explore all your options

Then again, if Trump wants to complain about an incorrect estimate of his tax burden, all he has to do is release his tax returns, Shaviro said.

So, experts agree that $30 million is a reasonable estimate, given the limited information available. Still, it is an estimate, so the actual number may be quite a bit lower or higher. We rate the claim Mostly True.

Edited for print. Read the full version at PolitiFact.com.