Trump-O-Meter

Repeal the alternative minimum tax

"The 3.8 percent Obamacare tax on investment income will be repealed, as will the alternative minimum tax."


Updates

3.8 percent Obamacare tax remains law, as does a more limited individual AMT

As a presidential candidate, Donald Trump pledged to eliminate one of the key tax provisions from the Affordable Care Act, the health care law passed under President Barack Obama.

Trump said that under his tax plan, "the 3.8 percent Obamacare tax on investment income will be repealed, as will the alternative minimum tax."

On Dec. 19 and 20, the Senate and the House passed the final version of the tax bill, which will go to the president for his signature.

So did lawmakers end the 3.8 percent tax enacted under the Affordable Care Act? No, it remains in place, despite the bill's ending of another element of the law -- the penalty for not having health insurance.

As for the second part of his promise, the bill doesn't eliminate the alternative minimum tax for individuals. This tax is levied on higher-income households that take a lot of deductions, to ensure that they pay at least a minimum amount of tax.

Under the bill, the threshold for the individual alternative minimum tax will rise from $164,000 for joint filers to $1 million. That means that fewer households will face the tax, but it doesn't go away, as promised. (In addition, the provision sunsets after 2025.)

The 3.8 percent tax isn't ending, and while the reach of the alternative minimum tax will be limited, it isn't ending, either. We rate this Promise Broken.

Sources:

PolitiFact, "Who wins and who loses from the tax bill?" Dec. 19, 2017

Urban Institute-Brookings Institution Tax Policy Center, "Analysis of the Tax Cuts and Jobs Act," accessed Dec. 20, 2017

Email interview with Patrick Newton, spokesman for the Committee for a Responsible Federal Budget, Dec. 19, 2017

Eliminating the alternative minimum tax is still the plan

The alternative minimum tax is a way of calculating income taxes that ensures that every American pays at least a minimum amount, even if they have a lot of deductions that significantly reduce their tax bill.

President Donald Trump included elimination of the alternative minimum tax as one of the bullet points in a one-page summary of principles released on April 26 for his upcoming tax legislation.

Now, with the release of its fiscal 2018 budget proposal on May 23, the administration once again pledged to pursue this goal.

Specifically, the budget proposal said that Trump would "end the burdensome alternative minimum tax, which requires many taxpayers to calculate their taxes twice."

The AMT was projected to bring in about $35 billion in 2017, according to the Urban Institute-Brookings Institution Tax Policy Center. That's about 2.2 percent of all individual income tax revenue.

The alternative minimum tax is also one that could have a significant impact on Trump personally, if one of his past tax returns is any indication. A line in Trump's leaked 2005 tax return shows that he paid $31.3 million that year under the alternative minimum tax. 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.

There is no actual tax legislation yet to carry out Trump's priorities, and Congress will have to pass measures before Trump can sign them into law. Still, his reiteration of his intent to eliminate the alternative minimum tax in both the one-page summary and in the budget proposal moves this promise to In the Works.

Sources:

White House, one-page summary of tax proposals, April 26, 2017

White House, fiscal 2018 budget proposal, May 23, 2017

PolitiFact, "Nancy Pelosi on target about what Donald Trump might save under his tax plan," April 28, 2017

Email interview with Roberton Williams, fellow at the Urban Institute-Brookings Institution Tax Policy Center, May 24, 2017