Tax Changes For 2025

The following is from irs.gov: 

Notable changes for tax year 2025

The tax year 2025 adjustments described below generally apply to income tax returns to be filed starting tax season 2026. The tax items for tax year 2025 of greatest interest to many taxpayers include the following dollar amounts:

• Standard deductions. For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2025, an increase of $600 from the amount for tax year 2024.
   
• Marginal rates. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
  • 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
  • 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
  • 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
  • 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
  • 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
  • 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
     
• Alternative minimum tax exemption amounts. For tax year 2025, the exemption amount for unmarried individuals increases to $88,100 ($68,650 for married individuals filing separately) and begins to phase out at $626,350. For married couples filing jointly, the exemption amount increases to $137,000 and begins to phase out at $1,252,700.
   
• Earned income tax credits. For qualifying taxpayers who have three or more qualifying children, the tax year 2025 maximum Earned Income Tax Credit amount is $8,046, an increase from $7,830 for tax year 2024. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
   
• Qualified transportation fringe benefit. For tax year 2025, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking rises to $325, increasing from $315 in tax year 2024.
   
• Health flexible spending cafeteria plans. For the taxable years beginning in 2025, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements rises to $3,300, increasing from $3,200 in tax year 2024. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount rises to $660, increasing from $640 in tax year 2024.
   

• Medical savings accounts. For tax year 2025, participants who have self-only coverage the plan must have an annual deductible that is not less than $2,850 (a $50 increase from the previous tax year), but not more than $4,300 (an increase of $150 from the previous tax year). 

  The maximum out-of-pocket expense amount rises to $5,700, increasing from $5,550 in tax year 2024.

  For family coverage in tax year 2025, the annual deductible is not less than $5,700, increasing from $5,550 in tax year 2024; however, the deductible cannot be more than $8,550, an increase of $200 versus the limit for tax year 2024. For family coverage, the out-of-pocket expense limit is $10,500 for tax year 2025, rising from $10,200 in tax year 2024.
   

• Foreign earned income exclusion. For tax year 2025, the foreign earned income exclusion increases to $130,000, from $126,500 in tax year 2024.
   

• Estate tax credits. Estates of decedents who die during 2025 have a basic exclusion amount of $13,990,000, increased from $13,610,000 for estates of decedents who died in 2024.
   

• Annual exclusion for gifts increases to $19,000 for calendar year 2025, rising from $18,000 for calendar year 2024.
   

• Adoption credits. For tax year 2025, the maximum credit allowed for an adoption of a child with special needs is the amount of qualified adoption expenses up to $17,280, increased from $16,810 for tax year 2024.

Trump's Crazy Tax Plan Would Not Work (And Would Make Goods More Expensive)

Donald Trump has said he would like to replace the income tax with a heavy tariff on all imported goods. That may sound good to the rich, but it would make life much more expensive for the poor, the working class, and the middle class.

That's because tariffs act like a sales tax. The tariff would be paid by the importer, who would then raise the price of the goods to cover that cost. Some might say just buy goods made in this country. That wouldn't work because many consumer goods are no longer made in the United States. For instance, no TV is assembled in this country. With a 70% tariff a $550 dollar TV would cost $850.

Also, the U.S. imports about 60% of fruits and 40% of vegetables so the price of groceries would skyrocket. 

But that's not the only reason the Trump plan wouldn't work. Economist Erica York explains in this Washington Post article.  Here is part of what she writes:

Donald Trump has floated a proposal to replace the U.S. income tax system with a new system of tariffs, moving the United States back to the tax mix of the late 19th century. The plan, simply put, is a mathematical impossibility.

Trump’s most obvious challenge would be in how to close the yawning gap between income tax revenue and duties. The U.S. Treasury collected $2.2 trillion from the individual income tax in fiscal 2023 and $80 billion from tariffs.

The gap isn’t, per se, the reason Trump’s vision cannot be realized. On paper, Trump could cover the shortfall with a 70 percent universal tariff on all imported goods.

But the proposal is unworkable because of the sharp difference in the size of the respective tax bases. The Congressional Budget Office projects $15.6 trillion of adjusted gross income in fiscal year 2023. Goods imports totaled about $3.1 trillion in calendar year 2023. Trump’s calculation ignores the precipitous drop in imports a tax increase of this magnitude would cause.

Based on historical data, we can expect imports to drop by 1 percent for every 1 percent increase in import prices. The projected total would fall to $930 billion. Because the base would be smaller, the higher tariffs would raise about $650 billion in revenue, not the trillions Trump projects.

Even adjusting for the inevitable drop in imports overstates the revenue potential of tariffs. No tax enjoys perfect adherence. And applying the stated tax rate to current import prices overstates how revenue would rise in real terms.

