The leak of Trump's tax return revealed the importance of the alternative minimum tax (AMT). Trump's effective tax rate was 25% because of the AMT; it limited his ability to take full advantage of the $100 million business loss that was deducted from his gross income. The AMT was much higher than his full tax would have been with the $100 million deduction. The deduction was part of a billion dollar loss that he declared when his casino business went bankrupt. That was a gift that he has been able to use partially every year until it is fully used up.
Guess what has been eliminated in Trump's tax reform proposal? I thought that you would never ask. Trump's tax reform proposal eliminates the AMT. It will be hard for Trump to convince most Americans that eliminating the AMT is good for them. Most of his populist supporters have never heard of the AMT. On the other hand, the handful of Trump supporters who fund GOP campaigns are very familiar with the AMT. They will be clapping their hands for Trump's "populist" tax reform plan.
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