Under a full set of standard tax modeling assumptions, the revenue maximizing rate falls between 40 to 50 percent, resulting in revenue between $450 billion to $650 billion. Raising rates above that range would reduce the resulting revenue — meaning tariffs fall well short of what is required to replace $2 trillion of income tax revenue. . . .

Spending on discretionary programs and net interest combined equals 8.8 percent of GDP compared to goods imports at about 11.2 percent of GDP. It would take a nearly 80 percent tax on all goods imports — assuming (implausibly) that imports remain unchanged — to turn enough revenue to cover these major spending items. Applying the actual revenue maximizing tariff rate on imports would not even cover interest payments on the debt, projected to exceed $1 trillion annually by 2025. . . .

Currently, the United States maintains a highly progressive fiscal program, in which higher-income taxpayers generally pay substantially higher income tax rates and lower-income taxpayers receive more back in refundable tax credits than they owe in income taxes.

Tariffs, in contrast, impose a regressive burden on taxpayers. Indeed, this is why analyses of Trump’s proposed tax plan — which raises tariffs and substantially cuts (but does not eliminate) income taxes — would increase the tax burden on at least the bottom 40 percent of taxpayerswhile providing the largest cuts for the top 5 percent.

Trump's Insane Idea To Help The Rich And Hurt Everyone Else

 

If Trump is re-elected, he and his GOP cohorts have already told us they want to continue the tax cuts he got passed during his first term (over 80% of which went to the rich and super-rich). It won't help the working class at all, and will only have a tiny benefit for the middle class -- and it will add trillions more to the national debt. It's a very bad idea.

Now Trump has come up with an even worse idea. At his meeting with congressional Republicans, Trump floated the idea of doing away with the income tax completely and replacing it with a tariff on all goods entering the United States.

Before you celebrate the idea of no income tax, stop and think of what the tariff on everything would mean. It would mean higher prices of nearly everything you buy. And not just a little higher. To replace the billions received in income taxes, the tariffs would have to be very high - and that would make prices on goods much, much higher!

It would be disastrous for the poor. They are already struggling to get by, and raising prices much higher would mean they would struggle just to have a subsistence existence. Working class families would also be devastated. They are already barely keeping up with inflation. The higher tariffs would mean they'd fall behind, and many would drop into the poor class. Middle class workers would also suffer. All of these groups would pay much more in higher prices than they currently pay in income taxes.

Only one group would be helped. The rich would make out like bandits! They would be happy to pay the higher prices, because it would be much less that they have to pay in taxes - and they could easily afford the higher prices.

It's just one more crazy idea that shows Trump, and his GOP cohorts, only care about one small group - the rich (and especially the super-rich). They don't care about hurting ordinary Americans as long as they can serve the rich.

Public Says Super-Rich Don't Pay Enough In Income Taxes

 

These charts are from the YouGov Poll -- done on March 31st and April 1st of a nationwide sample of 7,693 adults, with a margin of error of less than 2 points.

The top chart shows that 60% of the public says the super-rich don't pay what they should in income taxes.

The bottom chart shows that 63% support President Biden's proposal to make those with over $100 million pay a minimum tax of 20%.

Our Tax System Is Broken - Trump's Returns Prove It

 

I wasn't too surprised to learn that Donald Trump paid no taxes in 10 of the last 15 years, and in two more of those years paid only $750 (less than any middle or working class person must pay). 

Our tax system is broken, and has been since the Republicans gained enough power to institute their economic policy a few decades ago. They believe the rich should not have to pay as much in taxes as the rest of us. 

They tell us that by allowing the rich to keep most of their money, through an unfair tax system, they will share that extra money with the rest of us. Of course that has never happened. The rich just fatten their own bank accounts, and nothing "trickles" down.

Our income tax system was originally designed to be progressive. It was intended to be that those who made the most should pay the most -- and that worked well for many years, creating a vibrant and growing middle class. That system benefitted everyone, including the poor and disadvantaged (who benefitted from government programs paid for through those taxes).

Sadly, that is no longer true (as Trump's tax returns have shown us). We must fix our broken system.

Here is a part of what the editorial board of The New York Times has to say about this: 

The portrait of a man who earned hundreds of millions of dollars, lived a life of comic excess and yet, in many years, paid nothing in federal income taxes is an indictment of the federal income tax system. It illustrates the profound inequities of the tax code and the shambolic state of enforcement.

The government has sharply reduced the share of income that it collects in taxes from the wealthiest Americans. One recent study found that the 400 wealthiest households paid 70 percent of their total income in federal, state and local taxes in 1950, 47 percent in 1980 and 23 percent in 2018. The cuts in tax rates have come mostly at the federal level.

The government allows income to be sheltered from taxation for hundreds of different reasons, but real estate investors have long enjoyed a particularly sweet set of loopholes. A homeowner can write off the interest payments on a mortgage loan, but the owners of commercial buildings get a host of other benefits, too. It’s relatively easy for real estate investors to use past losses to offset income, to defer income and to avoid reporting some kinds of income. Best of all, the law lets investors claim a building is depreciating in value — a theoretical loss of money — even as the actual value increases. . . .

Moreover, the formidable complexity of the tax code makes it difficult to tell when wealthy taxpayers have crossed legal lines. For the rich, taxation often becomes a kind of structured negotiation between the taxpayer’s experts and the government’s experts.

It’s not a fair fight: The rich keep getting richer, while the Internal Revenue Service keeps getting smaller. Republicans in Congress have slashed funding for the I.R.S., stripping the agency of expertise, resources and authority. The number of I.R.S. auditors has fallen by one-third since 2010. The government employs fewer people to chase deadbeats than at any time since the 1950s.

The share of all tax returns subject to an audit declined by 46 percent from 2010 to 2018, according to the Congressional Budget Office. Astonishingly, the decline was even steeper for millionaires — the audit rate fell 61 percent over the same period. . . .

On current trends, the federal government will fail to collect $7.5 trillion in taxes over the next decade — about 15 percent of the total amount owed.

Cracking down on rich tax cheats is law enforcement. It is a basic function of government to ensure that people are playing by the rules. Tax cheating is not a victimless crime. Every dollar hidden from the government is that much less money to spend on education, roads and research. The rich are benefiting at the expense of everyone else. . . .

Congress should restore every penny of funding stripped from the I.R.S. since 2010 — plus whatever is necessary for the agency to perform its critical work.

Paying taxes is a civic duty, and the government needs the money. Most Americans try to pay what they owe, even if they wish they owed less, and they take comfort in the assumption that most of their neighbors are conducting themselves in the same way.

Why Not Make EVERYONE'S Income Taxes Public?

There's been a lot of discussion lately about whether Donald Trump should make his income tax returns public (or at least let Congress see several years worth of them). Personally, I think anyone running for public office should release at least five years worth of income tax returns -- and ten years worth would be even better. Unfortunately, it looks like it's going to take a court order to make Trump turn over his tax returns (and that court order will probably have to come from the Supreme Court).

There is a simple solution to all this -- make everyone's tax returns a matter of public record (which could be accessed by anyone). That may strike you as extreme, and I'm sure the rich will be aghast at that prospect. But it's done in other countries, and has been done in the United States in the past (before the rich convinced Congress to outlaw it).

It's not a crazy idea, and a good case can be made for doing it. Here's the case made by Benyamin Appelbaum in The New York Times:

In October 1924, the federal government threw open for public inspection the files that recorded the incomes of American taxpayers, and the amounts they had paid in taxes.

Americans were gripped by a fever of interest in the finances of their neighbors. This newspaper devoted a large chunk of the front page to a list of the top taxpayers in Manhattan under a banner headline that read “J.D. Rockefeller Jr. Paid $7,435,169.” One story reported that a number of wives and ex-wives had lined up at a government office in New York to seek information about their present or former husbands. Journalists soon began to note the curious absence of some conspicuously wealthy people from the lists of top taxpayers.

Congress had ordered the disclosure as a weapon against tax fraud. “Secrecy is of the greatest aid to corruption,” said Senator Robert Howell of Nebraska. “The price of liberty is not only eternal vigilance, but also publicity.” 

There is every reason to think that sunlight served the desired purpose. One important piece of evidence is that wealthy Americans absolutely hated the disclosure law, and soon persuaded Congress to execute a U-turn.

Almost a century later, it’s time to revisit the merits of universal public disclosure. Democrats in Congress are fighting to obtain President Trump’s tax returns under a separate 1924 law, written in response to related concerns about public corruption. That issue could be resolved, at least in part, if Congress embraced the broader case for publishing everyone’s tax bill.

Now as then, disclosure could help to ensure that people pay a fair share of taxes. Americans underpay their taxes by more than $450billion each year, more than 10 percent of total federal revenue. Publishing a list of millionaires who paid little or no taxes this year could significantly reduce the number of millionaires who pay little or no taxes next year.

In Norway, where tax records have been public since the founding of the modern state in 1814, a newspaper put the records online in 2001. One study estimated that the records’ greater availability caused a 3.1 percent increase in the reported incomes of self-employed Norwegians over the next three years, perhaps because they feared exposure.

Disclosure also could help to reduce disparities in income, as well as disparities in tax payments. Inequality is easier to ignore in the absence of evidence. In Finland, where tax data is published each year on Nov. 1 — jovially known as National Jealousy Day — people treat the information as a barometer of whether inequality is yawning too wide.

Consider that public corporations are required to report the compensation of top executives — who check disclosures of rival companies to ensure they are not underpaid.

Another benefit would be identifying patterns of illegal discrimination against women or minorities. Lilly Ledbetter, for whom the 2009 fair pay law is named, would have learned a lot sooner that she was making less than her male colleagues at a Goodyear plant in Alabama if she could have looked up their annual incomes on a government website.

Transparency could even help to increase economic growth. People who know how much their co-workers are paid — and how much people are paid at other companies, and in other industries — can make better career decisions.

Tax data also is a rich source of information about American life. The I.R.S. tightly limits access, but one of the few researchers allowed to work with that data, the Harvard economist Raj Chetty, has produced a series of important studies illuminating the mechanics of economic inequality. He and his collaborators have shown that Americans have a dwindling chance of making more money than their parents, and that living in a good neighborhood as a child has a lifelong impact on earnings. One can only imagine what others might learn from the data.

Calling for more disclosure may seem discordant at a time of growing concern about privacy. But income taxation is an act of government, not an aspect of private life. Property tax records provide a reasonable model. Local governments disclose the name of the property owner, the value of the property and the amount of taxes owed and paid. The same information should be available for income taxes — nothing more is necessary.

Dems Look To The States To Force Trump To Release Taxes

(Cartoon image is by Kim Warp in New Yorker magazine.)

During the presidential campaign, Donald Trump promised to release his tax returns. First he said he would do it after his tax audit was over (even though there was no reason why that should have stopped him). Later, he said he would release the returns if he was elected. Well, it has been four months since he was elected and he still has not released any of his tax returns. In fact, White House aides have confirmed he going to break that campaign promise by not releasing any returns at all.

Trump says the public isn't interested in his tax returns. Not true. Poll after poll has shows that an overwhelming majority was him to release his tax returns. That doesn't seem to matter. Trump lives in a fantasy world of his own creation, and reality means nothing to him.

Congress has the authority to request those tax returns from the IRS, and they could then release tham. And the congressional Democrats have tried to go that route -- forcing a vote on requesting the Trump tax returns. But Congress is controlled by Republicans, and they voted against requesting the returns.

Now Democrats are trying something new to get the returns -- this time on the state level. They have introduced bills in at least 19 states that would force a presidential candidate to release his/her tax returns before they could get on the ballot. Many of those states will defeat those bills -- the ones controlled by Republicans -- but the bills stand a good chance of passing in other states like California, Oregon, New Jersey, New Mexico, Maryland, and Hawaii.

Trump has already indicated that he wants to run in 2020 (assuming he survives this term). If he does so, he may have to release his tax returns to get on the ballot in several states. That may or may not mean a lot in the Republican primary, but it could be devastating to be left off the ballot in some states in the general election.

Some right-wingers say such a law would not be constitutional, because states cannot add to the requirements in the Constitution to run for office. That argument is not really true. States already have added  requirements to run, like a filing fee or signatures on a petition. Would requiring the release of tax returns be any different?

It should be interesting to see how these bills fare.

Trump Tries To Minimize His Refusal To Pay Income Taxes

(The photos of Warren Buffett and Donald Trump are from cnn.com.)

The issue of Donald Trump and his income taxes came up again in the debate on Sunday night. Hillary Clinton pointed out that Trump still has not released any of his tax returns (as all other modern presidential candidates have done). She also pointed out that Trump had likely not paid any income taxes for 18-19 years.

Surprisingly, Trump admitted that he had used a paperwork loss on his 1995 income tax return to avoid paying any taxes for many years. Then he tried to minimize his tax evasion by claiming it is commonplace among the rich to avoid paying taxes. He doesn't seem to realize that the old "other people are doing it too" argument doesn't excuse his own behavior, and is certainly not going to be appreciated by the general public.

He even tried to claim that Clinton-supporter Warren Buffett was also a tax evader, saying:

"Many of her friends took bigger deductions. Warren Buffett took a massive deduction." 

That didn't sit well with Buffett. who revealed that he had written the federal government a check of $1.9 million to pay his 2015 taxes. He said he had an income of $11.6 million, and took $5.5 million in deductions ($3.5 million of which were in charitable deduction -- only a tiny fraction of his total gifts to charity in 2015).

Mr. Buffett said:

"Mr. Trump says he knows more about taxes than any other human. He has not seen my income tax returns. But I am happy to give him the facts."

"I have paid federal income tax every year since 1944, when I was 13. (Though, being a slow starter, I owed only $7 in tax that year.) I have copies of all 72 of my returns and none uses a carry forward."

"The total charitable contributions I made during the year were $2,858,057,970, of which more than $2.85 billion were not taken as deductions and never will be. Tax law properly limits charitable deductions."

Buffett has revealed his taxes. It's time for Donald Trump to do the same. Has Trump donated any money to charity? Has Trump paid any income taxes in the last few years? The voting public deserves to know. It's past time for Trump to release his tax returns.

And Trump needs to stop offering the pathetic excuse that he is being audited. The IRS said that shouldn't stop his returns from being released, and other candidates have released returns during an audit. The people know that is just an excuse to keep from releasing the returns -- and most believe Trump is trying to hide something by not releasing the returns.

Taxes Are Turing Out To Be A Big Problem For Trump

The past week has not been good for the campaign of Donald Trump. It started with Trump exposing himself as a profligate misogynist, and then ended with the revelation that he probably didn't pay any income taxes for 18 or 19 years (and maybe even more).

A fairly recent poll asked respondents three questions about Donald Trump and income taxes. It is the Public Policy Polling survey -- done on September 27th and 28th of a random national sample of 933 likely voters, with a 3.2 point margin of error.

It turns out that 62% of voters want Trump to release his tax returns (which he has adamantly refused to do), and 52% of voters are convinced that he does not pay his fair share of income taxes. Perhaps most important, a plurality (46%) think they pay more in come taxes than Trump does.

This is not going to play well with the public on election day (or in early voting) -- and note, this poll was done before the story broke that he probably hadn't paid any income taxes in at least 18 or 19 years. Trump and his surrogates seem to think that not paying taxes makes him smart, but I seriously doubt that will be the opinion of the general voting public.

It Looks Like Trump Paid No Income Taxes For 18-19 Years

The image above is from Donald Trump's 1995 tax return, obtained somehow by the New York Times. It shows that he claimed a loss on that return of $915, 729,293 -- a loss that would have allowed him to avoid paying taxes for at least 19 years on an income of $50 million a year.

Understand, this does not mean Trump actually had no income in 1995 -- only that he hired some lawyers smart enough to use the tax system, which favors the rich, to avoid paying taxes on his income. Here is how the New York Times describes it:

Mr. Trump took full advantage of generous tax loopholes specifically available to commercial real estate developers to claim a $15.8 million loss in 1995 on his real estate holdings and partnerships.

But the most important revelation from the 1995 tax documents is just how much Mr. Trump may have benefited from a tax provision that is particularly prized by America’s dynastic families, which, like the Trumps, hold their wealth inside byzantine networks of partnerships, limited liability companies and S corporations.

The provision, known as net operating loss, or N.O.L., allows a dizzying array of deductions, business expenses, real estate depreciation, losses from the sale of business assets and even operating losses to flow from the balance sheets of those partnerships, limited liability companies and S corporations onto the personal tax returns of men like Mr. Trump. In turn, those losses can be used to cancel out an equivalent amount of taxable income from, say, book royalties or branding deals.

Better still, if the losses are big enough, they can cancel out taxable income earned in other years. Under I.R.S. rules in 1995, net operating losses could be used to wipe out taxable income earned in the three years before and the 15 years after the loss.

Note also that the Trump campaign and his campaign surrogates are not denying this report. They have simply said that Trump has legally followed tax laws. In fact some of his surrogates have gone so far as to claim he is smart for paying no taxes.

Rudy Giuliani said:

“The reality is, this is part of our tax code. The man’s a genius.”

And Chris Christie said:

 “There’s no one who’s shown more genius in their way to maneuver around the tax code.”

Do you think this shows Trump is a "genius"? Or does it show that he is just a tax evader -- paying nothing on millions in income while ordinary Americans, struggling to get by, pay their fair share of taxes?

This makes it clearer why Trump is refusing to release his tax returns. He knows that Mitt Romney was hurt by the revelation that he only paid a 13% tax rate on about $25 million in income, and he afraid of what the public will think when they learn he paid nothing in taxes while making even more than Romney did -- and he did that for many years.

Trump has been advantaged greatly by living in this country, but pays nothing for that. Instead, he makes his millions on the backs of honest tax-paying Americans. He should be ashamed, but unfortunately, he has shown us throughout his campaign that he has no shame.

U.S. Corporations Do NOT Need A Tax Cut

Republicans, and their presidential candidate, want to lower the income tax rate on U.S. corporations to 14%-15% from the current rate (about 35%). They claim the rate is too high and gives foreign companies an advantage. The truth is that almost no U.S. corporation pays that top rate, and many pay nothing at all in spite of making billions in profits, and most U.S. corporations actually pay less in taxes than their foreign competitors.

The Republicans also claim that lowering the corporate tax rate will create millions of jobs -- even though those corporations are already sitting on trillions of dollars, and there has never been any proof that the tax rate has any effect on job creation.

There is no real reason to lower the top tax rate for corporations. They currently enjoy one of the lowest tax rates since World War II, and most avoid paying even that. They used to account for over 32% of the federal governments tax revenues, but now only account for less than 11% -- a 21 point drop since 1952.

In the last few decades, thanks to tax subsidies, tax loopholes, and regulations that let them park money overseas to avoid paying taxes, the Republicans have fixed it so corporations no longer have to pay their fair share of tax revenues -- but they still enjoy all the advantages and protections of being an American company.

Just peruse all of these charts (from the Economic Policy Institute). I think you'll see that corporations, especially the huge domestic and multi-national corporations do NOT need a tax cut. What is needed is to make these corporations pay their fair share of tax revenues.

Of course, that won't happen as long as the Republicans retain enough power to stop it. That is why they must be voted out of power in November.

GOP IRS Head Says Trump Should Release His Tax Returns

(The cartoon image above is by John Branch at branchtoon.com.)

Donald Trump has broken with tradition, and is adamantly refusing to release any of his tax returns to the public. Evidently, he believes there is something in those returns that would embarrass him and/or cost him votes. His rather pathetic excuse is that he is being audited by the IRS -- even though all other modern presidential candidates have released their returns for many years, and at least one (Richard Nixon) did it while his return was being audited.

This brings up the question -- Why won't he release those returns? What is he trying to hide from American voters? His opponent, Hillary Clinton, has released her returns for more than the last 30 years -- and people from both political parties are asking for Trump to do the same. The following op-ed is by Fred Goldberg (appointed IRS chief counsel by President Ronald Reagan and as IRS commissioner and as Assistant Treasury Secretary for tax policy by President George H.W. Bush) -- a Republican calling for the release of those tax returns. He writes:

Much has been said and written about Donald Trump 's refusal to release his tax returns. Tax returns paint a revealing picture of who we are. That's why confidentiality is a central pillar of our tax system. If our government expects taxpayers to share this information with the IRS, we are entitled to ironclad guarantees of confidentiality and privacy — for this reason, our laws provide that wrongful IRS disclosure of our tax-return information is a felony.

But nothing prevents us as taxpayers from choosing to release our tax returns — and those who aspire for the highest public office have done so for decades. And they do so precisely because their returns provide a window (for better and worse) into who they are. Those who say Trump should release his tax returns claim we are entitled to view this portrait of the man who aspires to lead our country.

Trump has promised to release his returns when his audit ends, but claims he is under continuous audit by the IRS and that releasing his returns (including returns for years that are now closed) could have an adverse impact on current and future IRS examinations. As a former IRS commissioner and practicing tax lawyer, I understand it may be inconvenient for Trump to release his tax returns but we all know — and the IRS has confirmed — that nothing prevents any of us from releasing our tax returns any time we want. And by the way, for those who listen carefully, Trump's promise means he will never release his tax returns. Trump's advisors also have substantial control over when his current examination will conclude.

As a citizen and voter, I want to take a look because I will learn something important about this man who would be president. Inevitably, his refusal to release his returns raises a question: What is Trump hiding? The additional audit hassle is nothing compared to the extraordinary burdens he would carry as president. It's a small price of admission to the Oval Office. The sooner he releases his entire returns, the better.

Be that as it may, however, Trump is so far not willing to take that step. That's his decision, and voters will form whatever judgments they choose to form.

There is, however, a first step that Trump has no excuse for not taking. He can and should immediately release the first two pages of his Form 1040, along with his Schedule A, for the past 20 years. This would tell us how much he makes, how much he pays in taxes, and how much he contributes to charity.

Releasing this information would have no impact on any pending or future IRS audit of Trump. Zero. None. It is a risk-free first step with no downside. While painting a far from complete portrait, it would answer a few of the questions that Trump himself has raised during the campaign: He claims that he makes a lot of money; he claims that he makes significant charitable contributions; and he claims that he reduces his tax liability as far as current law allows.

The first two pages of his enormous tax returns, along with his Schedule A, will shed important light on these claims. The first two pages plus the Schedule A of the Clintons' 2015 tax return tell us they made $10.6 million; that they made charitable contributions of $1.0 million; and that they paid federal taxes of $3.6 million, for an effective tax rate of 34 percent. We have that same information about the Clintons for the past 20 years. The first two pages of Trump's tax returns, together with his Schedule A, would provide us with the same information for him. He can and should share that information with no audit risk whatsoever.

This would be a beneficial first step. His full return, as is the case with any individual having complex business affairs, would provide further important information, helping to paint a more complete portrait of Trump. For example, it could provide insight into Trump's record in business, such as more information about his important sources of income (real estate, domestic and off-shore investments) and the tax impact of debt forgiven in his bankruptcies.

A couple of my own disclosures: I had the honor of being appointed IRS chief counsel by President Reagan, and being appointed IRS commissioner and then Assistant Secretary for Tax Policy at the United States Treasury by President George H.W. Bush. This year, I will be voting for Hillary Clinton . I am confident she will keep us safe and that she could and would work with Republicans in Congress to lead our country to a better future for all Americans.

 (The cartoon image above is by Dan Wasserman in the Boston Globe.)

Clinton Paid Over 43% In Taxes -- Did Trump Pay Anything ?

What tax rate does Donald Trump pay? Does he even pay any taxes at all? We don't know what he's paid recently, but we do know that he has paid nothing in the past (taking advantage of some lucrative real estate loopholes). And the reason we don't know is because he is absolutely refusing to release his tax returns.

It is not a legal requirement for him to release those tax returns, but it is something that all modern presidential candidates of both parties have done. They have done that to show the voters that they are not crooked -- that they pay their taxes (and that they have nothing to hide about how they made their income). That makes me wonder -- what is Donald Trump trying to hide?

Does he get by without paying any taxes at all? That's something no middle class or working class American could do, and no rich person should be able to do (although many of them do that by using special deductions and hiding money overseas). Is he hiding the amount of income he has (embarrassed that it's not nearly what he claims it is)? Is he trying to hide income from foreign sources (Russians, Muslims) -- income that would not make his supporters happy?

Compare Trump's refusal to release his tax returns to his opponent, Hillary Clinton. Clinton has released many years of tax returns, and just released last year's return. Note on the chart below that in 2015, Clinton paid 34.2% of her income in federal taxes, and another 9% in state/local taxes. That means she (and Bill) paid 43.2% of their income in taxes, and that is after they gave 9.8% of their adjusted gross income to charity.

Hillary and Bill Clinton pay their fair share of taxes, and donate substantially to charities. Does Donald Trump do either? It's time he showed the American people. If he doesn't then they will be justified in thinking the worst -- that he is miserly and a tax cheat.

Trump's "Pie-In-Sky" Tax Plan Would Be A Disaster For U.S.

Donald Trump made the news yesterday by releasing his tax plan. On the surface, this plan may sound good to a lot of people, because it purports to reduce taxes for all Americans -- and nobody loves to pay taxes (no matter how necessary they are).

But if you look beneath the surface, you find this plan is not really the wonderful idea he has tried to paint it as being. First, he says he will eliminate taxes altogether for those making less than $25,000 a year (or $50,000 for married couples). But guess what -- those people pay little or no taxes already. This cut would mean nothing to the poor or the low-wage workers, and be only minimal for the rest.

The same can be said of middle-income workers making more than $25,000. They would get a small cut, but that's all. I'm not opposed to that, but let's look at who Trump's plan really benefits.

That of course, is the richest Americans and the corporations. It turns out that the richest Americans would see their tax rate reduced from 39.6% to only 25% ( a reduction of about 37% -- a much bigger percentage than the low-income and middle-income workers would get). And the giant corporations would do even better, with their tax rate being reduced to 15% (a whopping 62% reduction in their tax rate) -- and the money they make overseas would only be taxed at a rate of 10% (a enormous 75% reduction). In addition, he would lower the capital gains tax (which should be eliminated altogether) to only 20%, which benefits largely the richest Americans.

Trump would like for you to think that his plan would make taxation much fairer, but the opposite is true. It would make the tax system even more unfair -- and it would radically increase the gap in wealth and income between the rich and the rest of America (setting us up for another depression -- far worse than the terrible Bush Recession).

And how would he pay for this plan? Again, all we get are smoke and mirrors. He says he would eliminate loopholes enjoyed by the rich. Unfortunately, those loopholes would not equal the amount of taxes cut. In fact, the richest Americans would still be paying less under Trump's plan even if those loopholes were eliminated.

And then Trump mirrors the failed predictions of Reagan and Bush II -- that lowering taxes would actually produce more in government revenue because it would spur economic growth. That didn't work for Reagan or Bush II, and it won't work for Trump. Lower taxes have never spurred economic growth (only increased demand can do that), and even an elementary school student could do this math (that cutting the amount of taxes collected would decrease the amount of government revenue collected). That is just a fact.

The truth is that Trump's plan would be a disaster for this country. It would be mainly a huge giveaway to the rich and the corporations -- and it would substantially balloon the budget deficit (which would substantially increase the national debt).

Trump's plan is just the same old flawed Republican plans. It hasn't worked in the past, and it won't work in the future. It's just an illusion that he hopes the American people will buy (so they will vote for him). Don't fall for it!

(NOTE -- The caricature of Donald Trump above is by DonkeyHotey.)

MillionaireTexas Governor Only Paid $104 In Income Tax

(The image of Greg Abbott above is from the website of Progress Texas.)

The following post is from Lone Star Project:

Disclosing information like income tax filings late on a Friday to avoid press coverage is standard political behavior. However, distorting and manipulating the information to hide the facts is patently dishonest. Last Friday, Greg Abbott did just that – he selectively added, and withheld other, important information in a press statement to hide the fact that he paid only $104 in federal income taxes last year – a rate of under one percent – which is far less than what the average Texan pays.

According to tax documents he made public, Abbott was paid $134,000 in salary as the Attorney General last year. Rather than being straight up and stating that he took advantage of a series of deductions, exemptions and exclusions to reduce his tax bill to only $104, he implied that he had a 39.96 percent tax burden due in large part to property taxes – most of it on his approximately million dollar home.

It was a sleazy move. Greg Abbott included his property taxes to mask his actual income tax payment. Abbott also, of course, did not mention that he is a very wealthy man as a result of a multi-million dollar personal injury settlement he was awarded and that is paid to him as an annuity. Abbott pays NO taxes on his multi-million dollar personal injury settlement.

Public Says Rich And Corporations Pay Too Little In Taxes

Yesterday I brought you the results of a Gallup Poll that showed a majority of Americans (56%) think the income tax they pay is fair. Now the Gallup Poll has released another part of that same survey (done between April 9th and 12th of a random national sample of 1,015 adults, with a 4 point margin of error). This time the respondents were asked about the tax burden of different groups in our country.

The results are contained in the chart above. A significant plurality (45%) think the lower-income Americans pay too much in taxes. And the public is split over whether the middle-income Americans pay too much (46%) or their fair share (44%). But the results were far different for the upper-income Americans (the rich) and the corporations. A whopping 62% of the public thinks the rich pay too little when it comes to income taxes -- and an even larger 69% say corporations don't pay enough in income taxes.

That makes me wonder how the Republicans think they can sell their new tax cuts for the rich and the corporations -- and that is exactly what they are trying to do (in spite of the fact that only 11% think the rich pay too much, and only 9% think corporations pay too much). Do they even care that they are at odds with a significant majority of Americans on this -- or are the large campaign donations from the rich and corporations just too inviting to care what the people want?

The GOP will point to the top tax rates, and say they are too high. That is laughable for two reasons. First, they have been much higher in the past, and it did not hurt the economy or business investment. Second, neither the rich nor the corporations actually pay those top rates. Most of the rich don't pay the earned income rate at all, but the much lower capital gains rate. And many corporations don't pay any tax at all -- by taking advantage of loopholes and subsidies, and by hiding profits overseas.

The general public is right -- the rich and the corporations don't pay their fair share in taxes. It's time to fix that.

Majority Of Americans Say The Income Tax They Pay Is Fair

Today is the deadline for Americans to file their income tax returns (although around three-quarters of the population have already done it). And since most who wait until now usually owe money instead of get a refund, this is the time of year we hear the most complaining about paying taxes.

That brings up the question -- do Americans think the taxes they pay are fair. The Gallup Poll tried to answer that question in a new survey -- done between April 9th and 12th of a random national sample of 1,015 adults, with a margin of error of 4 points. The results are in the chart above.

It may surprise you, but a solid majority (56%) of Americans believe the income tax they pay is fair -- and that cuts across all income levels.

Should Our Top Tax Rate Be About 85%-90% ?

If you are rich, or a right-wing worshipper of the rich (like most Republicans), you may have spewed your coffee all over your keyboard after reading my headline -- but it is a serious question. And there is a serious new economic paper, written by Dirk Krueger of the University of Pennsylvania and Fabian Kindermann of the University of Bonn, that says all citizens (including the rich) would be better off if the top tax rate was between 85% and 90%.

Now this doesn't mean the rich would pay that percentage on all of their income -- only on the portion of their income that exceeds a certain level. The current top tax rate is 39.6%, but that rate only applies to income earned above the level of $406,750 ($457,600 for a couple). The money under that level is taxed at the same rate as those who make less than that amount. In other words, the top tax rate, whether 90% or 39.6%, would only apply to less than 1% of the population.

Those on the right will say such a high tax rate would be disastrous for the economy, and discourage high earners from making money. Not true. Note on the chart above that there have been extended periods in our recent history when our top tax rate was much higher. From the mid-1930's until the early 1980's our top tax rate was between 90% and 70% -- and those were some of the most robust periods of growth this country has experienced.

It was not until the Reagan administration that the top tax rate was lowered, as a part of the GOP's "trickle-down" economic policies. It was supposed to spur economic growth and benefit all Americans, but it didn't. It It only helped the rich, and created the biggest wealth gap since before the Great Depression. And that wealth and income gap, in combination with other "trickle-down" policies, was the primary reason for the Bush recession (which most ordinary Americans are still struggling to recover from).

I know raising the top tax rate to 85% or 90% is politically impossible at this time. The "trickle-down" lies about taxation are still believed by too many economically-ignorant people. But I do think a couple of things could be done with taxation that would help this country a great deal. The first would be to raise the top tax rate to somewhere between 45% and 50%. The second would be to eliminate the lower capital gains tax rate, and have everyone pay the earned income tax rate (regardless of how they earned their money).

This would provide much-needed revenue for the federal government, and it would slow the growth of the wealth and income gap (and combined with a substantial raise in the minimum wage, could even stop the growth in that gap).

We need to stop pandering to the rich in this country, and institute some economic policies that would be beneficial to all Americans. And while we're at it, it certainly wouldn't hurt to eliminate the subsidies and tax breaks that keep corporations from paying any taxes (even though they make huge profits).